In keeping with the New Year's celebrations, Food Business News will not republish until Monday, January 4th. Happy 2010 to all!

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

This & That

The Dark Side of Digital Marketing

While there has been a lot of hoopla recently about digital marketing and virtual coupons, online coupon fraud is on the rise. From 1986-2001, the Coupon Information Corp., the nonprofit agency that monitors the coupon industry, had only TWO CASES of coupon fraud. Even by 2007, there were only nine such incidents. In the past 18 months, 93 case files have been opened and the recession looks as though it’s going to make that worse. 1992 was the high water mark for coupon redemption (the end of the last major recession) with 7.9bn redeemed.

The losses aren’t virtual: Nestlé Purina Petcare Co. issued 250 coupons for a free bag of its adult dry dog food, and through early May, 2,754 coupons had been redeemed. Coca-Cola Co. had to withdraw a free 12-pack coupon from its “My Coke Rewards” program because of what it called “widespread counterfeiting,” and issuing a warning to consumers that “attempts to submit counterfeit coupons may result in civil action or criminal prosecution.” Counterfeiters reprint in-store coupons and smudge barcodes extending expiration dates. Coupon redemption is up 10% in the last quarter of 2008 (the latest stats available). Companies seeking to crack down on coupon abuse risk alienating customers who may not be aware the coupon they received from a friend or relative is bogus.

Without Sales There Are No Brand Impressions

With growing pressure on food retailers and manufacturers to cut costs and yet maintain margins, smaller food retailers are likely to see the amount of attention they receive from suppliers drop. Especially in areas like promotional support and personnel, marketers will be looking to cut costs and put their efforts into retailers with larger market share.

World News

The European Union (EU) has reprimanded the UK over import rules allowing irradiated food from non-EU countries that are processed in plants not pre-approved by the European Commission. Regulations state that EU countries can only accept food and food ingredients treated with irradiation from outside the bloc if they come from processing plants listed by the EC. No food safety issues are involved, but the “food police” are nonetheless adamant their viewpoint prevail. Britain insists new regs being promulgated this month will address the conflict.

The Chilean department-store chain La Polar rejected a proposed merger with supermarket chain Supermercados del Sur (owned by Latin American private equity fund Southern Cross). La Polar has rejected the models being pursued by competitors Cencosud and Falabella integrating department stores, supermarkets and other stores. La Polar has 40 department stores in Chile focused on the low end of the retail market, and is expanding into Colombia. Southern Cross bought La Polar in 1999, restructured its debt and took it public in 2003, but sold it again in 2006. Supermercados del Sur has 97 supermarkets in southern Chile with a 7% share of the national market.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• Is anyone surprised? Two thirds of workers bemoan the difficulty in maintaining health eating habits at work. A new survey by Peapod Business Delivery (owned by grocery chain Ahold) had only 7% of respondents eating healthier at work than at home, with 50% saying temptation in the office was their biggest obstacle to a healthy work diet. The #1 option sought by workers is fresh produce, while on 36% of those surveyed said their workplaces offered that option.

• The Wall Street Journal has reported that Nestlé “refused to give [FDA] inspectors access to pest-control records, environmental-testing programs and other information.” The company is currently under investigation because of e. Coli showing up in its Toll House cookie dough. Industry insiders insist companies are not required by law to give inspectors this information, and therefore Nestlé practice isn’t out-of-line with the food industry.

• While the survey size was small (less than 150), a study by Givaudan and the National Institute for Health shows a small difference in the perception of “sweet” depending on one’s race. It is difficult to know, however, whether the differences are genetic or cultural. Cognac makers, for example, have long sweetened their products exported to Hong Kong, where the custom was to mix the alcoholic aperitif with orange soda.

• A new trend in QSRs is selling wine or other alcoholic beverages.

• A roster of well-known and obscure fast casual restaurants got the highest ratings from Parents magazine: Cosi was first, followed by Jason’s Deli, Noodles & Company, Fazoli’s, Panera Bread, ZPizza, Atlanta Bread Co., Corner Bakery Café, Taco Del Mar, and McAlister’s Deli.

• Scientists from Texas have completed the mapping of the melon genome, opening up possibilities for sweeter or more nutritious fruits. European scientists, from France and Spain, had previously succeeded in mapping two unconnected sections of the melon DNA sequence.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Health Concerns

In keeping with the holiday....

