Dean Best's food industry blog - from just-food.com

Life not a cakewalk for Premier

Wed, 19 Nov 2008 15:40:00 GMT

The fact that Premier Foods could afford to turn down an offer for Mr Kipling, one of UK grocery's household names, suggests that the company's financial problems aren't as bleak as some have suggested.

However, life is hardly a cakewalk for the UK's largest food manufacturer at the the moment.

Premier has won some breathing room from its lenders with the news that a key covenant test has been pushed back from December to March.

However, the company has been forced to scrap plans for an interim dividend to reduce the pressure on its dent levels, which stand at around GBP1.8bn.

Also, any plans that Premier has to sell off non-core assets are being hit by the turmoil in the financial markets.

Nevertheless, Premier insists the business is robust and is trying to clam nerves overt the its financial health. It claims it would have passed that covenant test if it had been held next month, while it points to an 8% rise in sales for its fiscal year so far. Profits, the company says, are in line with expectations as cost-savings from the groups' programme to rationalise its manufacturing base flow through the business.

However, uncertainty surrounds Premier at the moment., Shares in the company were down over 5% to 26.5p at 15:41 GMT this afternoon (19 November). The road to recovery, it seems, will be a long one.

Sainsbury's, Wal-Mart inject positive tone - for some

Mon, 17 Nov 2008 14:05:00 GMT

It may be difficult to swallow for some, but the latest results from retail giants Sainsbury's and Wal-Mart last week injected a positive tone into the ongoing concern over the economy.

Sainsbury's, the UK's third-largest retailer, highlighted its "universal appeal" as it posted rising half-year sales and earnings, while Wal-Mart praised its "price leadership" for its own bumper figures.

However, today (17 November), the UK's ever-vocal National Farmers Union will accuse, among others, Sainsbury's and Wal-Mart's Asda of "outrageous bully-boy tactics" against suppliers as the economic downturn bites.

The NFU claims it has received an increased number of complaints from suppliers, who say supermarkets are demanding "unilateral price cuts", back payments and over-riders.

"There is enough flexibility in the margin taken by retailers to offer competitive pricing without reducing the price paid to farmers, growers and other suppliers. A continuation of this policy will see the agricultural production base in this country irreparably eroded with diabolical consequences for suppliers," NFU president Peter Kendall will tell a business meeting in Cardiff.

The debate over the power of the UK's largest supermarkets will never die and is sure to intensify as we navigate the current recession. And discussions between suppliers and retailers are likely to be as tense as they have ever been, particularly when looking at the financial results reported by some of the largest food manufacturers last week. Two of the UK's biggest names, Dairy Crest and Northern Foods, published mixed news. Dairy Crest saw its shares tumble after it issued a profit warning, while Northern said half-year profits had fallen 16% due in part to the weak pound.

On a brighter note, the weak pound should boost UK exports, which, in the food and drink sector at least, are showing signs of promise. According to figures out today, UK food and drink exports jumped 15.5% during the first six months of 2008 and look set to break the GBP13bn (US$19.41bn) barrier for the full year.

The US, meanwhile, looks set to enjoy something else that has become almost quintessentially British - a good old bunfight over the labels on food.

As we reported last week, the launch of the Smart Choices Program has been broadly welcomed across the pond as industry bids to show a united front in the fight against obesity.

However, some are calling for more research into the whole issue of nutritional labelling and into which schemes would prove most effective in changing consumer behaviour. Green ticks, stars... another debate that, it seems, is unlikely to be resolved quietly.

Caught in the act

Thu, 13 Nov 2008 18:07:00 GMT

Earlier this week, the British Retail Consortium warned that retailers could face an increase in shoplifting as the credit crunch bites.

"We have expressed the fear that the downturn will lead to an increase in theft levels," a spokesperson told just-food.

Today (13 November), your reporter almost became part of the supposed crime wave that is preparing to sweep the UK.

