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

UK food industry in spotlight over migrant workers

Tue, 15 May 2012 15:05:00 GMT

UK food manufacturers were today (15 May) in the spotlight over claims of "exploitation and poor working conditions" facing migrant workers.

A report from campaigners at the Joseph Rowntree Foundation this morning (15 May) made a series of allegations of forced labour and exploitation after conducting interviews with migrant workers in the food industry across England and Scotland.

The report claimed workers were "threatened and bullied" and "racist or sexist language was sometimes used in the workplace, underpinning a climate of fear".

In addition, the report said some employers used "fear of dismissal" to ensure that workers remained "compliant and deferential".

The report added the "intensity of work in the food industry, driven by economic pressures throughout the supply chain", had contributed to these practices.

"In food production, conditions are shaped by the competitive pressures that large suppliers and their customers (retailers) place on employers. In minority ethnic catering, conditions are shaped by intense competition among outlets and cultural business practices. These conditions explain why low-paid, insecure, sometimes exploitative employment exists," the report noted.

Reacting to the report, the UK's Food and Drink Federation, the industry association said it takes the treatment of its workers "very seriously".

"The report seems to relate mainly to the fresh produce part of the food supply chain and the hospitality sector rather than food manufacturing but we recognise our responsibility to support fair treatment throughout the supply chain and acknowledge problems where they exist," FDF director of competitiveness Angela Coleshill said.

Coleshill was recently appointed to the board of the Gangmaster's Licensing Authority, which is responsible for safeguarding the rights of workers within the industry.

"As a trade association representing around 400 companies, we work closely with our members to ensure that they are made aware of the latest legislation aimed at ensuring fair treatment of employees," she said.

Click here to view the full report.

M&S growth target looks shaky

Mon, 14 May 2012 12:06:00 GMT

Marks and Spencer is expected to cut its growth target when it reports its preliminary results next week.

Eighteen months ago, chief executive Marc Bolland set the UK retailer the ambitious target of increasing its sales from GBP9.7bn (US$15.58bn) in 2011 to GBP11.5-12.5bn by 2014. Sales expansion was to be generated through growth at its UK and international stores as well as online.

A weak fourth-quarter sales update last month could have put these targets into question.

In the fourth-quarter, M&S booked a significantly improved performance from its food division, which saw a 3.1% increase in revenue. And this performance looks set to continue as the firm focuses on innovation to attract more shoppers. The company has looked to shrug off its pricey image through various promotions, notably 'dine-in', to boost its food sales. And, on Friday, last week M&S launched a 'value' food range, as it attempts to take a bigger share of the weekly shop.

However, the lion's share of M&S sales come from its clothing offering, where availability issues in women's wear and poor consumer sentiment dented last quarter's numbers.

Over the weekend, reports have claimed that Bolland could be forced to climb down from his three-year sales targets, which would see revenue rise by around GBP3bn. On Tuesday week (22 May), Bolland is expected to confirm that full-year sales have risen by only GBP200m to about GBP10bn, the Daily Mail reported.

Somewhat predictably, Marks and Sparks' corporate press office declined to comment on the speculation, insisting any update would come out with its interim results.

However, one industry watcher told just-food that although in the longer-term M&S's clothing sales are expected to benefit from demographic trends such as the ageing population, the group's shorter-term targets now seem "unlikely" to be met.

Although many of these issues were flagged when the company released its fourth-quarter numbers, the market has reacted negatively to the reports and shares in the retailer dropped 11 pence this morning, to 349 pence at 11.51am.

Spar International confirms end to Landmark India venture

Fri, 11 May 2012 17:33:00 GMT

Global symbol retailer Spar International has confirmed its franchise venture in India with Dubai-based Landmark Group will finish at the end of the year.

Spar's announcement came three months after Landmark told just-food the venture would be over this year.

At the time of our report in February, Spar was not prepared to comment but there were already indications that the agreement would soon be over when, a month earlier, the retailer's MD, Dr Gordon Campbell, told just-food it was in talks with other retailers to open more outlets in India.

In February, reports in India suggested Landmark was unhappy at Spar's decision to talk to other retailers but the company would not be drawn on the issue when it spoke to us. Instead, Landmark said its deal with Spar had been "very fruitful and beneficial" and yesterday Spar echoed its soon-to-be former partner's warm language.