Part One:

The “buzz” continues to buffet meat and the food industry’s role in an epidemic of obesity. F as in Fat: How Obesity Policies are Failing in America 2009 a report issued by the Trust for America’s Health, says adult obesity rates increased in 23 states in 2008, down from 37 states the previous year, but still alarming to most health professionals. With the emphasis in national government on containing costs, the realization that fat people wouldn’t die earlier (and thereby save the health care system money) but will live as long, but be sicker and require more intervention, is now sinking in.

The report cited 16 states with an increase in obesity rates for the 2nd straight year, while 11 states increased for a third year in a row. No states decreased. The rate of adult obesity now tops 25% in 31 states, up from 28 states in 2008. The obesity rate exceeds 20% in 49 states. As recently as 1991, no states had obesity rates of more than 20%, and in 1980, the national average of obese adults was 15%. The full report is available here.

Part Two:

At the same time as pressure is being applied on the obesity front, the World Wildlife Fund (WWF) is urging meats carry warning labels advising consumers to eat meat no more than 3x per week, and dairy no more than 3x per day. Meat production is already under fire for contributing to the rise in greenhouse gases, whether from cow manure and belching (aggravated by feedlots where beef are fed corn, not part of their natural diet), producing the fertilizer from fossil fuels to grow feed for cows & pigs, or transporting the meat products to market.

Now the WWF is suggesting “Meat Free Mondays” with a pr push backed by Sir Paul McCartney in the UK. The organization claims UK consumers eat 70% more meat than they should and ingest 40% more dairy products. In addition to scaling back on meat, WWF is encouraging shoppers to consider meat substitutes like soy and rice, and is asking manufacturers to use less meat in processed foods and ready meals. The British Meat Processors Association has tried to soften the blow, pointing out the “complexity” of the food production/consumption footprint, and that eating meat has positive social, nutritional and economic benefits.

Dairy UK has taken a tougher stance condemning the WWF’s effort to “remove one of the nation’s most popular foods from the shelves.” The campaign against meat continues elsewhere in the EU: the Belgian city of Ghent is promoting a meatless day once a week, and Sweden’s government is seeking comment on proposed regulations that would look at the health and environmental impact of meat consumption. The new guidelines would alert citizens they currently average 65kg of meat per year, 10kg more than 10 years ago, and much more than nutrition requires.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Merry Christmas!

In observence of the Christmas holidays, Food Business News will not publish again until Monday, December 28th.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Wal-Mart Backs Obama’s Health Care Reform

Perhaps sensing a shift in the Force, Wal-Mart has broken with most other large companies and told the Obama administration it supports requiring employers to provide health insurance to their workforce.

The White House is fighting an uphill battle with Congress to reform health care, and big business has opposed the reform bill from the get-go. Its lobbying arm, The U.S. Chamber of Commerce, is fighting furiously against the plan, saying it would cost jobs, result in lower wages and perhaps lead to worse coverage if companies “trade down” among health plans to cut costs (though this argument makes no sense if they already are offering health coverage).

The National Retail Federation, the industry’s main lobby, was clearly caught off-guard, saying it was “flabbergasted” by Wal-Mart’s move. Fuming how this was “the single most destructive thing you could do to the health-care system shy of a single-payer system,” and how such a mandate “would quite possibly cut off the economic recovery,” the NRF is now left with trying to reassure workers that the retail industry isn’t more concerned about profits.

Wal-Mart hasn’t always been so progressive in its policies, having fought with organized labor over efforts to unionize the company’s work force. But in 2007, the company joined with SEIU, the Service Employees International Union, the country’s largest, in calling for affordable health care for all Americans by 2012. Wal-Mart has improved its health-care benefits, cutting the time before workers are “vested” for benefits in half for both full- and part-time employees, as well as offering more plans. Approximately 52% of its 1.4MM million U.S. employees are covered by company-provided insurance, up from 46.2% three years ago. The retail industry average is 45%.

Analysts say the company is looking to level the competitive playing field by having competitors who don’t cover their workers forced into doing so. Another reason for the company’s sudden embrace of the Obama solution is the plan currently making the rounds in the Senate that would require a more expensive health care plan for companies with low-wage workforces. Most Republicans oppose any employer mandate, and the U.S. Chamber of Commerce insists Wal-Mart’s shift won’t change any minds among its members.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

“Dollar” Stores Make Inroads in Food

Long considered the place where brands go to die, “dollar” stores are taking a bite out of Wal-Mart and other grocery retailers by offering no-frills value and a growing line of products.

