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

Retailers launch fresh offensive on education

Wed, 10 Mar 2010 17:14:00 GMT

Tesco, the UK's largest private employer, has continued the prolonged assault on what it terms the failings of the UK's education system.

Addressing a conference in London today (10 March), Lucy Neville-Rolfe, the retailer's director of corporate and legal affairs, said that UK school-leavers have problems with basic literacy and numeracy, timekeeping and “what you might call an attitude problem”.

“They don't seem to understand the importance of a tidy appearance and have problems with timekeeping ... Some seem to think that the world owes them a living,” she griped.

Her comments echo sentiments expressed by Tesco chief executive Sir Terry Leahy, who bemoaned the “woefully low” standards in UK schools last October.

Striking a more upbeat note, both Asda and Sainsbury's today unveiled new training programmes designed to equip employees – or potential employees – with the skills needed in the workplace.

Highlighting the “lack of recognition” that the grocery sector receives as a driver of economic growth, Sainsbury’s chief executive Justin King announced the launch of the UK’s first supermarket bakery college.

Meanwhile, Asda has said that it will offer 14 to 16 year olds a week of “real” work experience. Each of Asda's 371 stores will partner with a local school or college to help introduce young people into the world of work. The supermarket group will also offer 15,000 of its workers the chance to take part in a 12-week apprenticeship programme.

“One million people under the age of 25 are unemployed, and it's probably going to get worse before it gets better," Asda CEO Andy Bond (rather gloomily) predicted. “That's why I'm determined that we do everything we can now to help young people get a foot in the door."

So the message from the world of retail is loud and clear: schools are failing to equip the next generation of workers with skills needed in the workplace.

These criticisms have been repeatedly shrugged off by teaching unions and the government, who argue that educational standards have never been higher.

Nevertheless, if the controversial assessment of business leaders proves accurate, it has some serious implications for the future economic prosperity not just of the UK's food and retail sectors, but the UK economy as a whole.

FDA "crackdown" shows how political wind has changed

Mon, 08 Mar 2010 14:10:00 GMT

When it comes to ensuring that food is marketed responsibly, the US food industry is no longer being left to its own devices.

Last week, US consumer advocates welcomed a regulatory "crackdown" against how some manufacturers market health claims on their products. Nestle, Schwan's and Diamond Foods were among a raft of companies that received warning letters over "misleading" claims and were ordered to change labels or face action.

"The previous administration tolerated such shenanigans, but I hope that the party is now over," Bruce Silverglade, legal affairs director at the consumer watchdog Center for Science in the Public Interest, remarked last week.

There is no doubt that the political wind has changed direction in the US. President Obama's appointment of Dr Margaret Hamburg, a paediatrician, as the new head of the FDA underlined how central nutrition and tackling obesity is to his administration. The First Lady has also been vocal on these issues.

Last week's "crackdown" from the FDA was a further sign of the importance the Obama administration is placing on health and nutrition and on fighting obesity. Combine this ideological shift with the failure of some industry-led initiatives, notably last autumn's scrapping of the Smart Choices Program, and there is little doubt that the current administration will look to grab more and more control over how food is marketed to consumers.

On Wednesday (10 March), regulatory officials in the UK will meet to discuss plans for a "hybrid" scheme for front-of-pack labelling. Nutritional labelling has long been a topic of fierce debate in the UK, with manufacturers, and the country's largest retailer, Tesco, backing one system, while other retailers favour another - or a combination of the two.

However, amid concern that different labels cause confusion for shoppers, the FSA has formalised its proposals for a hybrid scheme that would combine the words 'high, medium, and low' with traffic-light colours and Guideline Daily Amounts (or GDAs) in percentage terms. The FSA has also called for portion size to be presented "in an easily identifiable way".

The Food and Drink Federation, the body representing UK manufacturers, said it wanted to wait until Wednesday's meeting of the FSA board before commenting on the plans, although its counterparts at the British Retail Consortium had no such qualms, arguing it "made no sense" for the UK to bring in plans before a decision is made at European level.

