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

Major M&A deals fall into place

Tue, 07 Feb 2012 16:00:00 GMT

Two of the more notable pieces of M&A in the food sector in recent months look to be nearing completion.

Today (7 February), German yoghurt maker Muller said it had secured the backing of Robert Wiseman Dairies shareholders representing almost 94% of the business and declared its GBP279.5m offer "unconditional".

And, yesterday, Swedish confectioner Cloetta said the country's competition authorities had improved its plan to merge with local rival Leaf International.

Muller said that it would look to buy up the rest of Wiseman's shares and said the milk firm would now apply to de-list from the London Stock Exchange.

Over in Sweden, Cloetta shareholders will meet next Wednesday to vote on the merger with Leaf. However, Cloetta investors representing 64% of its share capital and 81% of the votes in the company have stated their support for the transaction. Its main shareholder, Malfors Promotor, which owns over 52% of the business, plans to invest SEK545m in the transaction. Approval from Sweden's competition authority means the deal has taken a significant step forward.

The transactions are two of the major deals agreed in the last two months and both have been covered on just-food's insight pages.

The planned merger between Cloetta and Leaf was lauded by analysts, who argue the enlarged company will benefit from access to more markets and a greater ability to deal with volatile commodity costs.

However, the jury is out over Muller's takeover of Wiseman. Analysts, however, are divided over the benefits of the deal to Müller, with some questioning how much clout the takeover will give the company when dealing with the UK's powerful retailers.

Polman speaks up for Unilever's food business

Thu, 02 Feb 2012 14:49:00 GMT

Unilever CEO Paul Polman was keen to emphasise the robustness of the firm's food business this morning (2 February) after the consumer goods giant reported its annual results for 2011.

Polman told analysts the Anglo-Dutch consumer goods giant was "gaining share overall", while "maintaining reasonable volume growth" despite having taken significant pricing. "We are doing this while defending our profitability and investing in our brands," he said.

Underlying volumes from Unilever's foods division fell 3.9% in the fourth quarter of the year, leading to a 1.2% decrease for the whole of 2011. Sales from the unit were up 4.9% but that was due to the impact of price increases. Volumes from Unilever's refreshment unit - which includes ice cream - fell 3% in the last three months of the year. It was home and personal care and emerging markets - where food only accounts for a minority of sales - that drove Unilever's performance in 2011.

Polman conceded that he would have preferred "a better mix within volume and pricing" from its food division in 2011 but added: "Let's not get carried away, over the last three years this business has grown 3.5%."

He chose to focus on Unilever's spreads business to highlight the company's performance in food and its contribution to group earnings.

"It is a business that generates a significant amount of cash and profit for the company, allowing us to finance expansion in other parts of the business," he told analysts. "Looking forward we are hopeful that 2012 will bring a more stable cost and price environment, allowing us to better adjust the effectiveness of the actions we are taking to run spreads differently. We are in a good position with our focus on taste and health. It sets us up well to win with spreads in the future."

Investec analyst Martin Deboo, however, was less upbeat about Unilever's food prospects. He told just-food he was "struggling to see how it could be a positive volume outlook on food in FY12".

Nonetheless, Polman reiterated his confidence in Unilever's performance, informing analysts that, despite a gloomy economic outlook in North America and Europe, where growth is low, the company is "taking the right actions for group, for the long-term".

Reflecting on the performance of Unilever as a whole, he added: "It is better to make the dust than eat the dust ... we are confident as a company that we are making the dust. I expect certainly another challenging year out there, but we believe we are well prepared on what we need to do to further enhance our competitiveness."

We'll be running a more detailed analysis of the performance of Unilever's food divisions in 2011 - and the prospects for the businesses this year - tomorrow. Keep your eyes peeled.

Crunch time for PepsiCo in "all-natural" crisp lawsuit

Mon, 06 Feb 2012 13:45:00 GMT

A New York man is the latest to file a lawsuit against soft drinks and snacks giant PepsiCo in the US.

Chris Shake is suing the firm over the "all-natural" claims on Frito Lay's Tostitos and SunChips crisps. The plaintiff says the snacks actually contain corn and oils made from genetically modified plants, according to Reuters.

Shake said he shelled out an additional $0.10 per ounce of crisps to buy the allegedly "all-natural" products, instead of a product such as Doritos, which makes no such claim, the publication noted.

This isn't the first time PepsiCo has been sued over its Frito-Lay products. A similar lawsuit was filed in California last month by Julie Gengo, alleging that Frito-Lay's snack products were "fraudulently labelled".

Both lawsuits are seeking to recover the amount of money allegedly paid by consumers in search of an "all natural" product, with the New York lawsuit estimating that the amount of total damages will exceed $5m.

