Last week saw the question of whether regulators or industry should take the lead in promoting good nutrition come to the fore, when US policy makers signalled they could be preparing a clamp-down on “unsafe” trans fats. Added to moves from Mexico to tax fatty foods and it seems clear that worldwide governments are taking an increasingly pro-active stand on issues surrounding obesity. In some ways the food sector feels like an industry under seige. A swathe of quarterly results that failed to meet industry expectations, accompanied by a series of forecast downgrades, served to highlight the pressures that food makers are under as they attempt to navigate the choppy waters of a weak macro-economic environment. Here is a selection of the more noteworthy quotes that appeared on just-food over the last five days.
“While consumption of potentially harmful artificial trans fat has declined over the last two decades in the United States, current intake remains a significant public health concern, The FDA’s action today is an important step toward protecting more Americans from the potential dangers of trans fat” – FDA commissioner Margaret Hamburg on the regulator’s move to open a consultation period on its preliminary determination to legislate against trans fats
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“We invest our reputations and resources to provide consumers with safe and nutritious products that meet their preferences and lifestyle needs. Through our efforts at product reformulation and the development of suitable alternatives, trans fats that are not naturally occurring have been drastically reduced in the food supply” – food industry lobby the Grocery Manufacturers Association retorted
“When you put a tax on something what happens is that people change their consumption habits marginally. It’s a blunt instrument that affects everybody in the population and it just produces a slight reduction in the obesity rates. What happens is that people who are obese become slightly less obese and people who are overweight become slightly less overweight but you don’t cure the obesity problem by marginal changes in people’s diets” – Professor Richard Tiffin of Reading University on Mexico’s junk food tax
“I think Nestle is serious about weeding out the duds in its portfolio – you are not going to see whole categories disposed but you will see more of this small scale disposals around the edges” – Kepler Cheuvreux analyst Jon Cox sees further disposals ahead from Nestle following the sale of Jenny Craig
“Project K is an opportunity to step back from our business and identify larger structural efficiency and effectiveness opportunities. Our goal with this programme is to reinvest back in our business and to gain momentum in our business and get back on our sustainable growth model, and we’ll continue to reinvest back in the business until we see that happen” – Kellogg CEO John Bryant on cost-cutting plans that will see the cereal maker reduce its workforce by 7%
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By GlobalData“Next year, 2014, will see a shift to other businesses. Sugar will be less. But what you find is grocery will be more. I think we will start to get a recovery in our ingredients businesses and we have the growth of Primark” – Associated British Foods finance director John Bason says the company can offset lower sugar profits
“With such weak trading Morrison has once again endured a period of losing market share in the UK. With management talking of inflation of c2.5-3% (both for Morrison and the industry), this implies a LFL volume contraction across the core estate of at least 5%. Such sustained pressure will surely have resulted in further negative operational gearing and margin pressure” – Shore Capital analyst Darren Shirley on Morrisons continued LFL sales drop
“In terms of revenues if not perception, M&S is now more a food company than a clothing retailer. Within the lower margin food area, sales continue at a decent clip… However, the traditional general merchandise area continues to be the centre of attention” Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, comments on the division betweem Marks and Spencer’s food and non-food performance
“In a global enterprise, there will certainly be challenges from time-to-time. But our job and our promise to shareholders, is to manage those challenges and deliver our commitments. We’ve addressed each of these issues. So as we look ahead, we really in optimistic about the power and the potential of our unique assets to deliver significant value to our shareholders” – Mondelez International CEO Irene Rosenfeld after the company lowered its outlook following a weak performance from its biscuits business in China
“The company confirms it has appointed Ondra Partners to assist in developing investment options for the bread business, which include co-investment by a partner” – Premier Foods admits it is seeking an investment injection to improve the performance of its bread division