Spar spoke of a "very successful business relationship" and said the 13 hypermarkets opened by the venture were trading "very well".

Nevertheless, both sides are in talks with other retailers over possible new ventures, so, for whatever reason, either Spar or Landmark must have felt their partnership had run its course.

India remains an attractive market for multinational retailers and Campbell told just-food in January there are "great growth opportunities" in the country. We should expect another announcement from Spar in the coming months.

As for Landmark? There was speculation earlier this year it was in talks with French retailer Auchan over a possible venture in India. Both sides refused to comment at the time but Landmark has said it has "aggressive growth plans" for India.

Sainsbury's King looks for positives in falling food volumes

Wed, 09 May 2012 19:45:00 GMT

Sainsbury's, the UK's third-largest retailer, today (9 May) issued a sales forecast that suggests food volumes will continue to fall in the months ahead - but, speaking to just-food, typically ebullient chief executive Justin King still looked for the positives.

The grocer today reported annual profits that beat City forecasts as sales increased, helping the company, it claimed, "outperform" the market and reach its highest market share for a decade.

However, rising prices boosted sales (King said Sainsbury's volumes fell by around 2%) and the retailer's comments on the outlook for volumes mean more unhappy reading for food manufacturers.

Last year, UK consumers putting less food in their shopping baskets, meaning food volumes fell for the first time in a generation and the industry would have been hoping for a recovery this year.

However, data issued by the British Retail Consortium this week suggested volumes remained under pressure in the early months of 2012 and Sainsbury's forecasts indicated that trend could continue.

Sainsbury's expects like-for-like sales in its 2012/13 financial year to be "similar" to the previous 12 months and it underlined that it believes food volumes will be negative.

Speaking to just-food, King said Sainsbury's forecast on volumes reinforced comments it had already made. He said the retailer had previously noted there would be "at least another year" of falling volumes after changes in the way consumers shopped since the latter part of 2010. "There had been a fundamental change in how customers shop," he said. Consumers were shopping more frequently, watching what they spend and wasting less, he noted.

In fact, King insisted Sainsbury's had sought to play a part, helping consumers waste less food to help them manage their spending and alleviate the retailer's impact on the environment. "It's something we've tried to drive," he said.

But falling volumes is hardly ideal for suppliers, is it? King said Sainsbury's was still growing its business and that would benefit manufacturers. "The conversation we are having with our suppliers is that we are also growing our business. We're giving them sales growth at the same time."

Sainsbury's faces fresh challenges after strong year

Tue, 08 May 2012 15:40:00 GMT

Sainsbury's, the UK's third-largest grocer, will tomorrow (9 May) report its annual financial results. Of the UK's largest food retailers, Sainsbury's has been one of the better performers in recent months but, as ever in the country's fiercely competitive market, it faces a new round of challenges over the next 12 months.

Initiatives including the Brand Match price-comparison scheme have enabled Sainsbury's to drive sales over the last year, while rivals like Tesco, and more recently Morrisons, have stuttered.

In March, Sainsbury's reported a 2.1% increase in like-for-like sales for the year to 17 March. Tomorrow, Sainsbury's is expected to report an increase in annual pre-tax profits of around 5%, a slowdown from the 9% increase it filed last year, an indication perhaps of the cost of competing in the UK grocery sector and also the expansion of its store network over the last year. However, Sainsbury's has won praise from industry watchers. Shore Capital analyst Clive Black says he believes Sainsbury's "has cranked out a very good performance" over the last 12 months.

Nevertheless, as ever in the UK's fiercely competitive market, Sainsbury's faces a fresh set of challenges, including Tesco's plans to revitalise its UK business and, interestingly, from Waitrose. Last week, Waitrose announced an extension of its own price-comparison initiative against Tesco, which as well as targeting the UK's largest retailer, could also lure some shoppers away from Sainsbury's.

The thoughts of Sainsbury's chief executive Justin King on these issues and more (including the Government's expected announcement tomorrow of an adjudicator to monitor dealings between retailers and suppliers) will be worth hearing.

Waitrose puts words into action

Wed, 02 May 2012 15:41:00 GMT

"What you'll see this year is Waitrose become more price competitive," Mark Price, the upmarket UK retailer's managing director, said in March. Today, the company indicated it would act on those words with two announcements - with Tesco, Sainsbury's and Ocado in the firing line.