Nevertheless, given that the FSA's plans include such a "hybrid" approach will be seen as something of a victory for the likes of Tesco, for so long an opponent of the regulator's favoured traffic-light scheme.

If the FSA board backs the proposals, the recommendations will then be taken to UK government ministers. Regulators and legislators across the Atlantic, with labelling a hot topic in the US, will be watching events closely.

Write off India's domestic retailers at your peril

Fri, 05 Mar 2010 18:30:00 GMT

For all the talk of Wal-Mart, Tesco and Metro Group making strides in India - as well as the speculation over when Carrefour will enter the market - it is sometimes easy to lose sight of the growth seen by the country's domestic retailers.

The likes of Pantaloon Retail and Reliance Retail are expanding across India and, although the progress of India's homegrown players may be mixed, the cards are right now stacked in their favour - principally due to the local laws restricting foreign ownership in the sector.

Another local group, Aditya Birla Retail, today (5 May) told just-food about its plans for expansion across India.

Aditya Birla's ambitions emphasise not just the potential for growth in India but also the level of resources necessary to gain a significant foothold in the market.

The retailer is backed by one of India's largest conglomerates, with interests in construction and mining, but still the company is looking to private-equity firms for cash.

Neverthless, the boss of Aditya Birla's retail business is enjoying the ride. "There is a huge queue of people trying to get into the store," Thomas Varghese told just-food as he stood outside the company's newest store in Mumbai. "It is unbelievable."

For the likes of Tesco and Wal-Mart, the fledgling but fast-growing Indian economy will demand a lot of patience - and also deep pockets.

And, all the while, the likes of Aditya Birla are setting out their own blueprints for growth.

McWeight Watchers?

Thu, 04 Mar 2010 17:53:00 GMT

Continuing with the obesity theme, a surprising development to come out of New Zealand is the announcement of a tie-up between Weight Watchers and unlikely bed-fellow McDonald's.

As part of the deal, McDonald's will use the Weight Watchers logo on its menu boards and Weight Watchers will promote McDonald's to dieters. The dieting group has endorsed various items on McDonald's menu, including chicken nuggets and Filet-O-Fish.

Now, I'm not really a McDonald's aficionado, but I am assured that although Weight Watchers has pumped for the “healthier” white meat and fish options, healthy they aint. There are three grams of fat in each McNugget and 18 grammes of fat in a Fillet-O-Fish (which contains copious amounts of tartar sauce and processed cheese).

Now, call me cynical, but it seems pretty clear what this deal is all about – the famous 'golden arches' have found a golden opportunity to reach out to the abstinent.

As for Weight Watchers, shouldn't there be some concern that the move will devalue the Weight Watchers brand, which is reliant on the trust of dieters? Doesn't it seem a bit like Alcoholics Anonymous announcing a tie-up with Budweiser?

In defence of fish 'n' chips

Thu, 04 Mar 2010 17:44:00 GMT

The debate surrounding obesity has generated reams of headlines as policy-makers, pressure groups and the food industry vie for public attention.

Here in the UK, regulators have struck out at seaside favourite fish and chips.

According to a report in The Daily Telegraph, the Food Standards Agency wants fryers to increase the size and thickness of their chips because chunkier versions absorb less fat as well as altering cooking temperatures and portion sizes.

Fish and chips are a high-profile target for the FSA and, as iconic foods – indeed foods that to many a casual observer 'define' a nation – go, it seems an apt, albeit unglamorous, representation of the UK's culinary traditions.

Nevertheless, there are few who would mistake fish and chips for a “healthy” option.

Rather, the takeaway favourite speaks of a treat at the end a summer day... Of eating out of paper off your (salty and possibly slightly sunburnt) knees. And, frankly, I don't want the FSA meddling with my nostalgic, romanticised notions of the meal.

(But then, I didn't like when they stopped serving it out of newspaper either!)

Douglas Roxburgh, president of the National Federation of Fish Fryers, makes a more serious point – chip shops already tend to serve chunky chips. According to Roxburgh, the FSA should concentrate its efforts on the likes of McDonald's, Burger King and KFC, who serve skinnier French fries.