Family Dollar Stores Inc. has added 200 new food products, including national brands like Triscuit crackers and Kraft salad dressing. Dollar Tree Inc. has added new freezers for ice cream, sandwich meat and frozen dinners, and now manufacturers are looking to launch or test new products in these once-scorned retailers. The business model is the same as with “small footprint” markets like Tesco’s “Fresh & Easy”: multiple shopper visits for small buys of things like dry food, cereal, snack foods, and frozen items vs. the shopping in bulk associated with conventional food outlets.

The immediate victims of the “dollar stores” success will be the small, regional “mom & pop” grocer or chain. Unemployment is seen as playing to the cheaper alternatives, since shoppers now have more time to make purchasing decisions, and value is important. The glut of “cheap” retailers already includes warehouse clubs like Costco Wholesale Corp. and discounters like Wal-Mart. Grocery chains are trying to counter the trend with increased private label offerings, though theoretically private label can’t be the “cure all” for every problem in the grocery category.

Private label, after all, is not necessarily transferable to other stores, with shoppers who have traded for PL free to trade among PL brands based on price alone, slashing everyone’s margins. Dollar stores were already expanding their food offerings before the Recession, and average household trips to them stands at 13, up from 11 in 2001 according to Nielsen. This mirrors shopping trips to grocery stores which is down to 59 trips in 2008, off 13 from 2001.

The stigma of buying at “dollar stores” has faded, and many of them are now located conveniently to food retailers, making shopping there easy. What’s more, the channel is expanding faster than conventional grocery retailers, growing 52% from 2001-2008 (6,823 locations) while supermarkets expanded by just 5.3% (1,622). 99 Cents Only will focus on the western United States, while Dollar General plans to open 450 new stores to the 8,400 it already has. While not typical, Supervalu Inc.’s plans to close 50 stores in the Albertsons, Jewel-Osco and Save-A-Lot chains is in sharp contrast, but reflect its “substantially below” estimated profit margins.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• Despite losing 7% of its highly loyal customers according to Catalina Marketing Corp. study, J.M. Smucker Co. has announced its fiscal 4th-quarter profit more than doubled, led by the consumer trend of eating more meals at home, plus the company’s acquisition of the Folgers coffee brand last year, which grew at more than 2x the coffee category. Sales increased by 81% to $1.07bn from $590MM. Not surprisingly, the company says it will concentrate on the Folgers product line in the coming year.

• Safeway is the latest chain to embrace digital coupons for cell phones and computers. A partnership with Cellfire Inc. will load discounts onto a shopper’s savings card at more than 1,500 stores and deduct them at checkout. The price reductions will be printed on their receipt to reinforce the value proposition. Cellfire has already partnered with Kroger. The service is free to consumers, though standard texting and data rates may apply. The company claims redemption rates on digital coupons are as high as 15-20% compared with less than 1% on paper coupons.

• An agreement between the U.S. and Canada permits each nation’s certified organic products to be purchased in either nation with the organic label, thus aiding organic farmers in both countries.

• International Flavors & Fragrances (IFF) has developed six artificial flavor profiles designed to mimic the characteristics of fresh-cooked beef prepared in different ways: rare, marrow bone bouillon, stewed, boiled, grilled and roast. In a flair of marketing hocus-pocus, they claim this will answer consumer calls for more natural foods.

• Kroger is expanding its Comforts line of infant & toddler foods with a $10,000 scholarship contest.

• Kraft has announced an expanded frozen pizza production plants in Little Chute and Medford, WI (with promises to use 75%+ of the cheese used on its pizzas from Wisconsin). According to Information Resources, Inc., Kraft is the #1 frozen pizza marketer with sales of $1.2bn for the 52 weeks ending May 17. It’s pizza brands include DiGiorno, licensed California Pizza Kitchen, Tombstone and Jack’s.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

World News

• Hormel Foods Corp. and Mexico’s Herdez del Fuerte SA de CV will expand their joint venture designed to market Mexican foods in the U.S. With demand for meat declining, Hormel is seeking to sell more products south of the border. Mexican brands are growing in popularity both due to the interest in Hispanic food and the growing number of Hispanics living in the U.S. For example, Coke has found demand for its Mexican-bottled cola growing in the Southeast where immigration from Mexico is increasing. The product is sweetened with cane sugar instead of HFCS, so that is also contributing to the cross-border sales. Some of the Mexican brands marketed by Hormel include Chi-Chis, La Victoria and Dona Maria. Revenue is expected to be $200MM right out of the starting gate. The joint venture’s name will be MegaMex.