During a quick top-up shop at my local Sainsbury's, I let my son - who is approaching the terrible twos and has a propensity to tantrum when hungry - snack on a sandwich while I collected milk, taco shells and the like.

I threw the empty sandwich wrapper into the trolley as I grabbed my groceries and promptly forgot about it.

As I was going through the checkout line, a security guard approached me.

"I think you 'forgot' this," she said in the smug tones of someone who knows their euphemism is definitely not hiding the thinly-veiled accusation that they have caught you red-handed.

She reached down and picked up the wrapper, which had lodged itself between my reusable bags and the side of the cart.

Rosey-faced and breathless, I replied: "Oh sorry, thank you," trying to convey that this was not a premeditated act of burglary with my breeziness.

I am now convinced that all the extra pounds the BRC says retailers are investing in security are directed squarely at me. 'Wanted' posters probably hang in the back of the store and security personnel will shadow my every move, if I have the nerve to show my face there again.

I considered "grassing up" my son, but I have a feeling the buck stops with mum. And all over a GBP2.80 (US$4.09) sandwich.

Katy Humphries, Deputy Editor

The UK chews the fat over obesity

Wed, 12 Nov 2008 15:17:00 GMT

Even the UK went a bit Obama-crazy last week but, in recent days, the "O" word on everyone's lips has been obesity.

This week has seen one of the UK's big public health issues return to centre stage. An event was held marking the one-year anniversary of the launch of the government-backed Foresight report into tackling obesity.

The UK government, meanwhile, formally unveiled Change4Life, an anti-obesity drive backed by food manufacturers, retailers, broadcasters and charities.

UK Health Secretary Alan Johnson lauded Change4Life as the catalyst for a "lifestyle revolution" in which an ever-more obese population will eat more healthily and take more exercise.

The scheme, which is backed by the likes of Tesco, Kellogg and PepsiCo, has a lot of promise but, as we all know, obesity is a hydra-headed monster.

The problem of how to effectively tackle obesity was fiercely debated at the event held to mark a year since the publication of the Foresight report on the issue.

Representatives from industry, academia, science and the media analysed just what role convenience foods were playing in tackling obesity and, as you'd expect, the discussion was a passionate one - as you can see from our coverage of the event.

If anything, however, the debate did not go on for long enough, proof, if any were needed, of the fierce arguments surrounding the best way to tackle obesity and of how many factors are at play.

One issue that needs further discussion and analysis is the issue of price - particularly in the current economic climate. Price plays a vital role in what consumers buy and what they eat and often consumers believe that to eat healthily is to eat expensively.

Should Government step in and encourage industry to price healthier foods more cheaply?

Asda in demand

Tue, 11 Nov 2008 10:00:00 GMT

Need an injection of fresh ideas into your business? Where would you go? Management consultants? Investment banks? The answer, it seems, is Asda.

That's right, the business nous of the UK arm of Wal-Mart is in demand at the moment - at least if a charity auction in London last week is anything go by.

Friday afternoon (7 November) saw Caravan, a UK charity for those who have worked or are still working in the grocery sector, hold a fund-raising lunch in central London.

The event saw prizes donated by the food industry, including a day at the Cheltenham racing festival, up for grabs, while lots up for auction included a day of corporate hospitality at Lord's, the home of cricket, next summer.

However, the lure of having Darren Blackhurst, Asda's trading director, spend a day at your office proved hard to resist for some, with the lot raising GBP7,500 (US$11,707) for Caravan.

I'm sure Mr. Blackhurst has a wealth of business insight to pass on but the amount raised, well, raised eyebrows - especially when you consider that the box at Lord's raised a smidgeon more at GBP8,000... and another corporate junket at Wembley for the Carling Cup Final next March raised a smidgeon less.

Just-food could not be sure who won the Blackhurst prize but noticed that tables including a number of Asda personnel were instrumental in bidding up the value of the lot.

The identity of the winner proved something of a curiosity among the journalists at the event, who noted that surely in this business climate suppliers would want to see much less of their retail customers - not more.

