- The food business blog -
Dean Best's unique web log on the global food industry, key events, people and his own daily experiences. If you would like to offer your comments, opinions, suggest topics or just have a good rant, please feel free to email: Dean Best. |
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Gordon's clampdown on waste
7th July 2008 15:18
The thought of Gordon Brown, the UK Prime Minister, hectoring the country’s population on how to save food has grabbed the headlines here this morning (7 July).
However, leave to one side the image of the Iron Chancellor doing a Delia and telling us how to make the best of the leftovers in the back of the fridge.
For, as Brown, along with other G8 leaders meet in Japan for their annual summit, the global food crisis and government food policy is taking centre stage – and could have deep ramifications for your business.
As Brown met with the rest of his G8 counterparts, the UK government published its review of food policy in the country. The crux of the “challenge” ahead, the Government said, is how to cater for a growing global population, while keeping food prices down and combating climate change. No easy task, then.
Less household food waste was a key message from the report but, alongside that aim, came others including making farming in the developing world more efficient, a further push on reducing the food industry’s impact on the environment and fresh impetus behind improving the population’s diet.
The UK food industry has made moves on some of these issues but the publication of the report, which was personally commissioned by the Prime Minister, will be sure to place more pressure on all in the sector.
One top food industry executive feeling the heat last week was Marks & Spencer boss Sir Stuart Rose. M&S’s bleak trading update and the subsequent fall in its share price will leave Sir Stuart facing some tough questions at the company’s AGM on Wednesday (9 July).
Following the furore over Sir Stuart’s move to combine the chairman and chief executive roles at M&S, the company’s poor performance will give disgruntled investors further cause for complaint.
As one analyst told me last week, things could get “ugly” this week for the retailer.
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UK opens up for Aldi, Lidl
3rd July 2008 16:52
Hard discounters in the UK have had it tougher than in their country of origin – Germany – and many other parts of Europe where the format was quickly received and accepted into mass grocery retail.
Now, it seems, the fortunes of the likes of Aldi and Lidl are looking up.
Aldi has announced plans to invest GBP1.5bn (US$3bn) in the UK and open a store a week.
The company is, alongside Lidl, enjoying double-digit sales growth in the UK.
And, all the while, at the premium end, the likes of Marks & Spencer are finding the going tough.
This month's free management briefing for just-food subscribers takes a look at the major players and reviews the latest sales data and expansion plans from Aldi, Lidl and Netto.
The briefing highlights best-practice strategies that these players are taking in order to increase market share.
Adopting strategies such as private-label NPD, building on economic concerns and becoming more fashionable will ensure the discounters are here to stay.
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Food industry flocks to the summer sales
30th June 2008 17:03
The height of the summer usually means several things: rain at Wimbledon, mud at Glastonbury – and a period of serenity on the business pages.
Well, wouldn’t life be boring if it were so predictable. While the world’s top tennis players thrashed it out in the sun last week, and thousands of music revellers basked in sunshine at Glasto, a series of deals were struck in the food industry, as companies in sectors from ingredients to meat moved to reshape their businesses in the face of rising costs.
The biggest deal was among two of the biggest agribusinesses in the US. Bunge pounced to buy Corn Products International, a move, it says, that will give it a key foothold in corn products, like starches and sweeteners, as well as a greater presence in emerging markets like Mexico and India.
Despite Bunge’s bravado, the deal was initially greeted by a cool response from the market and sent the company’s share price tumbling 9%. However, analysts were quick to praise the move, which will create a more powerful supplier for all you food manufacturers out there.
Two more US-based firms – meat processor Smithfield Foods and produce-to-seafood group Del Monte Foods – have also been busy looking to the future by selling off parts of their businesses.
Smithfield has agreed to sell its European venture to Spanish processed meats giant Campofrio, a deal that will create the largest company in the sector in Europe. The enlarged firm will have sales of US$3bn and a presence in markets across the Continent and into Russia.
Del Monte, meanwhile, has found a buyer for its seafood business after deciding to offload the unit due to mounting costs. South Korea’s Dongwon Enterprise Co. will stump up $363m for a business that includes the Starkist brand but which has seen tuna costs jump 70% this year.
Del Monte boss Rick Wolford said the company had decided to focus on businesses with better margins. With costs mounting, it’s likely we’ll hear similar sentiments from industry boardrooms around the world in the coming months.
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Will Washington waver on biofuels?
25th June 2008 15:33
All eyes – at least among food suppliers in the US – are now on the country’s environment agency, as the debate over Washington’s biofuels policy heats up.
The US Environmental Protection Agency (EPA) is mulling whether to allow Texas to waive half its commitment to the Renewable Fuels Standard (RFS), which lays down how much corn the state should put aside for biofuels this year.
Texas, backed by presidential hopeful John McCain, argues that the mandatory use of corn for biofuels is driving up the cost of corn for swathes of the food industry – and driving up food prices for consumers.