• Sainsbury in the U.K. is riding a spike in same-store sales of 7.8% by launching up to 8K non-food products online, double the range stocked in the stores now. In addition, Britain’s #3 grocery retailer (16% market share) is planning on taking advantage of a weak real estate market by opening up 150 convenience stores in the next two years. The growth will produce an extra 2.5 million sq ft of selling space. Market leader Tesco (31.5%) had a smaller 4.3% rise in sales, but is also ramping up online offerings especially in the clothing category.

• Coca-Cola has opened two bottling plants in China to handle exploding demand. The company describes The Middle Kingdom as its “fastest growing market,” with sales up 19% last year and 10% in the first quarter alone of 2009. In contrast, sales elsewhere in the world grew a meager 2%. One of the first western companies to tackled the Chinese market, the brand has a euphonic Chinese name which means “pleasing to the mouth & promoting happiness.” As a result, the Georgia cola giant has approx. 50% market share there and plans to invest up to $2bn over the next three years, 2x its investment over the past three decades. While per capita consumption is only 25 bottles/year, sheer numbers have allowed China to overtake Mexico as its third-largest market (average U.S. consumption is 500 bottles/year). The latest additions to Coke’s Chinese operations are in Jiangxi and Xinjiang provinces in the far west, and bring the total of bottling plants to 40. In March, Coke tried to grow its non-carbonated business in China by trying to buy Huiyuan Juice, but the government blocked the sale. Instead the company will try to push its own brand, Minute Maid. With over 40% of the juice market, Huiyuan will be a tough challenger. The company is trying to be a good corporate citizen, too, by sponsoring China’s Olympic Torch Relay, constructing a $90MM research facility in Shanghai, and donating $12MM to rebuild schools after 2008’s disastrous Sichuan earthquake.

• Prior to the break-up of the old Soviet Union, comedian Yakov Smirnoff made a good living pointing out the heavy-handed ways of Soviet bureaucracy. It would seem some things never change. Despite the run-up in commodity prices around the globe, Russian paramount leader (oops, Prime Minister) Vladimir Putin has told Russian food retailers to lower prices— or else. Putin left a meeting recently to pay a surprise visit to the Moscow branch of the Perekrestok supermarket, one of Russia’s biggest retail chains. With a delegation of food producers following him, Putin demanded to know why retail prices were substantially higher than produce costs. According to the newspaper Kommersant Daily, Putin got into a Nixon-Khrushchev-style “kitchen debate” arguing over things like mark-ups on sausages (52%) and pork products (100%). “This is twice as much. Is this normal? It’s very high,” claimed Putin. Yuri Kobaladze, president of the X5 Retail Group which owns Perekrestok, then promised “Tomorrow we will cut the price.” Putin has been conducting what is widely seen as “stunts,” including a visit to an idle cement factory that featured a pen-throwing incident involving the factory owner, to take the heat off his government during the current financial crisis that has seen Russian GDP contract by 11% in the past 12 months.

• Pizza Hut is pushing hard in Thailand after dumping its franchisee there, Central Restaurant Group. By year-end, 15 new outlets will join the 81 already open, with 10 outlets dedicated to home delivery 5 for dine-in.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Health News

• The Greeks know, it’s their diet: a study by the University of Athens Medical School indicates not all components of the so-called “Mediterranean diet” lead to living a long life. A diet with large amounts of veggies, fruits, nuts, legumes and olive oil with only moderate drinking and little meat works. Lots of fish or seafood and little dairy has no benefits for living longer according to the study. After examining the diets of 23K Greeks for almost 10 years, the longevity benefits for the Mediterranean diet were lost if heavy vegetable consumption, light meat intake or moderate drinking were removed from the results matrix. Combinations of several components, especially abundant vegetables and olive oil showed positive health benefits. Several studies have advanced the health benefits of the Mediterranean diet, but this is the first to analyze its various components.