Waitrose is matching the price at which Tesco sells 7,000 brands, up from 1,000 lines. It is also offering free delivery to those that order at least GBP50 (US$81) worth of groceries online.

The extension of Waitrose's Brand Price Match scheme, which was launched two years ago, is a shot across the bows of Tesco, which is battling to revitalise its UK operations after quarters of falling sales.

However, the retailer is also taking aim at Sainsbury's, which has enjoyed success with its own price-matching initative, Brand Match.

Shore Capital analyst Clive Black said Waitrose's move would "nullify some of the benefit that has accrued to Sainsbury from what has been a remarkably effective Brand Match initiative".

Waitrose's success in convincing shoppers it can offer value (through schemes like its price-matching initiative and its Essential own-label portfolio) and remain a high-end retailer through marketing tie-ups with celebrity chefs like Heston Blumenthal. The success is seen in its sales figures. Its like-for-like sales in the year to 28 January increased 3%, a rate faster than a number of competitors.

However, competing on price dampened profits last year and initiatives like the extension of Brand Price Match could have an effect on earnings. That said, investment in space and new formats also had an effect on profits and Price said in March he hoped earnings would grow in 2012.

Waitrose's price-matching of brands on sale at Tesco is also similar to an initiative at Ocado, its partner outside the M25.

The extension of the scheme, as well as Waitrose's offer on online delivery, will only put more pressure on Ocado.

The online retailer reported an increase in sales in its first quarter but questions surround the company's prospects, despite a narrowing in its losses in its last financial year.

Black said Waitrose's offer was a "material challenge" to Ocado in Greater London, where the two partners are competitors. Greater London is, Black said, Ocado's "core and most profitable market".

A sign that Ocado is aware of the challenge it faces, not just from Waitrose but from other competitors, is in just-food's latest Promo Tracker data.

Ocado stepped up the level of discounts it offered in April in a mixed month of promotional activity among UK retailers, the Tracker, compiled with mysupermarket-insights.co.uk, showed.

Double-dip recession blow for retail industry says BRC

Wed, 25 Apr 2012 15:13:00 GMT

The news this morning (25 April) that the UK's economy has slipped back into recession may come as little surprise to many, but for the UK retail industry, it is unwelcome news.

According to the Office of National Statistics, the economy contracted 0.2% in the three months to the end of March on top of a 0.3% decline in the last quarter of 2011.

While today's figure is an early estimate and is subject to at least two further revisions in the coming months, it comes as somewhat of a blow for the UK retail industry, when a boost to consumer confidence is desperately needed.

According to the British Retail Consortium (BRC), with inflation growing at almost three times the rate of average wage increases and personal budgets under pressure from high fuel and utility bills, consumers have continued to cut back on many areas of spending.

The BRC previously warned that "temporary bright spots", such as last month's retail sales figures, cannot disguise the "fundamental difficulties" faced by households and businesses.

"2012 looks like being tougher than we thought. The figures are subject to revision but the UK's return to a technical recession is a blow," BRC director general, Stephen Robertson said.

"Whether GDP growth is just above or just below zero doesn't change the harsh realities facing customers but it will undermine confidence at a time when we desperately need to be going forward not backwards."

Robertson suggests the Government "halt its tsunami of destructive new regulations and taxes" if it is to "rekindle recovery".

UK consumer spending power continues descent

Tue, 24 Apr 2012 17:55:00 GMT

The latest Asda Income Tracker certainly made for some depressing reading today (24 April), revealing that the average UK family has continued to see its disposable income drop - down 6.5% on the year.

According to the supermarket group, family spending power fell by GBP10 (US$16.13) a week in March, leaving the average UK family with GBP144 of weekly disposable income after bills and taxes. This, the AIT said, is the lowest level since November 2008.

Commenting on the findings, Asda CEO Andy Clarke said it is "worrying" that this drop comes at a time when the cost of essentials is rising "increasing the demands on family budgets and putting pressure on income growth".

The consumer price index, the official barometer measuring the cost of living in the UK, was again up in March, rising 3.5%. This is well above average earnings growth, which is up just 1.6%.

Meanwhile, the spectre of high unemployment levels is also taking its toll.

Charles Davis, macroeconomics chief at CEBR, said that even as the cost of essentials looks set to fall back, "tough conditions" in the labour market look set to prevail.