To find our more about the Caravan charity, click here.

Optimism in times of doom and gloom

Mon, 10 Nov 2008 16:03:00 GMT

Despite the current doom and gloom over the economy, there were notes of optimism among the food manufacturing fraternity last week. Associated British Foods posted a set of robust annual figures that highlighted that, while its burgeoning discount clothing retail unit Primark may be grabbing the headlines, the Patak's-to-Ryvita supplier has built a strong stable of grocery brands to underpin the growth of the business.

Another food giant eyeing a sweeter future is Tate & Lyle. 2007 may have once been described as an "annus horribilis" for the company by some in the investment community but the UK food and ingredients group seems to be slowly heading in the right direction. The company last week reported "sound" first-half results, with operating profit up 3% thanks largely to its US business.

And one US firm with its eye on the future last week was PepsiCo, with news of a US$1bn investment package for China and a shake up of the way it runs its soft drinks and snacks businesses in India. The strategy is a prudent one. PepsiCo's snacks businesses in markets like India and China are taking the pressure away from the company's more mature markets in North America and Europe, where growth is harder to come by. The emerging markets are a small part of PepsiCo's business now but there is no denying that the company is placing its chips on their potential in the years ahead.

Until next time...

Dean Best, Managing Editor

Is Sir Stuart's optimism misplaced?

Wed, 05 Nov 2008 13:01:00 GMT

Sir Stuart Rose, the boss of UK retailer Marks and Spencer, is nothing if not a confirmed optimist.

At the press briefing on M&S's half-year results, the company's executive chairman was determined to look for positives despite the fall in the retailer's profits and deepening concern over the state of the UK economy.

While he admitted that the economic downturn has affected M&S across food and clothing, and while he acknowledged that trading remained "volatile", Sir Stuart insisted that M&S should stick to its guns and be proud of its position as a "quality foods" retailer.

Nevertheless, he was quick to emphasise that M&S was competing more fiercely on price in a bid to win over consumers looking for a value.

"We're now cheaper than Waitrose and we're on a par with Sainsbury's on some prices," he claimed.

When pushed on how M&S prices stacked up versus those at Waitrose, Sir Stuart stood by his guns, insisting that his products would win out as cheaper against those of his rival. "Let's get our products on the table and we can have a good punch-up," he joked, referring to his Waitrose counterpart Mark Price.

Joking aside, M&S will face an ongoing battle to win over consumers convinced that its products are too expensive. Moreover, with the company's moves to lower prices and continue its promotional activity, there will be continued pressure on margins, which could ultimately lead to some pain for suppliers.

Ambitious Arla sets out stall

Mon, 03 Nov 2008 15:33:00 GMT

Hidden among the mountain of third-quarter results last week, it was news of dairy giant Arla Foods' plans to shake up its global operations that really caught the eye.

After a wide-ranging review, Arla has laid out plans that it believes will strengthen the business and position it firmly among the sector's heavyweights. Investment in product innovation will double, its stable of brands will be consolidated (including the creation of a new, namesake brand) and markets including the US, Russia and China will win a greater share of Arla's spending. For a company the size of Arla, it is an ambitious strategy.

Outlining Arla's five-year plan, CEO Peder Tuborgh admitted the next phase of the company's history would be "an enormous challenge". However, he added: "It's not impossible for us to achieve our objectives and it is important for us to give our all and gain ground."

Arla's overhaul should be seen through the prism of the wider dairy sector. Dairy watchers believe the industry is ripe for further consolidation. The merger of Dutch groups Campina and Friesland Foods, once it wins EU approval, is expected to be the first in a number of such deals. Indeed, Arla intimated to just-food that it is eyeing tie-ups in Europe, so expect more changes on the dairy landscape in the months ahead.