However, according to the Center for Food Safety, there is no comprehensive, formal definition of the term "natural" when it is used on food labels, with the exception of some meat products regulated by the US Department of Agriculture.

This may not sit well with PepsiCo, who last year announced plans to make 50% of its snacks line from "all-natural" ingredients. To support the reformulation, Frito-Lay launched what it claimed was its largest marketing campaign in the history of the company.

On the lawsuit, a spokesperson for Frito-Lay told just-food: "Frito-Lay's first priority is making great snacks with high quality ingredients that people enjoy. We stand behind the quality and integrity of all of our products, and we are confident that our products and labeling comply with all regulatory requirements."

Economic chill deters visitors from ISM

Tue, 31 Jan 2012 09:20:00 GMT

After attending the giant Anuga trade show at Cologne's sprawling Messe exhibition centre, the ISM confectionery expo, held at the same venue since Sunday, was always going to feel smaller. However, seasoned exhibitors believe this year is one of the quietest ISM events in recent years.

Official numbers are not yet available but, talking to suppliers yesterday (30 January), it was a commonly held view that the number of visitors this year is below that seen at previous events.

"This is our 15th year now and this is the quietest show in all those years," Preet Grewal, co-founder of UK snack bar and cereal maker Eat Natural, said. "These are difficult times for a lot of companies and consumers."

Of course, fewer visitors means, in practice, that exhibitors have fewer appointments and are happier to spend more time with the media, talking at length about their business.

Eat Natural, for one, was showcasing new cereal products about to hit shelves at Tesco and Waitrose, while Grawla was also keen to talk about the continued potential for the company in international markets, which account for 20% of the firm's sales.

He also insisted a show like ISM had its benefits. "This is an important place to come because it's a focal point for all our distributors," he said.

An event like ISM can also boost the profile of a company in the minds of key decision-makers in its domestic market, according to Clive Miquel, the CEO of UK confectioner and snack maker Lees Foods.

"We have a long discussion every year about whether we are going to do it again but it's quite a good PR exercise because we see a lot of customers from the UK. It gives us a bit of visibility," Miquel said.

Lees sells products into markets like France but exports remain account for 5% of turnover, Miquel said. The company's portfolio of snowballs and teacakes "don't travel well", he explained. "They hate the heat, so unless we have a route to market it's difficult." Miquel insisted Lees, as a company, has "quite stretching targets over the next five years" and says if exports remain 5% of sales he would be "pleased with that". The company sells into markets like Malta, Canada and Australia.

Despite the widely-held view that visitor numbers were down, there were some suppliers who finished the day upbeat.

"That's the busiest day we've had at ISM," David Roberts, national account manager for UK biscuit maker Furniss told just-food.

Roberts acknowledged other suppliers that have attended the show more frequently might disagree with the level of visitors but he remained encouraged.

"This is our fifth year here. We're now more established and people recognise us. The quality of visitors to our stand has been better."

There were times yesterday when the halls grew busier and resembled the usual bustle of an international trade event. However, it was unquestionably quiet. Was it the freezing weather in Cologne? More likely it was the deep chill surrounding consumer markets in Europe.

Sweet start to the week

Mon, 30 Jan 2012 10:20:00 GMT

Waiting for a flight at six o'clock on a cold January morning at Gatwick is not the ideal way to start the working week but, when a confectionery trade show awaits, perhaps one should not complain too much.

Today, just-food joins over 1,400 suppliers and thousands of visitors at ISM, the confectionery industry exhibition that takes place each year in Cologne.

UK confectioners will take their place alongside competitors from Europe, the US and beyond to try to build their presence overseas.

The event is the first major trade fair since the UK government and food industry announced a series of measures to drive international sales; the "exports action plan" is sure to be a talking point among the country's confectioners and snack makers stationed in the halls of the Messe exhibition centre in Cologne.

The tussle for export markets will just be one subject of debate among those present. The pressure of dealing with volatile commodity costs has also been a key concern. The cost of sugar, for example, soured the mood of many a confectioner in 2011. In a statement ahead of ISM, the German confectionery industry association criticised the "intensively regulated and inflexible" EU quotas on sugar for driving up the price of sugar and looked forward to the end of the system in three years time. Brussels has recommended sugar quotas be scrapped by 2015.

Confectioners across Europe will also be chewing over the plans of Cloetta and Leaf International to merge. The deal, announced last year and set to go through in the coming months, will create a company that will generate annual sales of US$820m and could spark more consolidation in the sector.

And, of course, innovation will be another key theme at this year's show. Barry Callebaut, for one, is launching a range of chocolate and cocoa ingredients at ISM, while more consumer-facing companies will also be showcasing new products. German chocolate maker Halloren is exhibiting a raft of new lines, including chocolates sold under a new licence deal with Playboy. Halloren has lined up Playboy Bunnies to present the chocolates. Its stand is likely to be one of the more busy booths over the next three days.

