The food business blog from Dean Best
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UK competition fines soar in 2007
03 Jan 2008 16:00
Some UK business leaders may have raised an eyebrow at news that fines imposed by the UK’s competition watchdog soared in 2007.
The Office of Fair Trading’s fines reached GBP237m last year, a figure that, according to the Daily Telegraph, would anger some who see the watchdog as having a “publicity-seeking agenda”.
But would consumers affected by price-fixing in the UK dairy sector see it that way?
The OFT said moves to fix the price of milk, cheese and butter costs UK consumers some GBP270m during 2002 and 2003.
Retailers like Asda and dairy processors including Dairy Crest claimed that were trying to help farmers. However, at that time, farmers were quitting milk production in droves, tired of not being able to make a reasonable return – or even cover costs – from selling their milk.
Perhaps if farmers had been paid a decent price in the first place, the supermarkets and dairy processors wouldn’t have to resort to such under-hand tactics.
Many consumers will applaud the OFT for attempting to hit companies in the pocket for their indiscretions.
Brits are the junk-food junkies
02 Jan 2008 15:35
Welcome back to you all after what was, I hope, a relaxing Christmas. One or two of you (should that be us?!) may have over-done it a tad over the festive period and will be writing a list of resolutions in a bid to undo the excesses.
In a bid to spur us on, a study emerged today (2 January) that claims the UK is the country most “addicted” to fast food.
A survey of 9,000 people from 13 countries found the US closely followed the UK in its love for fast food. The study also found people acted in a conflicting manner when it came to managing their weight.
"People are inherently contradictory and nowhere is it more obvious than on such a sensitive and important issue as their weight," said Synovate global head of media Steve Garton.
The publication of the study – and, perhaps, the blow to British self-esteem – comes at a crucial time in the obesity debate in the UK.
New regulations on food advertising kicked into action yesterday with “junk food” banned from TV for programmes watched by the under-16s.
With the UK’s love for fast food now apparently usurping that across the Atlantic, those who argued for the regulations will be feeling vindicated.
Others will argue, however, that the guidelines that went live yesterday don’t go far enough.
We wish you a merry Christmas
21 Dec 2007 13:47
Hi folks, before I dash off for the just-food Christmas party, I thought I'd do a bit of house-keeping and inform you that the site will be closed on Monday (24 December).
Coverage will resume on 2 January.
Thanks for all your support this year and I wish you all a Merry Christmas and a happy and prosperous 2008.
Put our review under review
20 Dec 2007 17:52
It’s been a fascinating first year in the food industry. When I joined just-food in April, I quickly realised that the scale, size and importance of the industry dwarfed my previous beat in beverage alcohol.
It’s been an enjoyable eight months and I look forward – after a well-earned rest and a bit of turkey – to what awaits us in 2008.
But, as we head into Christmas, I’ve put together a short just-food review of 2007 – and I’m interested to hear your thoughts. Who had a good year? And who should take a deep breath, put the 2007 behind them and see 2008 as a fresh start?
Milk mergers - just a matter of time
19 Dec 2007 14:43
Whispers of a potential merger between Dutch dairy groups Friesland Foods and Campina have been heard many times in recent years.
Before now, both companies have quashed that prospect but it seems global conditions in the dairy sector may have forced their hand.
This year, those close to the industry have predicted a wave of consolidation in the sector as dairy companies look to strengthen amid soaring dairy commodity prices.
In the UK, First Milk and Milk Link are looking to merge, while in Australia, a number of potential suitors are circling local co-operative Dairy Farmers.
Friesland and Campina have to clear a number of hurdles before formally joining forces but market forces are pulling them together. And it seems likely they won’t be the last.
US uncertainty for Nestlé
18 Dec 2007 14:44
Shares in Nestlé dipped today (18 December) after analysts, worried about the prospect of a downturn in the US, trimmed their ratings on the stock.
The downgrades could just be a reaction to the fact that Nestlé shares had been trading at a premium in recent weeks.
Investors, growing in nerves amid this summer’s credit crunch, have been looking to the safety of big, robust multinationals like the world’s biggest food company.
However, even a company the size of Nestlé will suffer if the US economy does go into recession. Nestlé announces its results for 2007 in late February; food executives around the world will be watching the Swiss giant’s outlook for the US with interest.
