The food business blog from Katy Askew
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Consumer goods giant PZ Cussons expanding Africa food business
22 May 2013 16:45
Personal care group PZ Cussons has said it is making progress in expanding its African edible oils business and is preparing to launch a consumer food brand in the country.
PZ Cussons first began trading in Africa over 100 years ago. In 2010, the group launched PZ Wilmar Ltd - a Nigerian JV with Wilmar International - to build a palm oil refinery in the country and build up an associate food ingredients business.
The company recently completed construction of the refinery "on time and to budget" and the group said production began during the January to April trading period.
With sales of bulk oil already under way, PZ Cussions provided a little more detail on its plans for the June launch of a consumer food ingredients brand - Mamador - at a presentation on Africa yesterday (21 May).
Management was upbeat on the company's prospects in the market and, while food remains a small proportion of the Imperial Leather maker's revenue, it clearly has plans for the long-term development of the sector.
And it wasn't just management that struck a positive note on the group's prospects in the African food sector. Panmure Gordon analyst Graham Jones noted: "PZ Cussons revealed a major new brand, Mamador, which... should convert consumers from badly produced, cottage industry cooking oil to a safe, hygienic consumer brand."
He added: "Nigeria undoubtedly faces many challenges, but we see PZ Cussons as very well placed to benefit from the huge potential the country offers."
The African food business is far from poised become a significant part of the PZ Cussons portfolio. However, PZ Wilmar should be viewed as a slow-burning growth stream that has significant potential to expand in the long-run.
Indeed, the fledgling edible oils business will likely benefit from the highly experienced PZ Cussons management team and the strong distribution and logistical infrastrucutre that the company boasts in Africa.
Sainsbury's insists King staying... again
29 Apr 2013 13:57
Sainsbury's has again insisted chief executive Justin King has no imminent plans to exit the UK supermarket group.
The weekend papers were once more buzzing with speculation that King could be preparing to depart the UK's third-largest retailer.
Over the past month, reports have had him making an array of career moves, from the seemingly left-field suggestion that he could be replacing 82-year-old Bernie Ecclestone as the chief executive of Formula One (an option that seems to be largely based on the fact his son is a Formula Three driver) to the more predictable suggestion that he could take the helm at Marks and Spencer, a retailer that has disappointed the market as it grapples with various issues at its clothing business.
According to the latest set of reports, Sainsbury's has started long-term succession planning by instructing the executive search firm Egon Zehnder to find a replacement for King. Potential candidates have been cited as Sainsbury's commercial director Mike Coupe - believed to be the leading internal contender - Coles MD Ian McLeod, outgoing WH Smith boss Kate Swann, as well as various Tesco directors - including UK MD Chris Bush.
But the chief executive has quickly moved to cool speculation that he will be checking out of Sainsbury's any time soon. In a television interview yesterday (28 April), King said: "I am not planning on going anywhere. I see myself staying at Sainsbury's."
While Sainsbury's and its chief executive evidently plan to remain tight-lipped over the possibility that King could be preparing to abdicate, it seems likely the rumour mill will continue to turn. Speculation will be given added impetus as King approaches his tenth anniversary of taking the helm at the retailer in 2014.
Orkla initiates compulsory acquisition of Rieber shares
26 Apr 2013 16:04
Orkla Brands has made a mandatory offer for all the shares of Rieber & Søn that it does not already own.
The offer price is NOK67.45 per share, which is the same price per share as paid to the Rieber family for its majority 90% stake, Orkla said.
When Orkla announced the deal last August, the company said the takeover was "a significant step" to becoming a "pure-play branded consumer goods company".
Orkla has been selling off non-consumer assets in recent years but still has interests in sectors including aluminium, financial investments and hydro power in order to focus on its food interests. Funds from these disposals will either be fuelled to fund M&A and drive growth or returned to shareholders, management has indicated.
Booker gets green light for Makro buy
19 Apr 2013 15:40
The UK Competition Commission has unconditionally cleared the acquisition of Metro's UK business, Makro, by cash and carry operator Booker Group.??
Loss-making wholesaler Makro was sold by its German parent to Booker for GBP139.7m.
Booker has said that the deal will strengthen its presence across the country and the company expects to bring the business into the black as it integrates Makro into its store network.
In its final report, published today (19 April), the Competition Commission concluded that the merged company would continue to face sufficient competition from other wholesalers. ??
In a brief statement Booker Group welcomed the announcement.
Further speculation over Burton's Biscuit Co. bidders
11 Apr 2013 17:09
A potential deal likely to make a regular appearance on our pages for some time to come is the possible sale of Burton's Biscuit Co.