• An increasing number of companies have concluded it’s cheaper to pay their employees to get and stay healthy instead of paying for the health care costs once they get sick. With estimates showing more than 40% of premature deaths in the U.S. due to unhealthy behaviors like smoking, obesity or improperly taking prescription drugs, companies are looking to incentivize their workers to give up bad habits, get in shape or otherwise take charge of their health. Statistics indicate 20% of Americans continue to smoke and over 70% are overweight or obese. General Electric was able to induce nearly 10% of its workers who smoked to quit by offering them a $750 incentive if they remained clean for 18 months. Only 3.6% of smokers quit without the bonus. Similar programs for weight loss and taking prescriptions daily were successful with rewards as little as $3/day.

• It has long been known that taking antibiotics can upset beneficial bacteria in the body. A new study shows gut flora may be disrupted for weeks after stopping medication according to a report in the June 2009 issue of Infection and Immunity.

• For the third straight year, Massachusetts leads the U.S. in use of electronically routed prescriptions. The Obama administration is pushing e-prescriptions as a means for reducing mistakes and cutting the escalating cost of health care.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Eight O’Clock Coffee is a-Twitter.

The 150-year-old Montvale, NJ brand is moving from Facebook to Twitter in the hopes of reaching more new customers, thanks to S3, a Boonton, NJ marketing company. The iconic coffee best known as the house brand for the A&P grocery chain (The Great Atlantic and Pacific Tea Co.) has signed on to “follow” 1,874 people whose profiles and lifestyles seem “cool.” As a result, over 1,400 people are following the coffee company.

S3 started by searching for targets like the top 100 Twitter users, gourmet chefs or wine lovers who showed up on Google and elsewhere. But it turns out as the brand has added followers and followed, the process has grown organically, “the ultimate in superficial networking,” according to a company source. No one is quite sure what’s being communicated, though recipes are traded, stores with good prices are highlighted, etc. Surprisingly, no conventional marketing ploys that might gum up the “cool factor” are dispensed, other than alerts for upcoming price specials (saving money is always cool).

A&P sold Eight O’Clock for $127.5MM six years ago at the start of a process of upgrading its stores to private investors, who then turned around and sold it to Tata Coffee Ltd. of India for $220MM. Since then, the brand has received the top-ranked rating for Columbian coffee in tests by Consumer Reports magazine.

In addition to being cool, Eight O’Clock is about half the price of its competitors.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

I May Be Paranoid But That Doesn’t Mean Someone Isn’t Following Me

In a development that is likely to have some impact on the food industry, the U.S. Senate Permanent Subcommittee on Investigations has released a report that accuses commodity index funds of making large purchases of wheat futures it described as “excessive speculation” resulting in “significant unwarranted costs and price risks.”

Consumers, retailers, foodservice operators and CPG houses have all decried the sharp jump in commodity costs last year, with the subsequent squeeze on prices and margins. All sides pointed fingers at the others in claiming “price gouging,” even as all sides insisted they were only passing along partially their rising costs. Senator Carl Levin of Michigan is chairman of the subcommittee whose 247-page report is entitled bluntly Excessive Speculation in the Wheat Market.

The senator said that “In the last three years, speculators have spent billions of dollars on commodity indexes, and the financial firms selling those index instruments have purchased billions of dollars in commodity futures to offset their financial risks, creating price disruptions for producers and consumers.” The subcommittee examined trading records from the Chicago Board of Trade (now part of the Chicago Mercantile Exchange), the Kansas City Board of Trade, the Minneapolis Grain Exchange, the Commodity Futures Trading Commission (C.F.T.C.) and others to track the rise and fall of wheat prices.

Commodity index traders increased their holdings from about 30K wheat contracts in 2004 to 220K by 2008. By 2006, commodity index traders held 35%-50% of all outstanding wheat futures contracts on the Chicago exchange alone. The practical result of this activity was the average basis (the gap between futures and cash prices at a given location) at contract expiration grew from about 13¢ per bushel in 2005 to 34¢ in 2006, 60¢ in 2007, all the way to $1.53 by 2008, a 10x increase in just four years.

These “unwarranted” increases “imposed undue burden on those involved all along the wheat marketing chain, from producer to consumer.” Costs included higher margin calls due to higher futures prices, failed hedges and disruption of normal pricing patterns and relationships according to the report. The report also criticized the C.F.T.C. for waiving position limits for commodity index traders which “facilitated excessive speculation in the Chicago wheat futures market” and was “inconsistent with the C.F.T.C.’s statutory mandate to maintain position limits to prevent excessive speculation.”