Texas Governor Rick Perry stepped up his campaign yesterday (24 June) arguing that the RFS was hitting the food industry hard. “It is doing more harm than good and must be modified before our livestock industry suffers permanent damage,” Perry warned.
US bakers have joined meat processors in backing Perry but there are whole sections of US agriculture who want the EPA to stand firm.
The American Farm Bureau Federation (AFBF), for instance, insists that there is no link between the RFS and the pain felt in the livestock sector due to higher corn prices.
“If EPA sends a signal that the government is not fully committed to implementing the RFS – by wavering at the first hint of an increase in price regardless of whether the RFS is the cause or the severe harm standard has been satisfied – the investment markets could react and thus jeopardise the ability to meet the goals of the legislation,” the AFBF said.
The EPA will make its decision by 24 July. It will surely be a contested one.
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The shake-up in posh chocs goes on...
23rd June 2008 16:46
And so the shake-up of the fast-growing premium chocolate market goes on.
After the sale of Godiva late last year and Nestle’s publicly-stated ambitions to boost its presence in the category, today (23 June) saw the sale of Belgium’s Guylian to South Korean confectioner Lotte.
The deal will give Guylian the chance to boost its profile in Asia, where demand for posh chocolate is steadily growing.
The transaction is unlikely to create too many waves in the US, however, where Swiss firm Lindt is leading the sector – and showing signs of being determined to hold on to its lead.
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CIES - closing thoughts
20th June 2008 16:02
After sitting in a bar of Germans cheering on their football team last night (yes, I am a bitter Englishman), it was a relief to return to the orderly calm of the CIES World Food Business Summit in Munich this morning (20 June).
As just-food has reported this week, the conference has provided a fascinating snapshot of the work food manufacturers and retailers are doing in the complex field of sustainability.
However, many of the more thought-provoking views on the issue have come from outside the industry. Aviation giant Airbus implored the food industry to work harder on sustainability before it becomes seen as a contributor to problems like climate change. Advertising group BBDO warned that the old communication strategies (and by old, the firm meant just a few years ago) are no longer relevant in an era of Facebook and iPhones. Food suppliers and manufacturers would have received plenty of food for thought.
That’s not to say that the industry is not making significant strides on sustainability. The likes of UK retailer Waitrose and French food group Danone have developed innovative strategies on issues like sourcing and improving nutrition in the developing world.
It is these more innovative ideas that have really grabbed the attention this week.
However, as we all know, innovation costs money. And in the global economic downturn in which we are all operating, how easy will it be for you to keep investing in sustainability? And will consumers still be switched on to such issues when they are watching the pounds in their purse?
As the conference draws to a close, there could, on reflection, have been more debate here on how important corporate and social responsibility and embracing the sustainability agenda is – right now – in this more uncertain economic climate.
This is pertinent given the pressure publicly-listed companies are under to meet short-term targets on profit. The up-front costs and longer-term mindset needed on issues like carbon emissions do not fit well with this pressure.
There was, however, one glimpse into the minds of the audience here on that very point. Delegates, throughout the event, had been asked to vote on a series of questions on sustainability in between presentations.
One question this morning asked how an economic downturn would affect a company’s sustainability strategy. Just shy of half – 48.4% – said their investment “would be reduced but core areas would be maintained”.
Plenty of food for thought, indeed.
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Sustainability is sexy
19th June 2008 13:07
Sustainability is sexy.
No, you read that correctly. The message from here in Munich is that sustainability is sexy.
According, that is, to Mark Price, the managing director of UK retailer Waitrose.
Price – the self-styled “Chubby Grocer” – took his turn to chew the fat over the issue dominating the CIES World Food Business Summit this week.
This morning, Price outlined Waitrose’s work on sustainability and, by and large, it was clear to see that the retailer has made some genuine strides on issues like supporting farmers and local sourcing.
Sure, Price had an interest in standing up and walking us through the Waitrose sustainability message but credit should go to the company for the progress it has made.
However, there are a couple of key differences in the way Waitrose works as a company that determines its commitment to sustainability.
Firstly, the company’s ownership structure – it is, in effect, owned by its workers – enables the retailer to take a longer-term view than, perhaps, its publicly-listed rivals.
Secondly, much of Waitrose’s work on sustainability has been driven by what it shoppers want. And, generally, a shopper at Waitrose has deeper pockets, is more affluent and is more “switched-on” to green issues than the average shopper on a UK High Street.
The fact that shoppers at Waitrose are more willing to pay higher prices helps the retailer invest in its sustainability agenda.
Elsewhere, though, the outlook is more uncertain.
As concern over the UK economy mounts, and as consumers tighten their belts, how easy will it be for other retailers to fund the up-front costs needed to pursue a more sustainable business?
And how pertinent are those issues now to a more cash-strapped shopper?
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Sustainability makes a buzz in Munich
18th June 2008 18:02
“In the words of JFK, the best time to fix the roof is when the sun is shining.”