“At the moment it seems like a case of picking on the little guys because they can't touch the big guy,” he told The Telegraph.

An unlikely pair at Waitrose

Wed, 03 Mar 2010 15:28:00 GMT

Waitrose this morning (3 March) announced what it described as “a dream alliance” set to be the “envy of the food retail world”.

Drum roll…

Celebrity chefs Delia Smith and Heston Blumenthal are set to become food ambassadors for the UK upmarket retailer.

Great news for Waitrose and no doubt a pricey signing, but for the consumer, it may send a rather mixed message.

As the undisputed queen of TV cookery, Delia Smith is a fair choice, no question. Her image has always been quite mumsy, a woman known for her straightforward, fail-safe recipes and her squeaky-clean persona.

Bring in scientific, experimental and off-the-wall chef Heston Blumenthal though and one wonders where Waitrose is going with this.

Owner of The Fat Duck, a three-star Michelin restaurant, there’s no doubt Blumenthal is an accomplished and extremely talented chef (I won’t mention the Little Chef) but, alongside Delia, it's a struggle to see who Waitrose is targeting.

The release says little about what we can expect from the duo, other than sharing their expertise, showcasing recipes and offering tips.

There’s no doubt that celebrity endorsement can work if matched with the right brand. Jamie Oliver is a testament to that with his work for Sainsbury’s.

But a chef such as Nigella Lawson would have been a more appropriate choice, the 'domestic goddess' known for her polished TV persona.

I could be wrong, but let’s see what they come up with.

A possible reason for Paddington's return to marmalade

Wed, 03 Mar 2010 15:14:00 GMT

Earlier this week, we told how Paddington bear had returned to plugging marmalade, this time on behalf of UK food giant Premier Foods.

The much-loved TV bear had spent the last couple of years peddling Marmite for Unilever and his return to the orange stuff provoked furrowed brows in ad land.

Could this be the reason? Unilever has launched Marmite XO, a "mega-matured, extra-strong version" of the love-it-or-hate-it spread.

Now, Marmite is an acquired taste and perhaps Paddington could not stomach this new line, which is "matured" for at least 28 days.

Grahame Walker, a Marmite "Alchemist" (Unilever's words, not ours) said: "The resultant blend creates an intense sensory experience that can only be appreciated by the most extreme Marmite devotees.”

One can almost imagine Paddington wrinkling his nose at that one.

All change at Aldi UK - again

Tue, 02 Mar 2010 15:38:00 GMT

Aldi has unveiled the latest management team it hopes will breathe fresh life into its struggling UK business.

The German discount giant has named two managing directors to lead its operations in the UK and Ireland.

Matthew Barnes, a former Aldi executive in Australia, and Roman Heinl, who had overseen the company's business in Switzerland, will both take the helm at the retailer here and across the Irish Sea.

The duo are Aldi's latest attempt to revitalise its business here. Paul Foley quit the business last summer and his replacement, Armin Burger, left the company after just three months.

Little is known about how the two will work but, in the UK at least, they have their work cut out.

Aldi is no longer being talked about in the terms it enjoyed in the second half of 2008, when the media was full of stories about the so-called "Aldi effect".

Competition among the UK's largest food retailers has meant that shoppers, who were lured by Aldi as the country's economy moved into recession, have reverted back to the likes of Tesco and Asda.

And, according to the latest sales data from Kantar Worldpanel, published today (2 March), Aldi has lost market share in the UK, due in part to the Big Four (or Five, if you include The Co-op).

However, Kantar also argues that the weakness of sterling has made Aldi less competitive.

"The weakness of sterling continues to threaten some of the pricing in the German-based retailers and consumers are once again starting to shop there more selectively," the company argued.

With the likes of Tesco and Asda showing signs of not letting up on their battles on price and, notably, loyalty programmes, Aldi will find it tough to win back those pulled in by the "Aldi effect".

Kettle will give some sparkle to Diamond portfolio

Mon, 01 Mar 2010 18:06:00 GMT

Diamond Foods' move to buy premium crisp maker Kettle Foods played a part in driving down the US snack firm's shares on Friday (26 February) amid investor fears over how the acquisition would be funded.