It emerged last month the owners of the Jammie Dodgers and Maryland Cookies maker have launched a strategic review of the UK biscuit firm. In a process that could end in a sale of the UK biscuit firm, Apollo Management and CIBC have hired Credit Suisse to help them look at their options for the business, which they have owned since 2009.
One industry insider suggested this process showed the PE owners are essentially testing the water to see exactly how much interest there is in acquiring the business. So, earlier this week, we took a speculative look at the different companies that might throw their name in the hat in our Deal or No Deal column.
But it seems we may have missed a trick. According Stefan Kirk of M&A advisors Glenboden, South Korea's Lotte Confectionery could prove a dark horse should the race to acquire Burton's get off the blocks. Coming from one of SE Asia's best performing economies, Lotte is a power player in the Asian confectionery sector. And, Kirk says, the firm could well be looking to expand in Europe.
"Since their maverick entry into the European market with the acquisition of the Wedel branded confectionery business in Poland a couple of years ago, many in the industry are waiting in anticipation of further acquisitions by Lotte in Europe, who are also in branded biscuits in their home market," Kirk says.
So, could Lotte emerge as the eventual new owner of the iconic UK biscuit business? Well, you'll just have to watch this space. In the meantime, for a more detailed analysis of the companies who could be attracted to Burton's, click here.
National fish fingers and custard day?
02 Apr 2013 13:18
Doctor Who adorns the latest packaging for Birds Eye fish fingers in the UK
There are some of you who will immediately know what I'm talking about. For the rest, let me explain: tomorrow has been named "national fish fingers and custard day" to celebrate the favourite food of the eleventh doctor. Dr Who? Exactly.
Dr Who has replaced Captain Birdseye on a special-edition pack of fish fingers, which has been created by UK frozen food brand Birds Eye to mark the occasion and celebrate the 50th anniversary of the cult BBC series.
Avid Dr Who fans might be in for something of a disappointment, however. Birds Eye has only made one pack, a spokesperson for the group explains. This has been sent to Matt Smith who plays the eleventh Doctor in the iconic television show. I shudder to think what that would go for on eBay (mint, in box).
Lucky Smith has also been sent a year's supply of Birds Eye fish fingers.
Birds Eye has not entered into discussions with custard brands over potential cross-promotional opportunities this year, but as fish finger and custard day looks set to be an annual event, perhaps we should watch this space.
Energy fad moving to food?
14 Mar 2013 10:17
Energy has long been the big thing driving soft drinks sales growth. In recent years in particular, the emergence of energy shots has given the category a 'shot' in the arm. And, while there are a number of energy suppliants on the market, it might seem that the move of energy boosters into food has been slow in coming.
Cue that "eureka" moment when NRG Innovations realised it was possible to combine the energy boosting effects of the market leading 8oz energy drink with a milk chocolate bite.
"Our research showed that people were searching for an energy product that tastes great, is low-calorie, easy to transport, jitter-free and allows the user to decide how much energy they need and when they need it. After years of development and taste testing, we are proud to launch a product that addresses all of these issues," Joe Fairleigh, VP of sales, said.
The company has taken this research and creased chocolate-energy brand Energems. According to the manufacturers, Energems have been well received at trade shows and sampling events in the US, getting "rave reviews" and "lots of buzz".
The product is first launching in 40 Circle K stores in Charlotte in North Carolina. And, while it might seem unlikely that this small-scale début will shake up the confectionery and energy markets, it is worth remembering mighty oaks from little acorns grow.
Supply chain scandal could go global
27 Feb 2013 14:53
The horsemeat scandal that has shaken the European food industry and drawn into question the reliability and security of the modern supply chain looks like it could jump continents and spread to South Africa.
According to researchers from the University of Stellenbosch, a majority of South African supermarkets could be selling mislabeled meat products.
Of 139 samples taken by the researchers, 68% tested positive for ingredients not listed on the packaging. Unlisted pork was present in 37% of samples and a quarter of products contained unlisted chicken.
The study foundfound traces of a variety of animals, from donkey and goat to water buffalo. But perhaps more significantly, 28% of products contained unlisted allergens such as gluten or soy.
The survey targeted products containing processed meats - from burgers to deli and dried meats and sausages. Samples had been collected over a three month period in mid-2012, the researchers said.
The horsemeat scandal has ignited debate over where we should look to find protein. Commentators have suggested that the industry should lead consumers to more sustainable sources of protein, with the FAO going as far as to suggest the widespread uptake of entomophagy - eating insects.
However, the horsemeat revelations have also raised some very real concerns over supply chain security and prompted consumers to question whether they can trust that the food they buy is what it claims to be.