Katie Price's economic musings spark ASA Snickers probe

Fri, 27 Jan 2012 15:15:00 GMT

Reality TV star Katie Price, her Tweets providing insight into complicated global economic issues and the Snickers chocolate bar, may land Mars in hot water with the UK advertising watchdog.

This weekend the celebrity baffled the Twittersphere with a series of posts such as "Chinese leaders now likely to loosen monetary policy to stimulate growth. Yay!!" and "OMG!! Eurozone debt problems can only be properly solved by true fiscal union!!! #comonguys". It was all revealed to be an admittedly pretty clever PR stunt after she posted a pic of herself with a Snickers bar and the tagline "You're not you when you're hungry".

Some Tweeters raised their eyebrows ("So the implication of that Snickers campaign is that eating them keeps Katie Price vacuous and inane?," said one) but now the Advertising Standards Agency (ASA) has stepped in after the grand total of two people took time from their undoubtedly busy schedules to formally complain.

The ASA is investigating whether it should have been stated in the 'teaser' tweets that they were marketing communications and whether the hashtag "#spon" in the final "reveal" tweet made it clear enough that that tweet was a marketing communication. I'm no expert, but the fact this was OBVIOUSLY A MARKETING CAMPAIGN is self-evident, hashtag or no.

A Mars spokesperson said: "We will look to co-operate fully with the ASA on this investigation."

Whether Mars face censure from the ASA or not, the fact is that the campaign has been given extensive coverage in the media and Mars PRs are probably watching developments with champagne in hand.

Wal-Mart talks up Africa's potential at Davos

Thu, 26 Jan 2012 18:22:00 GMT

With the Swiss mountains behind him, Doug McMillon, chief executive of Wal-Mart's international operations, discussed the retail giant's new business in Africa in an interview with CNN.

McMillon said Africa, which Wal-Mart entered last year when it acquired a majority stake in South African retailer Massmart, was a "very attractive" market in the mid-to long term.

Wal-Mart's 51% stake in Massmart gives it access to a growing business in South Africa but also one that operates in 12 countries outside its domestic market.

"South Africa as a country presents a great opportunity. That's where 92-93% of the total revenue is. Beyond that, into the region, we're thinking about it a city at a time because that's where the population centres there. There's enough business there to support a few stores so we can learn the market."

Wal-Mart's entry into Africa and investment in Massmart was not an easy ride. It had wanted to acquire 100% of Massmart but scaled back its bid after talks with investors in the South African firm.

The US retail giant's eventual investment proved controversial with unions and some South African politicians concerned about the impact on local business. Wal-Mart and Massmart had to set up a development fund to help suppliers.

McMillon told CNN Wal-Mart had worked with South African suppliers, which would help both itself and local businesses. "Around the world, we buy the vast majority of our merchandise locally. It helps ensure we get shorter lead times and helps ensure we have products that are relevant for customers. It helps create jobs and if we have customers who have jobs, the stores can grow."

The Wal-Mart executive was coy about where the world's largest retailer was looking next. "We're looking for large markets with a high growth rate. We wouldn't comment on future entry or acquisitions because the prices would go up so we have to be careful with what we say about it."

Workers take Unilever pensions fight to Davos

Wed, 25 Jan 2012 15:39:00 GMT

UK workers clashing with Unilever over changes to its pension scheme are stepping up their protests.

Unilever staff from its Port Sunlight facility in Cheshire are travelling to the World Economic Forum (WEF) in Davos to confront the company's CEO Paul Polman, one of the co-chairs of this year's event.

The Unite union says the workers will be "puncturing corporate power's party bubble" at the WEF, a forum where influential people in politics, business and academia meet to discuss global issues.

Unite says Unilever has refused to negotiate over changes that it claims will hit some workers' pockets to the tune of 20-40% come retirement. Thousands of workers are currently engaged in a rolling programme of strikes at Unilever sites throughout the UK.

Jennie Formby, Unite's national officer, said: "It is frankly ridiculous that we have to go to these lengths to get a hearing for the workers, but we are determined that they will be heard.

"Mr Polman may feel that he is safe from protest among the global elite in a swanky ski resort where police outnumber the residents, but our members are going to tell him different. They will fight through snow, the biting cold and the heavy-handed policing because they intend to tell as many people as possible that a man who earns 285 times more than his workers is planning to rob them of thousands in their retirement.

"All these workers want is a fair hearing and their pensions promises to be honoured by one of the wealthiest companies on the planet.

"The Unilever workers will be carrying a message to the rich as they party at Davos on behalf of workers everywhere: your days of greed are up."

Unilever was not immediately available for comment at time of writing. However, in the past they have said the changes are a "tough and necessary choice" to protect the long-term sustainability and competitiveness of the business.