"Average earnings growth is expected to trail inflation in 2012, keeping pressure on household incomes. As such we are likely to see continuing declines on the AIT over the coming months," he concluded.

So, what does all this doom and gloom mean for the food industry?

In a timely announcement today, the latest Kantar figures highlighted the 'bottleneck effect' that has seen sales gains at the top- and bottom-end of the market, at the expense of the middle-ground.

The discounters - Aldi, Lidl and Iceland - are posting sales growth well ahead of the rest of the sector. Meanwhile, high-end retailer Waitrose appears to be attracting customers who are eating out less, but still looking for that taste of luxury. This trend is also witnessed by the growth of 'best' lines at mainstream supermarkets.

However, if consumer confidence continues to be squeezed, we could well see the development of an even more price-conscious consumer as the definition of value focuses in on price and less emphasis is placed on quality. Whether this happens will largely depend on how deeply the country's middle-class consumers feel the squeeze in the coming months.

We will be devoting some in-depth analysis to the issue later this week, so watch this space for more on the outlook for the country's discount retailers.

The "sheer folly" of the UK liquid milk sector

Fri, 20 Apr 2012 15:40:00 GMT

Dairy Crest's announcement this week that it is to close two dairies is yet another sign of the difficulty of trading in the UK liquid market.

Increased competition, volatile commodity costs and demands from retail customers have all put pressure on profits in the sector in recent months. Milk is often used as a loss-leader by supermarkets to bring in customers and, with retailers competing fiercely for ever-more cautious and promiscuous consumers, processors often face demands on price that put pressure on profits.

The rising cost of fuel and plastics, plus lower bulk cream prices, have put further pressure on Dairy Crest's dairies business, which has become a cause for concern. In March, the UK company said it was looking at a range of options to get the business back to a "satisfactory level of profitability".

Among those options, it now emerges, was the closure of a dairy in Aintree and one in Fenstanton, with the potential loss of 400 jobs.

Analysts welcomed the move to improve the performance of Dairy Crest's dairies division. However, with the closures to lead to Dairy Crest incurring GBP15m in costs, some industry watchers remain unsure about how the closures will benefit the company.

"We note our concern on the short-term cost for what may yet prove to be a somewhat intangible gain over the medium term; remember Arla Foods has yet to open its capacity-busting dairy in Buckinghamshire," analysts at Shore Capital wrote.

Alongside the announcement of the planned closures, Dairy Crest also announced it had lost a milk contract with Tesco. Robert Wiseman Dairies and Arla will be the retail giant's suppliers, although Dairy Crest tried to play down the loss by saying it only accounted for 3% of volumes.

However, Shore Capital argued the contract loss highlighted how tough trading in the UK liquid milk sector had become - and how short-sighted some in the industry had been to chase market share.

"It underscores the sheer folly, that we forcibly expressed at the time, of an industry that showed cataclysmic indiscipline over the past two years in a dash to gain and maintain share," they wrote. "A dash that delivered a collapsed liquid milk margin for all concerned."

Reggae Reggae sauce to make UK TV debut

Mon, 16 Apr 2012 14:01:00 GMT

The man behind Reggae Reggae sauce, Levi Roots, has been busy since his appearance with his sauce on UK reality programme for inventors Dragon's Den in 2007.

Since securing a GBP500,000 (US$792,000) investment for the set-up of the brand from the programme's investors, the brand has been expanded into categories including ready meals, snacks and soft drinks.

It seems Roots is keen to capitalise on the success of Reggae Reggae sauce and is launching his first TV advertisement for the brand.

Teaming up with Wallace & Gromit creators Aardman Animations, the advert will feature an animated version of Roots cooking a barbeque in the back garden of a house in Brixton, singing the "It's so nice I had to name it twice" Reggae Reggae Sauce song. It will run from May through to August.

The GBP2m campaign will launch on ITV, and will also roll out in the cinema, as well as PR, online amplification, in-store POS and sampling.

Click here to view the television advert through creative agency JWT London's website.

The hard road ahead for US retail giant Supervalu

Fri, 13 Apr 2012 15:38:00 GMT

Supervalu, one of the largest retailers in the US, has had a tough few years and, although CEO and president Craig Herkert is trying to turn the company around, industry watchers believe it will be a challenge for the former Wal-Mart Stores executive.