Shares in Diamond dropped 10% as the company uses an equity offering to fund the purchase of Kettle.

However, as our comment piece argued today, Kettle has the potential to add some long-term, branded sparkle to a company that historically has derived most of its revenues from own label.

Ad land: Mrs Kipling's TV debut; Paddington lured back to marmalade

Mon, 01 Mar 2010 14:34:00 GMT

A couple of amusing tales have emerged from ad land today (1 March).

First, TV screens in the UK will soon see what Mrs Kipling looks like in the flesh in a new campaign for Premier Foods' cake brand Mr Kipling.

The Mr Kipling brand is among Premier's five "drive" brands and categories that the UK group believes will drive growth at the company.

Mrs Kipling's identity has, until now, been kept under wraps but the UK's largest food maker is allowing the cake maker's good lady wife make her TV debut to plug its Oatibakes range, which was first launched in January.

Premier, meanwhile, has also lured back Paddington Bear to marmalade after a couple of years of munching on Marmite.

The TV character will from tomorrow be the "face" of the Robertson’s Golden Shred marmalade after a stint plugging the Unilever brand.

Premier said the use of Paddington made "perfect sense" amid the consumer trend for nostalgia. The company is also hoping the signing of Paddington will take its marmalade products to a "younger audience".

Unilever, meanwhile, issued an impish goobye to Paddington as he returned to marmalade.

"We said farewell to Paddington and sent him off on his travels with his suitcase full of Marmite sandwiches," a spokesperson said.

"It seems fitting that a bear as prone to mishaps as Paddington should turn up at Robertson's after developing such a savoury tooth."

One key questions remains, however: did Paddington love Marmite? Or hate it?

M&S's green narrative stands retailer out from the crowd

Mon, 01 Mar 2010 14:17:00 GMT

With suppliers and retailers jostling to be seen to be green, a strong narrative is becoming vital to hold consumers' attention.

Sustainability is no longer a buzz word; it is so often used it has become part of our industry's vernacular. But, with ubiquity, comes the danger that green initiatives lose their power, especially in a climate when consumers have other concerns.

However, Marks and Spencer's Plan A programme has a definite narrative and is a series of programmes that has lifted the UK retailer above its peers in its apparent commitment to environmental issues.

Today (1 March), M&S has set out a raft of new initiatives under the Plan A scheme, including making sure all products sold in its stores have "at least" one sustainable or ethical quality. The retailer's initiatives also include plans to enable its leading food suppliers to run "Plan A factories", which "adopt best-practice ethical and environmental standards".

To some, such words may be just that - words. But M&S has demonstrated its desire to make Plan A central to its way of working. Investments in new "eco stores", for instance, suggest M&S's environmental push is something it too is prepared to follow - and not just something the retailer demands its suppliers sign up to.

Similar noises on the environment came from Wal-Mart, the world's largest retailer, last week. The company is aiming to cut 20m tonnes of greenhouse gas emissions from its supply chain between now and 2015. The announcement was the latest in a series of plans Wal-Mart has to reduce its impact on the environment. The retailer has already developed a "sustainability index" to judge the performance of its suppliers on environmental issues.

However, the rhetoric from Wal-Mart suggests a less co-operative approach on the issue than that adopted by M&S. Given Wal-Mart's size, any moves it makes to cut its carbon footprint is likely to have a meaningful impact on how the industry as a whole effects the environment. However, amid Wal-Mart's increasing demands on its suppliers, less is heard about the retailer's own moves.

In fact, beyond the announcement, Wal-Mart was coy about the exact impact its plans will have on suppliers. Wal-Mart held a "webchat" to answer questions on its plans and, when asked whether the retailer would "press" suppliers to make "sacrifices", it said its plans would "closely involve" suppliers and would help its vendors save money.

Wal-Mart, however, stayed tight-lipped when we asked the retailer if a supplier's commitment (or otherwise) to the environmental cause would be a deciding factor in whether certain brands would be listed or pulled. You can be sure Wal-Mart's suppliers will be facing increasing demands in the weeks and months ahead.

