What’s Hot in Bakery: Global Industry Developments and Product Trends
The primary objective of this report is to examine underlying trends which are indicative of the current developments within global bakery. This report will also summarise the logic and reasoning behind each trend as well as detailing its effect – individual and cumulative – on product developments in bakery.
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Let's put horsemeat to one side for a moment.
On Thursday, there came another story to shake the food sector - the prospective sale of Heinz in a deal worth US$28bn.
Famed US investor Warren Buffett and private-equity firm 3G Capital have secured agreement from the Heinz board for a takeover it is purported will be the largest ever in the food sector.
"It's our kind of company. They've got a group of fantastic brands, led by ketchup," Buffett said in that folksy way of his after the deal was announced. "I've sampled it many, many times."
Buffett has a taste for FMCG companies renowned for their brands; his portfolio also includes stakes in Coca-Cola and Procter & Gamble.
However, while many of the Heinz headlines focused squarely on Buffett, should the deal go through (it is expected to be complete in the third quarter; the SEC investigation into options trading before it was announced should not derail it), Buffett is set to act largely as financier. "It's [3G's] baby from an operational stand-point," he said.
So what lies ahead for Heinz?. A drive for efficiency and productivity looks on the cards. Heinz has shaken up its supply chain and closed plants in recent years but 3G's record in the brewing sector suggests a renewed focus on costs. Under-performing assets, like Heinz's US frozen business, could be offloaded.
There is, however, also the possibility of strategic expansion. "Our goal here is to make this a better and even more global company. That is a goal we share with 3G and Mr Buffett," Heinz chief Bill Johnson told reporters on Thursday. As a private company, away from the glare of the market, 3G and Heinz could take a longer-term view on expansion, boosting its presence in emerging markets. Some industry watchers believe the 3G/Buffett-backed Heinz could lead a wave of consolidation in the US food sector.
The deal is likely to be a hot topic of conversation among the food industry execs and Wall Street analysts in Florida this week at the Consumer Analyst Group of New York investor conference, a key date in the US industry calendar. just-food will, as ever, bring you the latest news and views from the event, which starts tomorrow.
We are slap bang in the middle of the latest round of company results, with this tranche of numbers focusing on the fourth quarter of 2012 and giving us a chance to reflect on company performance in the last 12 months. Last week, among others, we had Nestle, PepsiCo and Mondelez International report to the market; this week, we have Wal-Mart, Danone and the UK's Premier Foods in the batch of results in the pipeline. Follow our news and On the money pages for the latest.
Last week, Wal-Mart's UK arm Asda became one of the latest companies embroiled in the horsemeat contamination saga that has rocked Europe's food industry. On Thursday, Asda recalled sauce made by private-label group Greencore after finding it contained horse DNA. The product was the first outside the frozen aisle to be found to contain horse.
After a week of recalls across Europe, arrests in the UK and the French government accusing one local firm of knowingly passing off horsemeat as beef, the first set of industry-wide tests for horse DNA were published in the UK on Friday. No new products sold at retailers were implicated but the results led news bulletins here on Friday evening with new schools in Lancashire and hospitals in Northern Ireland served products containing horsemeat.
Over the weekend, Malcolm Walker, the outspoken chief of UK retailer Iceland Foods, reflecting on the affair in TV interviews, pointed the finger at schools, hospitals and prisons for "driving down" quality. Walker also reportedly described the situation as a "storm in a teacup".
In any case, the UK government has again today summoned food retailers to talks to see what they are doing to restore consumer confidence. And more results from UK industry tests are due in the coming days.
Until next time...