"The reality is that the union representatives had multiple opportunities to help shape the greatly improved final outcome of consultation we reached in October, but unfortunately they decided to walk away from talks," the company said.

Katie Price, Twitter and Chinese fiscal policy

Tue, 24 Jan 2012 15:32:00 GMT

Reality TV star/entrepreneur/celebrity culture totem Katie Price shocked her Twitter followers with a series of tweets on global fiscal policy on Sunday (22 January).

"Chinese leaders now likely to loosen monetary policy to stimulate growth. Yay!!" said one. "OMG!! Eurozone debt problems can only be properly solved by true fiscal union!!! #comonguys", followed by "Large scale quantitative easing in 2012 could distort liquidity of govt. bond market. #justsayin". Cue head scratching from her 1.5m followers, bar those who are economic decision makers in Brussels and Beijing (you never know).

Price, formally known as Jordan, has previously spoken of her desire to move away from her glamour model lads mag roots and be perceived as a legitimate business woman. Is this economic punditry her latest bid to be taken seriously?

You've probably guessed the answer is no. It was all a PR stunt by Snickers, the chocolate bar from Mars. Price's insights into the pressing economic issues of the day were followed by a picture of the former Mrs Peter Andre holding a Snickers and the line "You're not you when you're hungry".

Seems pretty clever PR and a bit of fun, right? It was, however, not without its detractors. One tweeter posted: "So the implication of that Snickers campaign is that eating them keeps Katie Price vacuous and inane? Fine work." Food for thought...

Buffett ups stake in Tesco

Thu, 19 Jan 2012 18:15:00 GMT

A week after Tesco shocked the market and sent its shares tumbling with a profit warning, it has emerged that the US billionaire investor Warren Buffett has quietly increased his stake in the retailer.

In a statement to the London Stock Exchange today (19 January), Tesco said Buffett's investment vehicle Berkshire Hathaway had acquired more of the UK retailer's shares. Berkshire's stake is now 5.08%, up from 3.21%, Tesco said.

The date of the share purchase was 13 January, the day after Tesco warned its profits would not grow as fast as expected in its current financial year and in the next 12 months amid continued problems with its UK business. The retailer's shares fell 16%.

However, it is only two months since Buffett, whose investments are watched closely by the financial community, indicated his support for Tesco. In November, the investor told CNBC he would be interested in increasing his interest in Tesco.

"If the price came down some on Tesco, I'd buy some more of that," Buffett said.

Buffett, dubbed the Sage of Omaha, is obviously a man of his word, although his words have not always chimed with Tesco's strategy.

Earlier in 2011, Buffett described Tesco's US venture, Fresh & Easy, which has to make a profit, as "foolhardy".

Unilever compared to Willie Walsh as strikes begin

Wed, 18 Jan 2012 16:02:00 GMT

Workers at six Unilever sites today (18 January) held industrial action around the UK in the latest protests against the company's reform to its pension scheme - and the Anglo-Dutch conglomerate was compared to perhaps the bete noire of the country's union movement in recent years.

Staff at Unilever plants in Essex, Cheshire, Norwich, as well as at R&D and IT sites on the Wirral, north Wales and Bedfordshire held the latest strikes over the Marmite and Pot Noodle maker's plans to close its final salary pension scheme. The strikes are part of a rolling programme of 11 days of industrial action at those facilities and others around the UK.

Unite national officer Jennie Formby visited the picket lines and told just-food that the turnout was "very high". Workers, Formby said, were frustrated at Unilever's "refusal" to hold discussions on the plans and she said the company's stance suggested it was "trying to out-Walsh Willie Walsh", the former chief executive of British Airways whose moves to reform the airline led to fierce disputes with unions.

Unilever announced plans to make changes to its pension scheme last April. A period of consultation with workers led, Unilever claims, to some modifications to its plans but did not win over union officials, who, the company says, walked out of talks in August.

Since then, the two sides have been locked in what appears to be an intractable dispute. No more talks have been held, union officials insist they are open to fresh discussions but claim Unilever has turned down an offer to meet through conciliation service ACAS. Unite claims Unilever's plans would see some employees lose up to 40% of their expected pension and believe Unilever has no justification for ending the scheme and replacing it with an "inferior" alternative.

Unilever has said the change is "a tough and necessary choice which reflects the realities of rising life expectancy and increased market volatility" and has vowed to press ahead with the new scheme, which is due to be introduced at the start of July.

However, many of its employees are unconvinced by that argument. They claim Unilever's pension scheme is well funded, point to the consumer goods giant's rising profits in 2010 and say it admitted there was no financial necessity for the changes.

Formby reiterated that Unite would be open to more talks. "The ball is in their court," she said. "You cannot find resolution without conversation and dialogue." However, reflecting on Unilever's position she added: "It's hard to see how anything can change, rather than get worse."