Wal-Mart has benefited from the growing popularity of private-label products among US consumers in the last 18 months. Diamond Foods, a primarily own-label nut supplier, has also prospered. However, last week, Diamond moved to add some branded sparkle to its portfolio with the signing of a US$615m deal to buy upmarket crisp maker Kettle Foods.

While the M&A market remains subdued, Diamond's move for Kettle is a sign that some companies will pounce when the deal is right - even if it takes the business into a new field or category.

According to one analyst, the acquisition of Kettle will "transform" Diamond, with more of its revenue coming from branded products. The same analyst, however, suggested buying Kettle could make Diamond itself a takeover target. The bigger players in the fast-growing snacks category will be watching with interest.

Wal-Mart's green push leaves questions unanswered

Fri, 26 Feb 2010 12:17:00 GMT

Often a villain in campaigning circles, Wal-Mart is keen to be seen to be green.

The world's largest retailer had already put down a marker with its "sustainability" index but yesterday (25 February) the company set out its stall to cut carbon emissions across its business.

There will always be sceptics in the campaign community that will be extremely hard to convince. Some will want greater detail on Wal-Mart's plans and on how it will measure a supplier's carbon footprint.

Others, however, take the view that Wal-Mart is taking steps in the right direction and support the retail titan in using its massive leverage for the environmental cause.

Fred Krupp, president of green campaigners the Environmental Defense Fund, called yesterday's announcement from Wal-Mart had made a "bold move".

And, certainly, Wal-Mart seems to be leading the charge among the world's leading retailers to reduce the industry's impact on the environment.

However, there will, undoubtedly, be concerns over how Wal-Mart's plans will affect suppliers.

In the wake of its announcement in the US yesterday, Wal-Mart held a webchat to answer questions on its plans.

When asked whether it would "press" suppliers to make "sacrificies", the retailer said its projects would "closely involve" suppliers and would, at the end of the day, help its vendors save money.

Wal-Mart, however, stayed tight-lipped when just-food asked the retailer if a supplier's commitment (or otherwise) to the environmental cause would be a deciding factor in whether certain brands would be listed or pulled.

Now more than ever, with Wal-Mart apparently making the environment a priority, suppliers need to stay on the right side of the environmental debate.

Heinz marketing gets "creative"

Thu, 25 Feb 2010 17:37:00 GMT

Heinz booked an impressive third-quarter performance in the UK today (25 February), where sales volumes increased 9% on last year.

While the company admitted that sales of “winter warmers” like its iconic soup range were boosted by the cold snap, management made much of the “creative” marketing approach that the team this side of the pond has developed.

Initially, I assumed that Heinz's top brass was referring to the group's “it has to be Heinz” umbrella campaign launched earlier this autumn.

This multi-platform campaign, Heinz's largest marketing investment in the UK in the last five years, has included radio, TV, in-store promotion, PR and web activity. All very impressive.

However, while EVP and CFO Art Winkleblack and Margaret Nollen, VP of investor relations, gave a nod in the general direction of this impressive line-up, it was a marketing stunt of a different calibre that really caught their attention.

Apparently, Heinz's intrepid marketing team braved the snow to find the UK's coldest bus stop (located in Scotland). They then gave it a giant woolly hat.

This 'outrageous' stunt has clearly raised some mirth at Heinz HQ. And, apparently, it also generated quite a few headlines in the UK.

Really? I think those of us at the just-food office must have blinked and missed this extensive coverage. Either that or it got lost in the vast quantity of weather-related news we have been bombarded with this winter. (Yes, we get it, it's cold!)

Never fear, a quick Google search throws up a result that explains all.

According to News: Lite (which carries the tag line “it barely qualifies as news” - says it all really), Heinz not only gave freezing commuters a giant bobble hat to rest under, they also provided warming soup to keep out the chill.

Apparently, we could be in for some more promotional antics from those crazy cats at Heinz, as the company plans to boost its marketing spend by a further 50% year-on-year over the coming three months.

We wait with baited breath.

How healthy will the future be for Wessanen?