This week, Supervalu reported its annual financial results and, for the third year running, gross profit, sales and identical-store sales fell.

Herkert, who joined Supervalu in 2009, insisted there were signs of improvement at the retailer, which is part-way through a "transformation programme". Over the last 12 months, Herkert said, Supervalu had a built a "strong foundation" and he expects "another year of solid progress" at the retailer.

However, Wall Street is unsure about Supervalu's prospects. The company's share price has tumbled over the last year amid concerns that it could break lending agreements. It has also been rumoured to be a target for private equity.

Concerns over Supervalu's covenants have dissipated but there remains questions over whether the retailer's transformation programme will pay off.

Herkert's plan to changes things around at Supervalu comes, one analyst told just-food, after he made some early mistakes when he joined the business. What's more, his plans are not the first such programme Supervalu has seen in recent years; previous CEO Jeff Noddle also tried his own "transformation" initiatives.

The retailer seems to have been looking to reinvent itself for the past half a decade and, as one analyst noted, it is hard to secure custom when you are a business looking to redefine yourself.

"The real question is: 'Once you've lost that customer and it's been five years do you really get them back?'," asked BMO Capital Markets analyst Karen Scott yesterday as we discussed just-food's In the spotlight article on Supervalu.

Click here for more.

PureCircle promotes sustainability benefit of stevia

Thu, 12 Apr 2012 15:32:00 GMT

Stevia suppliers - and the food and drink manufacturers using the sweetener - have been keen to tout the zero-calorie and natural properties of the ingredient. However, one leading supplier is seeking to emphasise what it sees as another benefit of the product.

PureCircle has today (12 April) released a white paper in which it claims that its "high purity stevia sweeteners" have lower carbon footprint and use less water than other sweeteners for which data is publicly available.

The company, which supplies stevia to customers including PepsiCo, said the carbon footprint of its stevia was 82% lower than other sweeteners. The water footprint of its version of the ingredient was 97% less, it said.

PureCircle said the footprints were conducted by Camco, an independent water and carbon footprint expert and peer-reviewed by Dr. Tim Hess of Cranfield University, UK and Zahir Lazcano, an independent consultant.

The data will be of interest to food and drink manufacturers looking not only to cut calories but also carbon.

"Control of our supply chain is the essential reason that we were able to fully measure our footprint and put initiatives in place to continuously improve as we scale," PureCircle vice president of global marketing and innovation Jason Hecker said. "We believe that focusing on sustainability is integral to the growth of stevia as the next mass volume natural sweetener."

Industry interest in stevia has tended to focus on the fact that it is a zero-calorie and natural sweetener. With consumers watching their weight and, in some countries, turning away from artificial ingredients, stevia is seen by some as having a lot of potential in a number of product formulations.

Click here for the latest just-food management briefing, published two weeks ago, which focused on an ingredient that has attracted a lot of attention in recent months.

Tesco faces questions over UK and US

Wed, 11 Apr 2012 11:42:00 GMT

Tesco is facing increasing pressure from its shareholders to pull out of the US and focus on rejuvenating its flagging UK business.

Reports of investor discontent come ahead of the retailer's annual results next week when the market will want to hear more about chief executive Philip Clarke's plans to revitalise its UK operations.

However, Clarke is likely to face questions over its US chain Fresh & Easy and over its banking operations, where progress has been slower than hoped.

Tesco's third-largest shareholder, Legal & General Investment Management, has publicly voiced concerns over the retailer's strategy.

The investor told The Sunday Times: "Can it be everything to everyone, or should it focus on its gem, the British grocery business? Of course, this is likely to raise questions about other areas of the business, such as America and the bank."

It is estimated that Fresh & Easy has racked up losses in the region of GBP700m (US$1.1bn) since it launched in the US in 2007. The banking arm has yet to deliver promised current accounts.

An anonymous institutional investor told The Guardian that Fresh & Easy was a "disaster" and, once the level of losses had become obvious, Tesco "should have pulled back faster".

In the UK, however, the situation is similarly dismal. Tesco has been on the back foot since January when it delivered another quarter of falling like-for-like sales and issued a surprise profit warning.

The retail giant is stepping up the overhaul of its UK business and deliver what it had initially tasked as a three-year programme of investments in just 12 months. Yet, investors are questioning how viable this really is.