In a statement, Unilever said it was "deeply concerned" at what it called "disproportionate action" from unions. "The reality is that the union representatives had multiple opportunities to help shape the greatly improved final outcome of consultation we reached in October, but unfortunately they decided to walk away from talks," the company said.

Unilever repeated that the changes to the pension scheme were a "tough and necessary choice" and added: "We believe the provision of final salary pensions is a broken model which is no longer appropriate for Unilever. It is our responsibility to protect the long-term sustainability and competitiveness of our business, and to do so is in the best interests of our people."

The statement also included a line from Amanda Sourry, chairman of Unilever's UK operations, who said: "It is currently not clear how the dispute with the trade unions will be resolved - but we are continuing to urge our employees who have participated in industrial action to give further objective consideration to the very competitive new arrangements which are unavailable at most other companies in the UK."

Unilever, then, looks set to press ahead with its plans. A prolonged period of strikes could, in theory, hit production and the stocks of Unilever products in stores and force the company to the table (Formby says today's strikes have hit output; Unilever says it has put plans in place to ensure its products are available).

There could be some damage to Unilever's reputation among consumers but the average shopper would likely only notice if the availability of the company's products was affected.

Perhaps one issue for Unilever to watch is whether workers in other countries grow restless. Formby claims there is support among Unilever staff in Europe for the stance of UK employees and says Unite is planning demonstrations on the Continent.

As of now, however, there is only a stand-off, with more strikes planned between now and the end of the month and Unilever set to implement its changes.

Irish exporters are smiling

Wed, 18 Jan 2012 15:08:00 GMT

The spike in commodity prices helped push Irish food and drink exports to a record level in 2011. Ireland's exporters may not enjoy quite the same benefit in 2012 but confidence about Irish prospects overseas is on the rise.

Data issued by Bord Bia, the agency that promotes Irish food and drink exports overseas, has shown the the value of the industry's shipments grew to an "all-time high" of EUR8.85bn (US$11.36bn) in 2011.

Exports were boosted by global prices for major commodities in 2011, Bord Bia said, although it pointed out that volume growth accounted for 25% of the growth in Ireland's food and drink exports.

Nonetheless, Bord Bia did indicate that exporters may not get the same helping hand from commodity prices this year. It said the prospects for Ireland's food and drink exports in 2012 were "positive" but said lower volume in some sectors and "some further softening in global commodity prices" are likely to lead to "more limited growth potential" this year.

However, the agency said its annual survey of Ireland's food and drink exporters suggested "increased optimism" about this year, compared to how they felt 12 months ago about 2011.

"In total, 85% of exporters viewed the prospects for their business in 2012 as good or very good. This compares to 70% in 2010," Bord Bia said. "Almost two thirds of respondents rated their business prospects as much improved/improved compared to a year earlier. In terms of sales prospects, 69% of respondents, compared to 64% in 2010, stated that they had increased their sales forecasts for the year ahead."

Just before Christmas, the UK's food and soft drink sectors set a goal of growing by 20% by 2020 and said exports would play a key role in achieving that target.

However, industry association The Food and Drink Federation did indicate that there was evidence that UK exporters were losing sales to rival countries and insisted more need to be done to regain ground.

Later this month, a UK food and drink export forum, co-chaired by industry and government, will launch an "export action plan". Manufacturers on both sides of the Irish Sea will be keen to hear what the UK government and industry plans to do to grab share of export markets, vital to revitalising growth in both economies.

Uncertainty remains over Indian FDI

Wed, 11 Jan 2012 17:43:00 GMT

The future of troubled proposals for supermarket companies to enter India is still uncertain, despite today's (11 January) government announcement that it will allow foreign brands to own single-brand stores.

The proposals to allow foreign direct investment in the country, announced in November, was a bid by Prime Minister Manmohan Singh's Congress party to modernise the Indian retail market, attract investment and create jobs. Under the plans, foreign companies would be able to own 51% of multi-brand retail stores and 100% of single brand product retail (for example, Ikea). Currently they must partner with Indian retailers.

Few could have foreseen the outrage it provoked among Indian opposition MPs, and even key government allies. They began a series of protests that caused parliamentary proceedings to grind to a halt. They claimed giving retailers like Wal-Mart Stores, Tesco and Carrefour greater access to Indian's retail market would crush local businesses underfoot. One MP even threatened to personally torch any Wal-Mart that dared to open.

The government suffered what many saw as a humiliating climbdown and suspended the plan to begin consultation with various bodies after the parliament was crippled for two weeks.

The Department of Industrial Policy and Promotion today announced the single brand reforms would go ahead, but remained noticeable silent on the divisive issue of supermarkets.