Thu, 25 Feb 2010 15:32:00 GMT

The focus was on the future at So Good and Kallo maker Wessanen in Amsterdam today (25 February).

The Dutch food group's recent travails are well documented and, after posting losses of EUR220m for 2009, the company's management was keen to outline the business' ambitions.

The downturn may have hit sales of organic food in markets across Europe but Wessanen believes there is long-term potential in the category.

CEO Frans Koffrie also talked up the company's plans for investment behind its brands, as well as the prospect of bolt-on acquisitions.

The market, however, seemed less than impressed, with Wessanen's shares plunging by more than 13% today.

The hit to the share price may have been due to Wessanen's hints that it may need to restructure its balance sheet and with a share issue a possible option.

However, Wessanen's plans to be Europe's "organic food champion" will demand some serious investment and a level of spending that could hit the company's margins.

What's more without a recovery in the organic food sector within the next two years, Wessanen's investment could reap few rewards - and perhaps cause more pressure on the company's already-fragile balance sheet.

Where is Fairtrade headed?

Mon, 22 Feb 2010 13:50:00 GMT

These are fascinating times for Fairtrade.

The ethical mark, designed to help consumers help those in the developing world, has brushed off the recession, with cash-strapped shoppers happy to pay the Fairtrade premium to give farmers what is deemed to be a 'fair price'.

Amid this growing consumer awareness, particularly in the UK, big brand-owners have upped their investment in Fairtrade. Cadbury, Nestle and - last week - Unilever have switched brands like Dairy Milk, KitKat and Ben & Jerry's to Fairtrade.

In the run-up to Fairtrade Fortnight, a two-week period of events to promote Fairtrade in the UK that starts today (22 February), retailers like Sainsbury's and The Co-operative Group have been falling over themselves to push their Fairtrade credentials.

Such moves have been broadly welcomed by the Fairtrade movement but have caused some to question where the ethical mark is headed - and created more competition for the likes of Divine Chocolate, businesses that pioneered Fairtrade over a decade ago.

Our interview with Harriet Lamb, executive director of The Fairtrade Foundation, the charity that oversees the relationships between farmers and manufacturers, discusses these issues and the kind of future that could lay ahead for Fairtrade.

Food makers map out global plans

Fri, 19 Feb 2010 17:33:00 GMT

One significant conclusion to draw from this week's CAGNY conference in Florida is that the world's largest food manufacturers seem to feel more confident in the early weeks of 2010 than they did through the whole of 2009.

After Unilever's tubthumping about the prospect for its emerging-markets business, the likes of PepsiCo and Danone both took to the podium to outline their own global ambitions.

Danone, which has had its well-documented problems in India and China, admitted its business in developing markets was "young" - but that the French food giant wants to expand its operations in key markets.

Meanwhile, PepsiCo executive Zein Abdalla almost fizzed with optimism about the potential for the food and drink group in overseas markets.

After a year in which businesses of all sizes have looked inwards as they battled recession, could these pronouncements mean companies now feel confident enough to look for pastures new?

Away from CAGNY, Nestle CEO Paul Bulcke used the Swiss group's annual results press conference to set out the company's stall for growth in emerging markets.

While markets in the West may still be feeling the grip of recession, Bulcke said there was a "different spirit" in developing markets and that Nestle had targeted growth not just in China but the wider Asian region, Latin America and Africa.

The race for growth has seemingly restarted in earnest.

Hustle bustle continues at CAGNY

Thu, 18 Feb 2010 15:09:00 GMT

This week, the leaders of some of the world's largest food manufacturers headed to Florida for the annual Consumer Analyst Group of New York (CAGNY) conference to discuss the downturn and how to deal with still-weak consumer confidence in many markets.

Amongst the various speakers was the president and CEO of Campbell Soup Co. Doug Conant who underlined the importance of the US food group plans to revamp its condensed soup business.

The Campbell boss said sales volumes of condensed soup in the US had been "stronger" than they had been "in several years", and laid out plans to "fire up" its condensed portfolio, which accounts for half of the company's US soup business.