The US food industry could be set to see something of a tidal-shift over the next year - at least in the way its products are labelled. A number of the country's largest food makers - including General Mills and ConAgra Foods - have signed up to the Smart Choices Program, a labelling scheme designed to give US consumers more information on the nutritional content of their food. The Smart Choices symbol and nutritional information will start appearing during the middle of next year and could herald a transformation in the way food is marketed in the US. Nevertheless, as ever, there will be questions as to how far a labelling initiative can solve such a multi-faceted issue as obesity.

One US company cutting down is Wal-Mart, which last week announced that it would cut capital spending on its domestic stores by a third this year and slow the pace of store openings. The world's largest retailer then signalled its belief in the potential of the emerging retail markets with plans to shift more capital towards faster-growing countries in the next five years. "You will see in the next five years more of a shift towards the emerging markets of the world," Mike Duke, Wal-Mart's vice president of international markets, told analysts last week. "Those markets like Brazil that we're really pleased with, and markets like China."

As ever, those emerging markets have been grabbing your attention in recent days. While a just-food research report highlighted the promise of China's packaged food and retail sectors, retailers in Russia caused some concern over their financial health as they navigate the stormy waters of the economic downturn with news of a multi-million dollar government support package. Could some of Russia's less robust retailers soon be picked off by a multinational?

How would your business fare in China?

Fri, 31 Oct 2008 15:32:00 GMT

So much media attention has focused on the pitfalls of operating in China in recent weeks with the country's food safety record taking a battering - again.

Nevertheless, as we all know, China offers so much potential that sometimes it pays to focus on the promise of investing in the country.

This week, China was the focus as just-food published its latest research report on the world's key emerging markets.

As the report highlights, the rapid expansion of China's food retail sector is underpinning the growth of the country's packaged food industry.

However, multinationals beware - China's domestic companies will not let you have it your own way.

And, what's more, Chinese consumers are said to be looking more and more to home-grown brands than the big global marks.

US publication Brandweek reports that, according to the latest research, Chinese consumers are "more loyal" to domestic brands than their international rivals.

Four of the "most trusted" brands in China are home-grown, including beverage brands Tsingtao and Master Kong. The likes of Olay and Sony fared well, according to a recent study by AlixPartners, but the research threw up some interesting questions about the clamour for foreign brands in China.

The US readies itself for the R word

Mon, 27 Oct 2008 11:47:00 GMT

In the UK, the R word is finally out in the open. On Friday (24 October), it emerged that the UK economy had shrunk for the first time since 1992 - confirming Bank of England chief Mervyn King's comments earlier in the week that it was likely the country was entering a recession.

UK output fell 0.5% during the three months from July to September and it is widely accepted that the country will see two consecutive quarters of falling GDP by the end of the year - meeting the technical definition of a recession.

Of course, such a prospect does not come as any great shock. Faced with a frozen credit market and soaring household bills, consumers have been tightening their belts, hitting spending on the High Street. UK food manufacturers and retailers have not been immune from the downturn and there is the fear that their problems will worsen as the economy moves into recession.

And, as UK Prime Minister Gordon Brown is fond of telling us, no country is immune from the economic turbulence. Nerves among the business community on both sides of the Atlantic, throughout Europe and in many global markets are likely to be running high.

Nevertheless, some are determined to remain optimistic. At the SIAL food industry exhibition in Paris last week, just-food heard a bullish tone from food makers of all colours. The likes of dairy giant Lactalis insisted continued investment behind its brands was key to growth, while frozen foods specialist Pinguin argued its business was well positioned to ride the economic stormy waters as consumers trade down.

One food group seen as ideally placed to withstand the downturn is Nestle. Last week, the Swiss food giant upped its forecast for annual sales and profits and, strikingly, signalled its confidence with some guidance on the revenue and margin growth it expects to see next year.

Elsewhere, however, the outlook is less rosy. Premier Foods, the UK's largest food group, was forced to deny reports that it was looking to sell off household names like Mr Kipling to reduce its debts. Premier has sought to reassure investors about the strength of the business but questions have grown over the company's ability to meet its banking covenants.