The likes of Wal-Mart, Tesco and Carrefour may take heart at today's announcement, but time will tell if the government has the backbone and political capital to force through the controversial FDI reform.

Workers take pension protests to Unilever's front door

Tue, 10 Jan 2012 21:31:00 GMT

On the north bank of the Thames, Unilever's London HQ has been the home of the consumer goods giant for almost 90 years. Today, on a mild but grey Tuesday afternoon in January, it formed the backdrop for the latest instalment of what is likely to be one of the most dispiriting episodes in the company's history.

Scores of Unilever workers travelled from sites across the UK to protest at the Anglo-Dutch conglomerate's UK head office about the company's plans to change its pension scheme. For a company founded on philathropy that "set up projects to improve the lot of their workers" (the quote is taken directly from Unilever's corporate website), it is disheartening to see the business at odds with many of its staff.

However, employees protesting outside Unilever House today (10 January) told just-food of their "anger and betrayal" at the Marmite and Pot Noodle maker's plans to close its final salary pension scheme.

Workers and union officials argue the plans would see some employees lose up to 40% of their expected pension and believe Unilever has no justification for ending the scheme and replacing it with an "inferior" alternative.

Unilever says the change is "a tough and necessary choice which reflects the realities of rising life expectancy and increased market volatility". However, many of its employees are unconvinced by that argument, claim Unilever's pension scheme is well funded and are preparing for a programme of rolling strikes, which are scheduled to start on 17 January until 29 January. Unions claim that over 2,500 Unilever workers took part in a 24-hour walkout last month.

"This is a very wealthy company, this is a well-funded pension scheme and the company themselves told us there is no financial imperative, yet they won't talk to us about ways of keeping the scheme open even though we put forward suggestions that are of limited risk and cut costs as well. The company just didn't want to know," Unite national officer Jennie Formby said.

In theory, Unilever's arguments are valid. Increasing life expectancy means some pension schemes are unsustainable, Market volatility could mean Unilever faces paying more into its scheme to meet any deficit.

However, with CEO Paul Polman earning a base salary of EUR2.9m (US$3.7m) according to Unilever's 2010 annual report (indeed, Unite cites data from pension advisers PIRC that says Polman received a total remuneration of EUR54.2m in Unilever's last financial year), it is hard not to feel some sympathy for factory workers faced with lower-than-expected pension settlements.

And there is no denying the frustration that some Unilever workers feel at the planned changes. Bill Hodgson, a worker in the research lab at Unilever's site in Port Sunlight in north-west England, said there was "shock, anger and a feeling of betrayal" when the company announced its plans last year.

"It's certainly the first national strike that Unilever has had in the UK. We're not traditionally a militant workforce," Hodgson said. "When you consider how Unilever is doing - double-digit growth, billions in profits - and the company saying there is no fiscal necessity to do this, that it's about competitiveness, that's when most people decided they weren't going to take this."

Hodgson, who has worked for Unilever for 20 years, said there has been a "very noticeable change" in the ethos of the company, which he described as a "very paternal" business. That change had started before Polman became chief executive but had "accelerated" since the Dutchman took the job in 2009.

Where does this leave Unilever? Unions say the planned stoppages will hit production but the company says it has made contingency plans. Formby insists union officials are ready to sit down and talk to Unilever but negotiations broke down in September and there is no sign that they will resume any time soon. (Hodgson, incidentally, said no Unilever representative came out to talk to the protesters today).

Unilever could not be reached for comment this afternoon but its statements so far indicate it intends to proceed with its plans. "We believe the provision of final salary pensions is a broken model which is no longer appropriate for Unilever. It is our responsibility to protect the long-term sustainability and competitiveness of our business, and to do so is in the best interests of our people," Unilever has said.

Of course, if there is a negative impact on production, it could force Unilever to the table but it is unclear how many strikes protesters will have to hold to hit supplies.

The strikes and protests could dent Unilever's reputation among consumers but, again, the strikes would need to have an impact on production and on supplies reaching stores for the average shopper to take notice, despite the fact that pensions (witness the public sector protests) and executive pay have been headline issues in recent months.

For now, it seems there is stalemate, with Unilever seemingly intent on implementing the changes and workers set to hold more industrial action.

TV chef Worral Thompson cooks up humble pie

Mon, 09 Jan 2012 15:33:00 GMT

TV chef Antony Worral Thompson has issued an apology over a series of shoplifting offences at a Tesco supermarket.

The Ready Steady Cook chef was arrested on Friday (6 January) after stealing GBP70.83 (US$109) worth of foodstuffs from the store in Henley-on-Thames, Oxfordshire, over five incidents from 22 December onwards.

Thames Valley Police issued Worral Thompson, who had to close four of his restaurants in 2009 after a drop in revenue, with a formal caution.