Rival Heinz also sounded an upbeat note as it saw its shares rise on the expectation of "very strong" third-quarter earnings per share.

William Johnson, president, chairman and CEO revealed plans for the launch of Heinz infant formula in Russia and China in a bid to capitalise on the rapid growth of the emerging markets, an area touched on many times by speakers this week.

It was also the turn of Hershey chief executive Dave West yesterday, who revealed it is "actively" looking at ways to grow its international business through mergers and acquisitions.

The company's overseas strategy has been called into question after Kraft Foods' acquisition of Cadbury, with some commentators asking whether the Reese's maker has the scale to compete. West clearly believes it has.

And so, with just a day and a half remaining, we await announcements from Danone, Dean Foods and PepsiCo.

Ben & Jerry's announcement imminent....?

Wed, 17 Feb 2010 17:19:00 GMT

As the days tick to the start of Fairtrade Fortnight, companies across the UK prepare their announcements on the resilience of their Fairtrade offerings during a tough economic recession.

Sainsbury’s was first to kick off the impending wave of Fairtrade related news on Monday (15 February), with the announcement that it has become the world’s largest retailer of Fairtrade products.

just-food, however, has had whiff of a possible launch by Unilever's Ben & Jerry’s - and a link with the Fairtrade Foundation. Could the ice-cream maker be looking to add to its Fairtrade repetoire?

Watch this space…

Unilever switches focus to the East

Wed, 17 Feb 2010 16:37:00 GMT

Unilever's recent publication of its annual results - the first year under the stewardship of CEO Paul Polman - received a broadly positive response from the investment community.

With one notable exception. The company's performance in Western Europe.

The region will be an area of focus for Unilever and Polman this year after the company's sales there fell during 2009.

Unilever's restructuring fell heavily on Western Europe in 2009 but, even after costs linked to those programmes were stripped out, margins and operating profit from Western Europe was lower in 2009 than the year before.

As we reported earlier this month, Western Europe is an area of Unilever's business that the chief executive has acknowledged needs attention.

Despite Western Europe remaining a “tough environment” on macro-economic level, Polman is comfortable admitting there are places where the firm is not as competitive as it should be.

However, as Unilever told its audience at the CAGNY investor conference yesterday (16 February), there remains much to give the business cause for optimism - not least within emerging markets.

In 2009, Unilever's revenues across Asia and Africa rose and the company is keen to capitalise on its business in emerging markets this year.

The firm’s footprint in developing and emerging markets has grown from 20% to 50% of Unilever in the last 20 years and the group is clearly hoping this trend will continue.

Speaking to analysts at the CAGNY conference in Florida yesterday (16 February) Michael Polk, president of Unilever Americas said he expects to have around 1bn new consumers in these markets by 2020.

Ambitious but not unrealistic given Unilever's success in the last 12 months.

CAGNY kicks off

Tue, 16 Feb 2010 18:09:00 GMT

"It's great to be here in Florida again especially after the winter most of us have been through," remarked ConAgra Foods CFO John Gehring as this year's CAGNY conference got under way today (16 February).

ConAgra has been among a clutch of food makers to present at CAGNY today as investors heard how the largest food manufacturers would drive growth in what remains a very challenging business climate, particularly in developed markets.

For its part, ConAgra said it would persist with its NPD programme this year, using cost-savings from its supply chain to provide the "fuel" for sales and earnings growth.

General Mills pointed to its own marketing moves to drive growth in the US but set out its stall to grow internationally over the next five years.

And, meanwhile, Kraft Foods, now the world's largest confectioner after its takeover Cadbury outlined a timetable for how it plans to integrate the UK firm into its business.

Investors have voiced concerns over Kraft's ability to drive profitable expansion and deliver promised margin growth in the wake of the Cadbury deal. However, Kraft believes the acquisition will drive annual sales and has set a target of revenue growth of at least 5%.

And, all the while, Kraft insisted it was exiting a number of "unprofitable" categories and focusing again on NPD instead of "value-driven" marketing.

Next up later today - Sara Lee, Unilever, Hershey and Archer Daniels Midland.