Firms in the US have already been at the centre of such speculation with fears over the future of poultry giant Pilgrim's Pride a prime example. Less critical but just as telling was the news last week from US food group Hormel Foods that it expects profits to be lower during its current fiscal year. It was Hormel's second profit warning in two months and the company said earnings would be hit by the twin problems of the financial crisis and continuing pressure on costs.

And all eyes will be firmly on the US this week when the country announces its GDP figures for the third quarter of 2008. It's looking likely that the R word will be rearing its head Stateside, too.

Britain's most paranoid discounter?

Thu, 23 Oct 2008 16:56:00 GMT

As the battle for cost-conscious UK consumers intensifies, Tesco has been quick to proclaim itself the country's "biggest discounter".

But it seems its bullishness belies an apparent anxiety about the march of the traditional discounters in the UK.

"Tesco is getting really twitchy about anything new that Aldi puts on its shelves," a German own-label manufacturer confided in just-food at the SIAL food exhibition in Paris. "They have only to spot something new in an Aldi store and, if it's in my sector, they're on the phone to me the same day."

It must be one of the few times when price point comes ahead of margin.

Peter Crosskey

Country in crisis: UK faces flavourless phallics

Tue, 21 Oct 2008 12:17:00 GMT

The scandal involving Chinese dairy products tainted with melamine took an unexpected turn yesterday (20 October) when the UK's Food Standards Agency issued a recall for a number of "adult" products, such as Chocolate Willy Spread.

If you had been planning a trip to sex shop Ann Summers for a raunchy purchase, the FSA has advised you to steer well clear of the afore mentioned willy spread, a similar nipple spread or "I love you" novelty pen sets - all of which were imported from aptly named Chinese manufacturer Le Bang.

For a lot of guys in the UK the situation just got really serious: contaminated milk is one thing, but take away their willy spread and that's just going too far.

While some of these products contained up to ten times the level of melamine allowed under EU regulations, the FSA said that their removal from shelves was a precautionary measure and that the risk was low - after all just how much of the stuff are you going to eat?

On a serious note, this latest recall highlights just how interconnected the global food sector is. Who would have predicted that a Chinese milk scare would end up in British sex shops?

In a statement on its website, the safety regulator admitted: "This is a first. We've never had to put out an alert before on willy spread, chocolate-flavoured or otherwise."

Well there go my plans for the weekend.

Katy Humphries, Deputy Editor

Industry buckles in for rough ride

Mon, 20 Oct 2008 13:31:00 GMT

Once again evidence of mounting financial gloom dominated last week's news, when we saw the likes of PepsiCo and Cadbury battening down the hatches as the global economy heads into choppy waters.

PepsiCo announced plans to cut 3,300 jobs from its global businesses after posting a 10% fall in quarterly net income.

Responding quickly to a set of disappointing results, principally the consequence of falling sales at its soft drinks business, PepsiCo is now eyeing efficiency gains in order to protect profits and shareholder returns.

PepsiCo has seen pressure on its margins from declining consumer spending and rising costs. Nevertheless, the US food and drink company believes its business remains strong, benefiting from product mix and geographical range. The company argued that this round of job cuts - part of a wider initiative dubbed 'Productivity for Growth' - will enable to it to emerge from the current economic blip in better shape.

Likewise, UK confectioner Cadbury announced a round of lay-offs that, it claimed, will strengthen operations.

"Our new streamlined organisation, together with additional cost-reduction initiatives, will increase the focus on implementing our strategic plans and underpin delivery of our margin targets," CEO Todd Stitzer said.

The company said that it will "de-layer" the regional management between Cadbury's seven business units and the UK head office as part of the company's goal to reduce its workforce by 15% by 2011.

While food industry majors are looking to trim the fat from operations in order to safeguard margins, the Icelandic food industry has witnessed the most devastating impact of the turmoil in the financial markets seen to date.

Speaking to Iceland's food manufacturers last week, just-food learnt that the collapse of Iceland's banks has left businesses denied access to foreign currency and overseas credit. For an industry reliant on imports, the results could be devastating.

