Top 7 from 7: The key global food industry news of the past 7 days (Aug 27 - Sept 3)
USA
First up is news that a host of assets from the Campbell Soup Company may soon be available as the company explores offloading its international operations and C-Fresh-food unit. The company would use proceeds from the sales of non-core brands to pay down debt and would refocus on its core soups, snacks and beverages business in North America.
The company has been reviewing its operations since the sudden exit of CEO Denise Morrison in May. The businesses up for sale generated about $2.1bn in net sales in fiscal 2018.
“After three months in my role as interim CEO and digging into the operations with the new management team, it’s abundantly clear to me that the company is in need of greater focus and discipline,” interim president and CEO Keith McLoughlin told analysts during the Q4 earnings call.
Another manufacturer, Hain Celestial, remained optimistic this week despite a disappointing drop in net sales in the US. Company executives remain committed to their multi-prong strategy to reshape the US business and return it to growth in the back half of 2019.
“The decline in the [US] net sales was due in part to the strategic decision to no longer support certain lower margin SKUs in order to reduce complexity and increase gross margins over time, as the United States reporting segment continued to focus on its top 500 SKUs, which disproportionately impacted the other platforms,” the company reported in its earning statement.
During the natural and organic brand manufacturer’s fourth quarter US net sales fell 6% over the same period the prior year to $269.9 million, dragging down the region’s full year sales 2% to $1.09 billion compared to the prior year, according to the company.
On the retail front, Vitamin Shoppe launched a new concept Keto HQ, and wants to be the ‘premier one-stop-shop for everything Keto’.
With increasing interest in a ketogenic diet – a low-carb, high-fat eating pattern that prompts the human body to burn fat instead of carbohydrates for energy (known as a state of ketosis) - Vitamin Shoppe is hoping to capitalize on this trend by housing and highlighting all the keto products it carries in one section of its bricks-and-mortar stores nationwide, as well as a special digital storefront on its ecommerce platform.
“Similar to many health and wellness options, the Keto diet requires expert insight, knowledge and resources in order to be successful,” Dave Mock, executive vice president and chief merchandising and marketing officer at The Vitamin Shoppe, said in a press release issued.
"With KETO HQ, we aim to be a trusted advisor to our customers who have embraced the Keto lifestyle, which can be complex at times, by providing them with guidance from highly knowledgeable resources and the products to aid them on their journey."
Europe
Moving to Europe, and one of the week’s big news was Coca-Cola’s acquisition of British brand Costa Coffee for an eye-watering $5.1 billion.
“The acquisition of Costa will give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion,” said Coca-Cola in a statement.
Coca-Cola sees coffee as a ‘significant and growing segment of the global beverage business’.
“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market with a strong coffee platform,” said James Quincey, Coca-Cola President and CEO.
Also in Europe, Unilever announced it will open a new innovation center at Wageningen University & Research in the Netherlands to focus on healthy and sustainable food innovations.
“The Global Foods Innovation Center is explicitly focused, as part of the Agri Food eco-system in Wageningen, to increase the impact of our own R&D expertise by working closely with a large variety of external partners: from large multinationals to SMEs, start-ups and NGOs,” Unilever chief executive Paul Polman said.
Polman also emphasized the importance of taking a collaborative approach to address the challenges facing the food sector, such as climate change and health.
“Only together can we realize the real changes on a large scale that are needed to transform the global food system,” he stressed. “This is really tangible, trying to change the face of the Netherlands and more importantly trying to change the face of food and food security in this world."
Asia
Moving to Asia now and news that Malaysia could be the latest country to introduce a sugar tax on carbonated beverages in response to the nation’s concerning spike in diabetes.
The announcement has been met with mixed responses, with some supportive and some against it. For example, the Malaysian Dental Association (MDA) also welcomed the announcement, declaring that it would save ‘millions of teeth’.
Striking a more neutral tone, Universiti Putra Malaysia Putra Business School senior lecturer Dr Ahmed Razman Abdul Latiff suggested that a tax be levied on sugar, and not merely soda. “[Are sodas really] the main contributor towards diabetes in Malaysia, or is it sugar? Teh tarik, for example, also uses a lot of sugar,” he said.
“If yes, then this is a smart way by implementing tax. I am confident that a soda tax can help increase revenue for the government. However, if the people do not change their lifestyle, then medical costs will also increase and add to the burden,” added Dr Ahmed.
Our last news to note for this week focuses on deepening rice shortages in the Philippines. The crisis has pushed prices to a three-year high, despite the injection of rice imports.
The rising cost of rice is only one of Philippines’ concerns, as food inflation rates are also the highest they have been in five years.
Since the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law in January this year, the inflation rate has also been on an upward trend, and hit 5.7% in July. This is the fastest rate of increase registered in the Philippines since 2012 was set as the base to determine inflation.
Despite this, the government remains confident that this is a temporary situation, and will stabilise by the end of the year.