For just-food's analysis of how security down the supply chain can be improved, click here.
The South African researchers' findings highlight another uncomfortable truth: if the European supply chain is untrustworthy, then can manufacturers in other global markets can rely on their supply chains?
As consumers, regulators, manufacturers and retailers around the world step-up scrutiny of the products on their shelves, the supply chain scandal could be set to get a global dimension. Clearly this is an issue that has the potential to undermine consumer confidence - not just in Europe but on an international level.
Tomorrow, we will be discussing the results of our international confidence survey in a free webinar. It is likely that consumer confidence and trends driving NPD will be heavily influenced by the increased drive for provenance, traceability and reliability in 2013. Tune in to hear our panel of experts discuss this and other topics - ranigng from emerging markets to M&A.
You can register to attend the webinar here - it takes place at 3pm GMT.
Nestle drawn into horsemeat scandal
19 Feb 2013 13:47
Ah, how the mighty have fallen.
Was it really only last week that Nestle CEO Paul Bulcke insisted he was "confident" that "what we produce is not affected" by the horsemeat scandal that has rocked the European food industry since January?
"Quality has a price so that is why we are sometimes more expensive," he said during a conference call to discuss the group's earnings. Nestle, Bulcke argued, "prides" itself on the use of local ingredients and invests heavily in ensuring the security of its supply chain.
Fast-forward four days, and Nestle's horse is not looking so high.
It has emerged that two of Nestle's prepared ready meals, sold in Spain and Italy, as well as a meat product produced for its catering arm, have tested positive for horse DNA.
The group's response has been swift and decisive: Nestle has replaced the ready meals on sale with alternatives that are 100% horsemeat-free; ended its contract with German meat supplier HJ Schypke; and suspended deliveries of all finished products that include meat from this source - even products that have tested horsemeat free.
Nestle's response has been nothing less than one would expect from the well-oiled machine that is the world's largest food maker. However, the fact that Nestle has been hit by the scandal once again emphasises that the highly integrated and complex nature of the supply chain means anyone could potentially be drawn in to the scare. If a containment enters the chain, it can spread like wildfire.
PE owner slams Findus over horse meat response
13 Feb 2013 11:57
Findus shareholder Lion Capital has criticised the frozen food giant over the horse meat saga
Findus has come under fire for its response to the horse meat crisis - from the head of one of its private-equity shareholders, Lion Capital.
Earlier this week, Findus attracted the attention of the UK's politicians when Labour MP Tom Watson accused the frozen food company of being slow to recall the affected beef lasagne and insisting the firm should be held to account.
"For over a week Findus have known they could not guarantee the contents of their beef lasagne for over six months. Think about that for a moment. How did they let that happen? Why didn't they respond? I think Findus are negligent," Watson insisted in an open letter.
And today (13 February), it was the turn of the company's lead shareholders to turn on Findus management.
In an interview with Sky News, Lyndon Lea, a partner at Lion Capital, complained Findus was slow to inform shareholders of the issue and - significantly - failed to go on the front foot in a bid to restore trust in the brand.
"Within hours [of finding out about the contamination] I sent an email to the chairman stating that Findus needed to step forward and accept responsibility, apologise to the consumer, restore trust in the brand and be very visible in managing this crisis," Lea said. "Findus took advice from its public relations adviser, Burson Marsteller, who gave exactly the opposite advice and felt that this was an industry issue and not a Findus issue."
Certainly, Findus could have been more vocal in its efforts to communicate to the public once the contamination had been confirmed. The group was alerted to a potential issue on Saturday 2 February by supplier Comigel. However, it was not until the following Saturday - one full week on - that it communicated directly to consumers, taking out adverts in the weekend press.
In defence of Findus, the frozen food group was perhaps not so slow to act on Comigel's warning as has been suggested. Indeed, it seems much went on behind the scenes in the first few days that the crisis hit the company. As a spokesperson for the retailer told just-food, it withdrew product and alerted its retail customers to a potential issue the following working day from when it received Comigel's warning. And Findus initiated a consumer recall as soon as tests for horse DNA returned positive.
In hindsight, it is easy to say Findus should have been quicker to alert consumers and in initiate a full recall. But what if the tests had in fact come back free of horse DNA? Findus would have done immense damage to its brand and initiated a costly and unnecessary recall for nothing. Should this scenario have played out, I am sure observers would have been equally as quick to denounce management as reactionary and alarmist.
So, Findus's failure essentially lies in how it handled the PR side of things. If the group been more proactive in its communication efforts, as Mr Lea suggests, it is likely that much of the criticism that has been levelled at the firm would have been avoided.