Legal & General believes the retailer will need to invest as much as GBP1bn to turn around its flagging UK business, Bloomberg reported yesterday.

In addition to the "significant" sum required, Legal & General fund manager Richard Black told the publication the supermarket chain needs to provide "clarity on where the money is being spent, the returns expected and how the grocer measures its effectiveness".

As for the US, at the firm's annual results last April, Clarke said it was "essential" that losses from Fresh & Easy come down over the next year after the division's bottom line worsened over the prior 12 months. The unit's trading losses widened by 9.7% to GBP186m in the year to 26 February 2011, despite sales growing 38.1%. Tesco attributed the widening losses to the integration of the two fresh food suppliers it acquired in 2010 - 2 Sisters and Wild Rocket Foods.

The unit, however, showed an improvement by October last year at Tesco's half-year results, with losses narrowing by 23.2%.

Clarke has insisted he is confident the business will break-even towards the end of 2013. Whether this is achievable or not may become clearer at the release of its annual results and strategic review on 18 April.

Canada probes Target expansion

Tue, 10 Apr 2012 15:07:00 GMT

Target's plans to expand in Canada are to be examined by the Federal Government.

Target announced in January 2011 a deal to acquire the leases on up to 220 Zellers stores from Hudson's Bay Co. The firm has since purchased the leases of 189 sites currently operated by Zellers and indicated that it plans to open up to 150 stores in Canada, the majority of which are set to open in 2013.

According to Canadian reports, regulatory authorities have launched a review of this move under the Investment Canada Act. They will examine whether Target's plans to sell "cultural content" could reduce the amount of Canadian cultural content on store shelves - in the form of DVDs, CDs and books - and hurt domestic publishing houses.

While the review will not prevent Target's expansion, according to the Edmonton Journal the group could be required to increase the number of Canadian authors and musicians gracing its shelves, as well as purchasing imports through Canadian-owned publishing houses, among other measures.

The news is a reflection of the Canadian obsession with, well, being Canadian and differentiating itself culturally from its larger and more powerful neighbour. Nevertheless, any hurdle in the way of Target's expansion north of the boarder - and significantly any negative press surrounding it - will surely come as welcome news to the country's supermarkets.

Target's Canadian stores will have some significant differences from the company's US outlets. The average converted Zellers store will have about 100,000 sq ft of selling space, which is about one-third smaller than the average Target store in the US. And, while the company's focus on non-food means that it cannot be classed as a supermarket, it intends to compete for grocery dollars, stocking fresh and ambient food products at all outlets (compared to only carrying fresh at its Super Target and Pfresh in the US.)

With far fewer SKUs, Target's food range will not attempt to duplicate a supermarket. However, Target has taken aim at core-item sales it seems. In the firm's fresh aisles, consumers should expect a good range of basics (think every day fruit and veg, bakery items, dairy and popular meat products).

And, at least in the US, Target has a better reputation for quality in fresh than fellow compatriot Wal-Mart while also maintaining a value positioning - factors that are sure to make the retailer a formidable competitor.

So, what can Canadian supermarkets do to fend off Target's incursion on their turf?

Certainly, emphasising their wider range and food speciality is an obvious move. However, as this latest development shows, the virtue of being Canadian can also go a long way in Canada. Supermarkets should therefore look to highlight their local and regional sourcing credentials and emphasise any ties to the communities in which they are located.

Exclusive just-food webinar, in association with SymphonyIRI

Wed, 04 Apr 2012 15:39:00 GMT

Join us tomorrow for a free webinar which exclusively reveals the results of our survey into business confidence in the industry, along with additional analysis from SymphonyIRI.

We will exclusively reveal key regional and global trends shaping the food sector in 2012 based on a survey of just-food's international readership.

just-food's 2012 Confidence Survey canvassed views from professionals in the global food sector on areas such as consumer confidence, M&A and industry consolidation and NPD.

Commodity pressures, an issue focusing the minds of many in the industry, not least amid a surprise rise in food inflation in the UK last month, will be another key theme of the webinar.

During the event, I will discuss the survey results, put them in context and add some of my own thoughts on where the industry is heading over the next year.

I will be joined by Rod Street, executive vice president of the International Consulting Group at SymphonyIRI (an editor of just-food's Street Talk column), who will give his take on the challenges and opportunities facing the food sector in 2012.