In the coming week, just-food will be providing live coverage from SIAL, when the great and good of the sector convene at the biennial exhibition in Paris. Innovation is likely to be a hot topic at the event, as the industry looks to the future and formulates strategies to battle the current downturn.

just-food heads to Paris

Fri, 17 Oct 2008 18:30:00 GMT

The European food industry turn its gaze to Paris this weekend as the great and good of the sector convene at the biennial SIAL exhibition.

SIAL takes place in the intervening years between Anuga, Europe's other big food industry event, which is held over the border in Germany.

This year, from 19-23 October, around 140,000 visitors from 191 countries will flock to Paris for SIAL, showcasing products from dairy to deep-frozen food and from confectionery to cured meats.

SIAL offers multinational groups, including dairy giants Parmalat and Lactalis and UK food conglomerate Associated British foods, the chance to run shoulders with fledgling and up-and-coming firms from countries ranging from China to Egypt.

The international flavour of the event will be key for many exhibitors based in the mature markets of western Europe; a show like SIAL gives those firms the opportunity to open up potentially lucrative markets overseas.

just-food will make the short hop over the English Channel for the event and will be bringing the latest news and views from the show.

Be sure to check the website next week for the latest coverage.

Walkers rides the nostalgia wave

Thu, 16 Oct 2008 15:33:00 GMT

For any of you who may have spotted something large, pink and furry on a night out recently, then fear not. You may have just passed a Monster Munch puppet and you could be in for a GBP5,000 (US$8,588) windfall.

Monster Munch crisps have become the latest product to be relaunched in an attempt to ride a wave of 1980s nostalgia. And Walkers are certain to be making a packet out of it.

Following the successful revival of Cadbury's Wispa chocolate bar last year, Walkers relaunched its popular corn snack last month, closely followed by a 'search and rescue' for its monsters - all part of the relaunch, Walkers happily confirmed.

The crisp maker said that its three iconic monster puppets, stars of the 1970s and 1980s adverts, have gone missing and the company has launched a nationwide search to help find them, with a reward for their safe return.

Lurid you may think, but clever all the same.

It seems Walkers has followed Cadbury's lead in coming up with a savvy advertising campaign with which to promote the crisp.

The confectionery giant launched a clever advertising campaign for Wispa using Facebook and YouTube after Wispa fans, apparently acting independently, stormed a stage at Glastonbury during Iggy Pop's slot, waving a banner that read: 'Bring back the Wispa'.

Nostalgia certainly seems to be the way forward for companies wanting to connect with the public. Whatever next?! White leather sofas and New Kids on the Block?

I guess at least we can be thankful we don't have to chomp our way through 5,000 packets of flaming hot flavour crisps in order to claim a prize. Although, as a food journalist partial to a packet of Monster Munch or two myself, it wouldn't be too much of a hardship.

Crisis crunches food companies

Mon, 13 Oct 2008 14:57:00 GMT

In ordinary times, flicking through the Sunday papers on a balmy autumn afternoon in London would be one of life's little pleasures.

However, these are not ordinary times.

The news right now makes for grim reading. Last week, the Dow in New York suffered its worst week ever as panic over the global economy gripped the stock market. In the UK, the FTSE endured its worst week since the crash in 1987. And in Europe, the major stock markets dropped in value by at least a fifth. All this despite the unprecedented move from central banks around the world to cut interest rates in a bid to free up the world's frozen banking system and inject some confidence into the wider financial system.

Over the weekend, the G7 met in Washington for frantic talks on the crisis. European leaders then met in Paris on Sunday (12 October) to hammer out a rescue package for banks on the continent - seen as vital to stem any further convulsions on the financial markets.

According to Dominique Strauss-Khan, the head of the IMF, the global financial system is on "the brink of systemic meltdown".