The chef has a range of gluten-free stocks and sauces that his website states is sold in supermarkets like Asda, Sainsbury's and Waitrose.

He said: "I am so sorry for all my recent stupid and irresponsible actions; I am of course devastated for my family and friends, whom I've let down and will seek the treatment that is clearly needed.

"I am not the first, and I certainly won't be the last person to do something without rhyme or reason - what went through my head, only time will tell.

"Of course, I must also apologise sincerely to Tesco, with whom I'm had a long and genuine working relationship, and to all the staff at the Henley branch, many of whom I've got to know over the years.

"Once again, I am so sorry and hopefully in the future I can make amends."

A spokesperson from Tesco confirmed he has not been banned from the store.

The episode has proved a talking point throughout the industry. Speaking to reporters after Morrisons reported its Christmas sales results today, the retailer's chief executive Dalton Philips was wryly asked by one hack whether he would welcome Worral Thompson into his stores.

"We welcome all paying customers," Philips said. "At the moment, we're [offering] free shopping so that might apply to certain customers, too."

"Mounting pressure" for Hershey to expand into emerging markets

Fri, 06 Jan 2012 19:45:00 GMT

It has been one of the most regular assertions in the confectionery sector in recent years - and one US analyst has repeated it again today (6 January).

Hershey, so the argument goes, needs to expand further into emerging markets - and quick.

There is no doubt the US confectioner has lagged its peers in investing in international markets. Compared to the likes of Kraft Foods, Mars Inc and Nestle, Hershey is far too dependent on its domestic market, which, despite seeing sales growth tick along nicely, is far more mature than the likes of Brazil, India and China.

Hershey is building its presence in markets like Mexico, India, China and Brazil and the company is looking to meet a target of generating US$1bn in sales outside the US by 2015.

However, Sanford Bernstein analyst Alexia Howard believes that, after the recent consolidation in the confectionery sector (Mars' acquisition of Wrigley, Kraft's mvoe to buy Cadbury and Nestle's purchase of a majority stake in Chinese candy maker Hsu Fu Chi), there is "mounting pressure" on Hershey generate more growth outside the US.

Of course, last month, Hershey acquired Canadian confectioner Brookside Foods but the focus of analysts is on the company's position in emerging markets.

Hershey, Howard says, has been "striving" to build its international business organically but she argues it needs to acquire local operators or form joint ventures to gain significant market share overseas.

"While Hershey has been striving to grow organically in international markets, these markets are dominated by Kraft, Nestlé, and Mars, and it is more likely that Hershey will need a strong international partner or pick up a few local players to increase penetration," Howard wrote in a note to clients.

The world's largest confectioners believe emerging markets will drive top-line growth and have made moves accordingly. Howard is correct that Hershey needs to do the same but argues large acquisitions could be hard to come by - and indicates that bolt-on deals joint ventures could be another option for the Reese's maker.

Hershey has said it could look to acquisitions to build its international business but Howard is quick to note that the company's management have not commented on specific targets.

She does, however, put forward partners that Hershey could team up with in particular markets - Argentina's Arcor in Brazil and Grupo Bimbo in Mexico, where the local food giant is the fifth-largest confectioner.

Howard says one possible venture, with Nestle, could be less of a possibility after the Swiss group's deal with Hsu Fu Chi.

Hershey reports its annual results to the market - and attends annual US analyst conference CAGNY - next month. Could it divulge more on its international ambitions and assuage possible concerns among investors?

Yoghurt maker Rachel's lifts lid on impact of retail rift

Thu, 05 Jan 2012 15:41:00 GMT

Rachel's Dairy, the UK organic yoghurt maker, has revealed just how much a delisting by a major UK retailer can cost a business.

The company's results for the year to December 2010 show it had to write off GBP978,000 of goodwill after an unnamed customer decided to stop selling certain milk products.

The results, filed at Companies House just before Christmas, show how the company performed in a year in which it had two owners. Rachel's was sold to French dairy giant Lactalis by US dairy group Dean Foods in August 2010.

During the year, Rachel's sales grew 20.7% to GBP25.9m. The company's gross profit was up 22.8% at just under GBP11m.

However, Rachel's distribution costs and administrative expenses, including the goodwill charge, meant it made an operating loss during the year of GBP395,000 - compared to a GBP1.1m operating profit in 2009. In all, Rachel's made a net loss of GBP316,000 in 2010. A year earlier, it made a net profit of GBP764,000.

In its report, Rachel's said it had grown its sales and market share despite "difficult economic conditions" and said its brand would benefit in 2011 from its first TV advertising campaign.

Reflecting on its takeover by Lactalis, Rachel's directors also stated: "The acquisition ... has provided a strong platform for the future growth of the business as consumers become increasingly aware of the Rachel's brand and product range."