The presentations will be followed by a 15 minutes open Q&A session.

This webinar is free to attend but has limited places. Register here to reserve your place.

Retailers take on 'Tesco tax'

Tue, 03 Apr 2012 09:59:00 GMT

Retailers in Northern Ireland have slammed the introduction this weekend of the so-called 'Tesco tax'.

The levy to subsidise rates (government tax) relief for small businesses been labelled as "short-sighted" by the Northern Ireland Retail Consortium (NIRC), which argues that it unfairly targets larger retailers and could send investment elsewhere.

The levy affects retail properties at the GBP500,000 (US$769,174) rateable value threshold and above, which is the value attributable to a property on which the final rates bill is calculated. It should reflect the rental value of the property.

To raise the required GBP6.5m would equate to an 11 pence regional rate supplement (at 2011/12 levels), increasing rate bills on those properties by around 20% on average.

The actual impact of the levy on bills would vary by district council area, from around 18.5% to 22.5%.

A spokesperson for the NIRC told just-food that while it is happy to see support for small businesses, the legislation may force global retailers to look elsewhere to invest.

"Our problem with the legislation in Northern Ireland is it is solely large retailers that are being asked to pay extra, even though the small businesses that will benefit come from a wide range of sectors.

"It's unfortunately that in the current climate there should be a priority on attracting investment, and we think it sends out a rather unfortunate message about Northern Ireland, which is that if you invest in such a large store in Northern Ireland, sadly then you might be seen as a sitting duck to be taken advantage of.

"Many of the large retailer operate on a global stage so when times are tight and they are looking at where to invest capital, they obviously will weight up the return that investment can get across the globe, so our fear is that they might take that investment somewhere else," she told just-food.

Stormont Finance Minister Sammy Wilson, however, has reportedly said the levy represents a "minuscule" proportion of retailers' profits.

"I'm fairly confident if there are changes in employment, it will not be due to the levy," he told the BBC.

A bacon coffin? Really?

Thu, 29 Mar 2012 14:01:00 GMT

Every once in a while, I find my inbox to contain a press release that manages to stop me in my tracks. And that is just what happened today (29 March), when I saw that J&D's Foods has launched a bacon coffin.

It took me a few moments to get my head around exactly what this means. No, not a coffin for bacon, a bacon-themed coffin for deceased bacon lovers.

The release reads: "You ate bacon, you decorated your body with bacon, your car with bacon and your home with bacon. And now, you can peacefully rest wrapped in bacon."

Now it is possible I need to expand my social horizons, but I have never come across anyone who "decorates" their body, car or house in bacon. Or any other food for that matter.

Toning down the crazy just a notch, it turns out that bacon coffins are "finished with a painted bacon and pork shading" and "accented with gold stationary handles".

Makes a little more sense. Even so, while I love a bacon sandwich as much as the next person, I find it hard to imagine a great demand for this - even among the most die-hard bacon lovers.

Beef Products stung by "pink slime" panic

Wed, 28 Mar 2012 14:26:00 GMT

It seems Beef Products Inc has had enough of the controversy surrounding the "pink slime" it reportedly produces, and plans to suspend operations at three of its facilities until the issues are addressed.

The company, along with many other US firms, has been embroiled in conflict over its meat trimmings after former US government scientist Gerald Zirnstein coined the term "pink slime" to describe the unlabelled and "unappetising" bits of cartilage and other chemically-treated scrap meat going into ground beef.

He reportedly made the slime reference to a fellow scientist in an internal - and he thought private - email. But that email later became public, and with it came an explosion of outrage from consumer groups.

While regulators have said the ammonia-treated filler, known in the industry as "lean, finely textured beef," meets food safety standards, critics say the product could be unsafe and is an unappetising example of industrialised food production.

BPI, a producer of the meat trimmings, has said it will now suspend production at three of its four plants amid concern about the product.

The facilities being wound down are located in Amarillo, Texas; Garden City, Kansas; and Waterloo, Iowa. Together they reportedly produce around 900,000lb of the beef product per day.

The 200 employees at each location will receive their full salary and benefits for 60 days while production is suspended.

"We feel like when people can start to understand the truth and reality then our business will come back. It's 100 percent beef," a spokesperson for the company told CBS News.