A perilous time, then, in which to do business. The impact of the credit crunch is already being felt in the so-called "real" economy. In the wake of Sainsbury's results last week, just-food took an in-depth look at the impact the credit crunch is having on UK retailers. With cash-strapped UK consumers trading down, the country's grocers are focusing more on value, a strategy that has paid dividends for Sainsbury's, although possibly one that could have hurt the company's margins.

Elsewhere, a profit warning came from UK-based convenience food group Uniq, which blamed a "significant deterioration" in economic conditions for its financial problems. Fellow convenience food firm Bakkav�r relinquished its shares in Ireland's Greencore, pointing to the "turmoil" in the financial markets. And, perhaps in a sign that the global economic chaos is affecting the hitherto buoyant emerging markets, Russia's largest grocer, X5 Retail Group, said that, despite rising sales, it would scale back its plans for expansion due to the financial crisis.

The concern is, if some of the the food industry's largest firms are suffering amid the economic chaos, what hope for the smaller players? The collapse of the banking system, the freezing of the financial markets and the clogging up of credit could prove the death knell for scores of businesses across the sector.

Will rate cuts calm retailers' fears?

Thu, 09 Oct 2008 15:08:00 GMT

The simultaneous rate cuts announced yesterday (9 October) stunned economic commentators and, arguably, gave some reassurance to the markets - but they also gave retailers exactly what they wanted.

It is hoped that the 0.5% cuts announced in London, New York, Frankfurt and Beijing, designed to free up the world's frozen banking system, will lighten the mood among cautious consumers concerned that a recession is here or, at the very least, imminent.

Inflationary pressures, certainly here in the UK, had hitherto discouraged the Bank of England from cutting rates and food inflation had been a critical element in its reluctance.

Retailers, facing plummeting confidence on the High Street, have been keen to see rates come down. Fierce price competition has hit margins, as has consumers' desire to trade down. However, with concerns over food inflation persisting, the Bank remained reluctant to cut rates.

In recent days, the UK's largest retailers have debated whether food inflation has at last peaked. Tesco boss Terry Leahy told Reuters last week that inflation had "passed its peak". His comments followed the earlier insistence from Asda chief Andy Bond that "food price inflation has peaked and we are beginning to see the cost of goods stabilise".

Both comments would have been made with a desire in mind for the Bank to cut rates and therefore get consumers spending again. And, yesterday, the British Retail Consortium published figures that, it claimed, showed food inflation was slowing.

Nevertheless, the debate over food inflation continues to rumble on. Yesterday, Sainsbury's finance chief Darren Shapland was more circumspect in his prediction for inflation. Meanwhile, Arla Foods has upped the price it will pay farmers for milk, while fellow dairy group Robert Wiseman has said it will also increase prices.

Whatever the industry debates, the average consumer remains pessimistic about the economic outlook - and that pessimism is only likely to be heightened with the latest warning on the global economy from the IMF.

And, for as long consumers remain downbeat, so retailers will find the margin growth of the recent past hard to come by.

Know your staff, love your staff

Wed, 08 Oct 2008 17:23:00 GMT

It's not often that you hear the words of Mother Teresa at a food industry event.

Okay, so they were second hand but the phrase "know your staff, love your staff" is something that could come in useful, especially in this turbulent economic climate.

Last night (7 October) in London, executives from many industries - including food - gathered to hear the latest work from a programme called Business In The Community (BITC).

The event was held to mark the first anniversary of the BITC's "Business Action on Health Campaign", an initiative that aims to promote the health and well-being of employees across businesses of all shapes and sizes.

Now, investment behind schemes like this - and on many other corporate and social responsibility issues - is likely to be squeezed in the current economic climate but we were reminded - not least through Mother Teresa's words - of how important looking after your staff is.

Indeed, when money is tight, it pays to look after your workforce. The reduction in cost of managing sick days more effectively or the reduction in insurance costs should health and safety practices be carried out effectively is enough to make any under-pressure finance director sit up and take notice of the importance of such schemes.