Why EU ad pledge will make compulsive viewing
17 Dec 2007 13:59
In a bid to display their seriousness in tackling child obesity, the EU's biggest food firms signed up to a set of marketing commitments last week.
Similar moves in the US are, after initial fierce criticism, slowly gaining support and it has quickly become clear that the European initiative will also have to overcome the sceptics.
The EU Pledge – signed by food and beverage firms that account for around two-thirds of the annual marketing spend in the sector – is a voluntary undertaking to curb advertising to children. Consumer groups have expressed scepticism and have continued to call for legislation rather than self-regulation. That concern, though, is to be expected; it is only once initiatives like the EU Pledge have demonstrated their effectiveness that they start to gain any kind of credibility.
However, like many self-regulatory initiatives, the pledge will have the problem of not representing the entire industry. While a number of major companies have signed up, there are some notable absentees, not least McDonald's, a major advertiser to children and a company that often attracts the ire of pressure groups.
To its credit, the requirements of the EU Pledge do go further than current advertising codes of practice in most EU countries. Its proponents point out that it is the first time in Europe that a group of companies has set up a common framework on advertising to children, and the first time a unified age benchmark has been agreed. Nevertheless, the decision not to opt for a self-imposed time watershed will attract criticism. This aspect of the pledge could be a weakness that critics of the scheme will look to exploit.
One thing is certain – it’s a topic that does – and will continue to – make for compulsive viewing as we head into 2008.
A hectic first month for Ahold's new boss
14 Dec 2007 17:52
It’s been an interesting first month in charge for Ahold CEO John Rishton.
The world’s seventh-largest retailer by sales has ploughed on with its revamp in the US with the sale of its Tops stores. The overhaul is designed to boost sales and margins of Ahold’s US business and its “value improvement programme” seems to be ticking over nicely.
Nevertheless, the changes haven’t stopped speculation about Ahold’s future with analysts predicting a merger between the Dutch giant and Belgian counterpart Delhaize.
Meanwhile, over in Scandinavia, Ahold’s retail venture has been rocked by a food safety scandal. The supermarket chain ICA has pledged to act after some stores in Sweden were found to be relabelling unsold meat and changing sell-by dates on the packages.
So, as we head into Christmas, perhaps Rishton will be warmed by figures from Ahold’s domestic market that claim festive sales are up 13% on last year.
Ahold’s Albert Heijn chain is the largest grocer in the Netherlands and is best-placed to benefit from a bumper Christmas after a robust last few months.
Fierce price wars have been a characteristic of the Dutch retail market in recent years; Rishton will no doubt be cheered that shoppers are looking for more premium items – for Christmas at least.
Danone not laughing over Wahaha
13 Dec 2007 13:39
Talk about the potential of China all you like but Danone’s turmoil over there shows how troublesome operating in the market remains.
Indeed, so heightened is French concern over the spat that President Sarkozy recently waded into the row on a recent visit to China.
The country can offer vast rewards but the perils are also great. The row is set to hit Danone’s top-line, is likely to hit its fourth-quarter numbers and, perhaps most worryingly for Danone, is looking like it will run and run.
Retail numbers crunched on both sides of pond
12 Dec 2007 17:11
Some thought-provoking figures on the grocery landscape on both sides of the Atlantic over the last 24 hours.
In the UK, Morrisons, the country’s fourth-largest grocer, is seen as the big improver, with its share rising to 11.3% during the three months to 2 December, according to TNS figures.
Morrisons, which under the stewardship of Marc Bolland, is focusing on the provenance of the food sold in its stores, saw sales grow 7% year-on-year, the highest of the big four, TNS said.
The market as a whole saw sales rise 5% during the 12-week period and the figures will certainly give Morrisons, perhaps until now the most maligned of the UK's "big four" grocers, a welcome shot in the arm.
Nevertheless, how Morrisons performs during the key Christmas period will give the industry a clearer indication of the outlook for the business.
In the US, the picture seems a bit less rosy. Shares in a number of major US grocers fell yesterday (11 December) in the wake of Kroger’s third-quarter results.
Kroger’s like-for-like sales were up but analysts were disappointed by lower margins from the retail giant’s fuel sales. The company’s gross margins dipped as earnings were also given a healthier glow from a tax benefit.
Industry watchers are also questioning how easy it is proving for US retailers to pass on higher supplier costs to consumers as the country’s economy tightens.
With the Fed cutting interest rates yesterday, will the pressure ease?