Many may be breathing a sigh of relief that BPI is drastically scaling back production of the "pink slime", but the product has been used in the US for years with no concerns attached to it.

While no doubt, the beef product is cheap to produce and makes products such as burgers less costly, there's no evidence to date that it makes beef less safe, or even less nutritious. It seems BPI may have to sit and ride out this storm.

Beef Products Inc could not be reached for comment.

McCain, Sobey families join forces

Tue, 27 Mar 2012 17:23:00 GMT

Two of Canada's premier business clans, the McCains and the Sobeys, have joined forces to form SeaFort Capital, a new private-equity investment vehicle.

Scott McCain, COO of Maple Leaf Foods and the son of the late Wallace McCain who co-founded another Canadian food giant,McCain Foods, will sit on the board of the new venture brushing elbows with Donald Sobey, who helped build the Sobeys grocery chain, and his son Rob Sobey, who also sits on the retailer's board and is the chief executive of Lawton's Drug Stores.

According to its website, the new investment firm will target "old economy" businesses with earnings of between C$2m (US$2m) and C$10m.

"Our preference is for companies that have a strong tangible asset base," the company said.

Canadian reports have suggested the firm will target family-owned companies in smaller cities and towns across Canada, in particular providing an alternative for entrepreneurs preparing to retire without anyone to hand their businesses on to.

With the strong grounding that some of its most high-profile investors have in the food and retail sectors, it seems likely then that we could see SeaFort increasing the level of private-equity activity in this sector.

However, perhaps this represents a drop in the ocean. According Tom Lindsay, co-founder of M&A advisors Spayne Lindsay, international M&A activity in the food sector is likely to be driven by higher levels of PE investment in the coming months.

Speaking during the Consumer Analyst Group Europe conference in London, where just-food was the exclusive media partner, Lindsay explained the appeal of food companies to private-equity investors.

"Food companies do have relatively stable cash flows, even though they are relatively low growth at the top line level, they can be made to grow at the bottom line level through cost savings, consolidation synergies and improved focus. And there's plenty of capital in the private-equity world," he explained.

Ingredient firms see opportunity in high egg prices

Mon, 26 Mar 2012 15:40:00 GMT

Kerry Group and Arla Foods have been quick to highlight how they can help food manufacturers facing soaring egg prices in the wake of the new EU rules on animal welfare.

Egg prices across Europe have jumped in the wake of the introduction of legislation on how hens are caged. A number of EU member states failed to comply with the new rules by the time they went into action on 1 January, hitting the trade in eggs, as companies that had not met the regulations were banned from exporting. There has been an obvious impact on manufacturers of products from cakes to quiches: the prices of eggs on wholesale markets have leapt.

On Friday, Irish food group Kerry released a statement that outlined how they could "help" manufacturers.

"With confectionery, biscuit and cake manufacturers across Europe reported to be on the brink of closure due to an EU-wide egg shortage, Kerry Ingredients & Flavours has a range of hydrolysed protein solutions to help confectionery manufacturers experiencing production difficulties," the company said.

Kerry pointed to its Hyfoama ingredient, an alternative to albumen, the protein derived from egg whites used in biscuits and confectionery.

"Albumen, the protein derived from egg white, has traditionally been used by manufacturers of aerated confectionery such as nougat and marshmallow. With the egg shortage, and the fact that the price of liquid egg white has risen by 41.3% year-on-year, and in recent weeks has been reported as rising in excess of 70%, confectionery manufacturers are under real price pressure," Kerry director Tom Schmedes said. "Hydrolysed proteins are a recognised replacement for albumen, and, depending on process and recipe, just 40g of Hyfoama™ hydrolysed protein can replace 100kg of egg white."

Arla, meanwhile, believes sales of its egg replacers will double this year. The company said it sold enough of his Nutrilac ingredients in 2011 to replace 20,000 liquid eggs in bakery products; this year, it expects that figure to reach 40,000 tonnes.

John Gelley, sales director for EU bakery at Arla Foods Ingredients, said: "The impact of the Welfare of Laying Hens Directive on egg prices has been huge, and as a result many bakery companies have been switching to our Nutrilac egg replacers as a more cost-effective alternative. The first quarter of this year has seen a big spike in sales of our egg replacers and, since market prices for eggs show no signs of softening, we anticipate this trend will continue."