There is a concern that, as more focus is given to the bottom line, less time will be spent on issues like workplace well-being. There is the danger that such issues will be seen as a bit woolly.

But the ethical case - and more pertinently - the business case remains for knowing and loving your staff.

Food pays the price for credit crisis

Mon, 06 Oct 2008 15:19:00 GMT

"Everyone is leveraged - companies are leveraged, governments are leveraged and individuals are leveraged."

These were the words of one US analyst to just-food last Thursday evening as we discussed the impact the global credit crisis is having on the food industry.

The words hammered home just how bleak the situation is right now. The US Congress may have finally approved the US$700bn bail-out plan designed to kick-start the country's - and by extension the world's - frozen financial markets but it would be foolish to assume that the problem is now solved.

It would be equally foolish to assume that the food industry is immune from the global economic turmoil. Even as recently as a few months ago, commentators were describing the food sector as "recession-proof". "Everyone has to eat," was the war-cry. And although that bullishness has become more qualified - the food industry has since been described as "recession-resistant" - it would be dangerous to think this crisis starts and ends in Wall St and derivatives.

In our news series on the global economic landscape, we looked at one industry reeling from the impact of the credit crunch - the meat sector. Meat processors have had a wretched 12-18 months as commodity costs have soared but, for some, the credit crisis could deal a fatal blow.

US poultry giant Pilgrim's Pride has only secured the liquidity to operate until 28 October and some analysts rate the likelihood of bankruptcy at 50:50.

Shares in Smithfield Foods, meanwhile, have been hit as rumours have swirled over its future. The hog and pork processor has insisted it has adequate liquidity but is it uncertain whether that will stop the speculation. As one analyst told us: "The meat-packing business is not a good business to be in right now; businesses aren't in great financial health."

Aside from the financial problems of the more highly-leveraged companies, the average debt-laden shopper has been changing its habits accordingly for months. Last week, we saw yet more evidence of that trend in the UK, with Tesco's robust half-year figures and another disappointing performance from Marks and Spencer.

In some quarters, M&S's second-quarter figures were met with something of a sigh of relief after July's profit warning but question marks remain over the business, particularly in food, which, according to some estimates, has seen margins hit hard in recent weeks.

It will be interesting to see how Sainsbury's - a grocer that sits somewhere in the middle of Tesco and M&S on the price spectrum - has fared in recent weeks when it publishes its latest update on Wednesday (8 October).

Fiends of the workplace

Fri, 03 Oct 2008 11:17:00 GMT

Writing for a food publication, the editorial team are occasionally sent pleasant surprises in the post, from new soups, to olive oil, ketchup and even a box of organic vegetables.

So I was more than delighted when, upon opening the post this morning (3 October), I stumbled across some Halloween chocolate biscuits sent to us by Cadbury.

Having just made myself a cuppa I thought it would be rude not to crack them open and have a sneaky few. The rest of the editorial team are away from just-food HQ today so unfortunately I couldn't offer them around and so had my pick of the ghoulish shapes.

Happily munching away, I continued with my letter opening until something really frightening stopped me in my chomping tracks....

"Is your workplace making you fat?"

I gulped down the ghoul and took a swig of tea.

According to BDG Workfutures, "Britain's workforce is facing a nutritional contradiction as waistlines continue to expand to dangerous proportions."

I take a slow glance down to my "expanding" waistline and push the ghouls aside.

Apparently, health has never been higher on the agenda and can have "major implications" for businesses in terms of levels of productivity, staff retention, absenteeism, insurance premiums, morale and image.

It's funny you should say that....

While I always manage to abstain from the chocolate and blueberry muffins that regularly show their faces when the editorial team are in, my lack of exercise at times can be shameful. To the point where I will drive to our local Morrisons store instead of taking the 10/15 minute walk my colleagues usually take.

So, in light of this morning's revelation, I've decided that today I will take that walk and rid myself of those ghouls that have been festering inside of me and pushing my waistline to dangerous proportions.

Healthy food here I come!

Michelle Russell, reporter