So spoke Gareth Ackerman, chairman of South African retailer Pick ‘n Pay, as he addressed the CIES World Food Business Summit in Munich today (18 June).
Let’s hope the roofs of Munich needed no extra work on a day that has seen some foul, and well quintessentially English, weather in this most German of cities.
In all seriousness, Ackerman, who also doubles up as chairman of the CIES Summit committee, was issuing a word of warning to his food industry audience about the importance for all suppliers and retailers of meeting the issue of sustainability head on – and meeting it now.
Sustainability, that much-talked about but less-understood of issues, is one of the central themes of this year’s summit.
This afternoon, following a morning of sessions dedicated to the retail landscape in Europe, sustainability took centre stage.
Ackerman paved the way for, somewhat bizarrely at first glance, a representative from aviation giant Airbus. However, Andrea Debanné, strategy vice president at Airbus, had a series of insightful messages for the food industry.
The former Coca-Cola Co. executive (she was even wearing red, nice touch) pointed to the aviation industry’s mistakes in dealing with the public’s perception that it is a major contributor to climate change.
Notwithstanding the fact that aviation accounts for 2% of global CO2 emissions, Debanné said the industry had become associated with climate change and global warming. The food industry, she said, needed to get working on how it can alleviate its impact on the environment and look to collaborate on the issue. “Don’t wait until you become a target,” she said. “Get your facts straight and lead the dialogue.”
The dialogue in the auditorium then led to an eclectic presentation from Professor Robert Pickard, chairman of UK consumer association, Which?.
In an engaging and humorous half an hour, Pickard took in the Big Bang, Hamlet and honeybees. (I won’t pretend to do it justice here). Using bees as an example, Pickard said government, companies and individuals needed to work together on laying the foundations for effective CSR and sustainability policies.
“Corporate social responsibility is in every individual honey bee body,” Pickard said, adding that humans have lessons to learn from the workings of your average hive.
Sustainability, then, is the buzz-word of the day here in Munich (sorry, it had to be said).
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Live from the CIES World Food Business Summit
18th June 2008 9:15
just-food hits the picturesque German city of Munich over the next three days to bring you live coverage from one of the leading European food industry conferences of the year - the CIES World Food Business Summit 2008.
Though steeped in Bavarian history, Munich is a truly international city and an ideal place for such a global event. Weaving through the groups of tourists (and even the odd hen party) strolling along the bustling city-centre Marienplatz last night, it was clear that the city famed for its traditional bier and bratwurst has grown to become as cosmopolitan as the German capital, Berlin.
The summit reflects that mix of homegrown and international. We'll hear from the likes of Alain Caparros, the boss of German retail giant Rewe, who will give his thoughts on one of Europe's toughest retail markets.
Delegates will also hear from, among others, two of the food and beverage industries leading lights - Coke president and chief operating officer Muhtar Kent and Danone chief executive Franck Riboud.
Keep an eye on our pages for all the latest....
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Nestle, Nooyi and rotten tomatoes
16th June 2008 18:17
There were plenty of rotten tomatoes thrown around the US last week in the wake of the salmonella outbreak sweeping across the sector, and some were being sent in the direction of the country’s food safety officials.
News that the salmonella scare had affected people in 17 states brought to mind similar nationwide recalls over spinach and peanut butter – and reignited the debate over the effectiveness of the US Food and Drug Administration.
There is widespread agreement that the FDA needs more money to boost its policing of the US food supply but the story of tainted tomatoes also served to bolster calls for reform of the agency.
The FDA won praise last week for being more open and providing more information on the types of tomato to avoid and the states not linked to the outbreak. Consumer groups, however, were quick to point to flaws in the FDA’s policy towards the US produce sector. As one leading consumer advocate told just-food, the crux of the whole debate is that the FDA is "reactive not preventative". Reform of the FDA seems certain but the future shape of the agency is sure to be a subject of fierce debate.
Advertising, another often controversial subject, grabbed some headlines last week, with Nestle caught in the cross-fire on both sides of the Atlantic.
First, the UK’s advertising watchdog banned a Nestle ad campaign, arguing the company’s “three-a-day” claim for whole grains was misleading and could be confused with the government-backed five-a-day message on fruit and vegetables. Nestle also came under fire in the US for failing to sign up to an industry-wide effort to limit junk-food advertising to children.
Perhaps wary of a possible PR backlash in the US, Nestle told us that it is mulling over whether to sign up to the scheme. Nevertheless, both stories only served to highlight how food manufacturers can come under pressure in the minefield of nutritional guidelines.
And, finally, one top food industry executive spoke out last week about the pressure all companies are feeling on commodity costs. PepsiCo boss Indra Nooyi controversially called on Washington to take action over rising commodity prices, warning that she sees no end in sight to the trend.
Some may scoff at her call but Nooyi’s comments shed further light on an issue affecting us all in the food industry. As she warned last week: “Food prices have gone up and consumer spending is really getting squeezed. Yes, you can pass the costs on to the consumer, but at what point will they stop buying?”
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