Lactalis is family owned and therefore is not obliged to report financial results. It will be some time before we get to see if Rachel's has thrived in the first full year of French ownership.

Surveys highlight business gloom in UK

Wed, 04 Jan 2012 15:28:00 GMT

A couple of surveys published in the UK over the last 24 hours indicate the gloomy mood permeating parts of the country's economy.

Data announced yesterday (3 January) showed the UK manufacturing sector had its worst quarter in the final three months of 2011 since 2009.

Elsewhere, a survey said UK chief financial officers expected the country's economy to fall back into recession and remain "weak" for a "prolonged period".

The manufacturing data came from the Markit/CIPS purchasing managers index. The index increased in December to 49.6 from 47.7 the month before.

Output increased due to higher foreign demand (particularly, the index said, from China, Germany and Eastern Europe) and an effort to clear backlogs of work.

However, levels of new work fell for the six month in a row and despite the December score being higher than October and November, any score below 50 indicates a contraction in output.

What's more, the performance throughout the fourth quarter was the worst since the second quarter of 2009.

"Manufacturing will therefore likely be a drag on the economy in the closing months of the year," said Rob Dobson, senior economist at Markit and author of the index. "Looking ahead, manufacturers are currently relying heavily on backlogs of work to prop up production. This is only a temporary fix, and the trend in overall order books needs to improve if the sector is to avoid a protracted period of lacklustre performance."

The CFO survey from Deloitte said 87% of finance chiefs believe this is a "bad time" to put "additional risk" onto their companies' balance sheets. Deloitte also noted that 70% of CFOs expect corporate margins to decline in 2012.

There have, of course, been indications that the food sector has bucked the general manufacturing trend in the UK.

According to data from the Food and Drink Federation, 96% of respondents to a business confidence survey in the industry believed domestic sales would increase or remain the same in the fourth quarter of the year.

Data for the last three months is not yet available but the FDF says exports rose 12% in the first three quarters of 2011.

"There are fragile signs of growth centred on some very specific parts of the sector where demand remains strong, particularly consumer and capital goods, with some businesses even reporting record growth that defies the gloom," David Noble, CEO at the Chartered Institute of Purchasing & Supply said when the Markit index was announced.

That said, there are numerous indications that consumer spending will remain under pressure this year. David Cameron has noted the fears people have over jobs and paying the bills and insisted he knows how difficult it will be for the country this year. Those fears will continue to have an impact on spending, even on food - as we saw last year when volume sales of food fell in the UK.

And just look at the moves the UK's largest food retailers have already made to try to insist they can provide value to the nation's cash-strapped shoppers.

In the coming weeks, they will report their Christmas trading, starting with Morrisons next week. Their comments on consumer confidence will be keenly watched.

Questions over food safety in China return

Tue, 03 Jan 2012 15:40:00 GMT

A new year but the same old questions over the safety of food made in parts of China's food sector have reared their head once again.

Last week (27 December), major Chinese dairy processor Mengniu Dairy admitted that state inspectors had found contaminated milk products at one of its plants in central China.

Mengniu is listed in Hong Kong and there was an immediate financial impact on the business, with its shares falling to their lowest level in two years.

However, the impact could continue in the days and weeks ahead, with local consumer confidence in China's food sector again rocked.

Internet users have called for a boycott of Mengniu products, Bloomberg reported last week, while hackers gained access to the company's website, posting the message: "Mengniu once made the Chinese people strong and proud, but now it's doing harm to its own people."

Mengniu insisted none of the affected products found their way to market but the contamination brought to mind previous scandals. In 2008, milk products containing the industrial chemical killed six infants and sickened thousands of others. Mengniu was one of over 20 dairy companies to have seen their products tested positive for melamine.

Meanwhile, in 2004, 13 babies died in Fuyang city due to malnutrition after taking substandard milk powder.

Despite Beijing's moves to tighten up controls, last year the China Daily newspaper claimed the country's milk regulations were the weakest in the world.

Of course, Beijing could point to the fact that the contamination at the Mengniu firm was uncovered by a state inspection. However, China's dairy sector remains in need to investment to improve safety controls and product quality, which could give an advantage to the larger, multinational players in the country.

Fonterra's former local partner Sanlu was the Chinese dairy processor at the centre of the melamine scandal and, four years on, the New Zealand dairy giant is busy building an independent presence in a market that remains one of huge potential for the dairy industry.

That potential, however, will only be reaped by those who invest heavily in food safety with headline after headline fuelling the fears of local consumers concerned about what is in the dairy products they consume.

just-food is closed for Christmas

Fri, 23 Dec 2011 15:18:00 GMT

just-food is closed for Christmas and the New Year from tomorrow. We return to our desks probably a little heavier on Tuesday, 3 January.

Have a very merry Christmas and a Happy New Year.