Blog: Dean BestOptimist or pessimist?

Dean Best | 11 May 2009

Is your glass half-empty or half-full?

Your answer likely determines your view of the state of the global economy and your thoughts on how the food retail sector can navigate the downturn.

This year's World Retail Congress – held last week in Barcelona – highlighted the difference between optimists and pessimists in food retail.

Tesco reminded us that there remains potential in the world's emerging retail markets. International director Philip Clarke insisted there is “a hell of a lot of growth to go for”.

Spar International seemed to agree, with boss Dr Gordon Campbell outlining the retailer's plans for a fresh assault on the Chinese market.

Elsewhere, however, just-food was struck by the pessimism over the state of the Russian economy, with the head of local retailer Dixy Group emphasising just how challenging it remains operating in the market. Industry watchers also focused on just how fragmented India remains.

The almost split personality of those present at the Congress summed up a somewhat flat atmosphere at the event this year. Visitor numbers seemed lower, the press pack appeared smaller – in all, the conference seemed to lack the buzz of last year. But then, given the extent of the economic problems over the last 12 months, perhaps that should not come as a huge surprise.

More gloomy news emanated from Spain last week, with news of turmoil at Grupo SOS, the olive oil maker and owner of Carbonell and Bertolli. The SOS board was forced to hold a meeting in the wake of the dismissal of its chairman and CEO and to discuss a loan scandal that has thrown up questions over the future direction of the company. Over the weekend, SOS said it would issue new shares in the business to shore up its financial position but there remain uncertainty over the group's health – will certain assets have to be sold?

Wessanen, the Dutch food group, told us that a sale of its North American operations would help the business to pay down rising debts and grow in Europe. Last week, the company revealed it exceeded a debt covenant during the first quarter of the year and, although its North American businesses remain under review, disposals seem likely.

But, let's end on a more positive note. Shares in Kraft Foods jumped by more than 6% after the US food giant posted a rise in first-quarter profits. Chairman and CEO Irene Rosenfeld hailed "a very solid start" to the year at Kraft and she told the Wall Street Journal that the US consumer was “getting a little more back to normal”.

That might brighten up some of the more glass-half-empty folk out there.


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