The subcommittee, in a move sure to stir opposition from the financial community, is recommending the C.F.T.C. drop existing waivers and reapply standard position limits, potentially imposing other measures if that doesn’t solve the problem.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

I Want To Eat Healthier— I SWEAR— No, Really, I Do!!

Americans insist they want to eat healthier. The problem is they may be telling the food industry and reporters what they should be saying, not what they really feel.

A new study by Mintel International shows only 20% of those surveyed said health was an important factor in ordering at a restaurant. Much more important are taste and hunger satisfaction (77% and 44% respectively). In a classic case of “do what I say, not what I do,” ¾ of respondents claimed they’d like to see healthier choices on menus, but only half usually order them.

One factor might be cost, since restaurant offerings in the healthy category usually price out higher than less-healthy options. Over 50% of those in the survey complained about the higher cost of healthy menu choices as well as the paucity of them, with less-healthy options far outnumbering the “good” alternatives. Whether it’s the chicken or the egg that comes first, restaurants are lagging with “good for you” additions to their menus; only 5% of those introduced in the first quarter of 2009 have any nutrition claim. In contrast, 20% of new menu items are fried.

The government’s efforts to pressure restaurants into nutrition labeling is mirrored in the survey respondents with 75% desiring greater nutritional information and transparency. These conclusions were supported by a separate survey commissioned by Hormel which said the economy has forced shoppers to cut back on healthy or all-natural.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• A joint study the 1.4MM African immigrants living in the U.S. estimates they make up a $50bn potential market. The survey was conducted by LA-based New American Dimensions (NAD), the U.S. African Chamber of Commerce, The Minneapolis Foundation and Aguilar Productions. Researchers, the research identifies the group as “largely untapped,” and points out an Islamic sub-segment where culturally- appropriate foods and beverages are currently lacking.

• Starbucks Corp. remains unable to find the “right” product mix, and will launch a line of salads. In addition, its baked goods will no longer contain HFCS (high-fructose corn syrup), artificial flavors or dyes. Where possible, preservatives will also be dropped from these products, and will cover 90% of the bakery items sold. Starbucks is also testing a Frappuccino formula in Dallas that incorporates these changes.

• In yet another sign the organics trend is slowing, sales of organic milk in California increased just .2% March, the most-recent month reporting to the California Department of Food and Agriculture. Totals reached 2.5MM gallons with increased totals for low-fat milk and drops in whole, reduced-fat and fat-free milk (source: California Farm Bureau).

• Kraft, playing on the word “singles” in its Kraft Singles line of packaged cheeses, is promoting grilled cheeseburgers for $1 in TV ads and on the Web, while Unilever is looking to grab some $1 buzz by giving away 25MM coupons for discounts on 2 boxes of Lipton Onion Soup mix as part of Lipton Onion Burgers priced at 85 cents per serving. Wal-Mart is running TV ads touting a dozen breakfast items for a buck or less as an alternative to QSR breakfasts costing up to $5. And finally, Campbell is looking at $1 price points for some condensed soups instead of the customary $1.59. The move is partly in response to the meteoric rise of dollar stores. According to one industry source, spending at dollar outlets by consumers earning more than $100K spiked 18% last year.

• The $11bn bottled water industry continues to find friction as concerns rise about the amount of waste it generates. Now the FDA has announced it will require bottlers to test their water sources for coliform and fecal contamination (previously the source did not have to be tested).

• OSI Restaurant Partners LLC, the parent company of the Outback Steakhouse, Bonefish Grill and Carrabba’s Italian Grill among others, has started shedding some of its smaller brands in order to pay down debt. Both Roy’s and Cheeseburger in Paradise have been sold back to their original owners. While privately-held, OSI hold public debt and reported its latest earnings as showing a net profit of $82.3MM, mostly on reducing its debt load by $20.8MM to $27MM. Revenues ($964.4MM) were down almost 10%, with same-store sales off 8.6% at Outback Steakhouse, 7.3% at Carraba’s, 10% at Bonefish Grill and 19.9% at Fleming’s Prime Steakhouse & Wine Bar. Last year the company’s first quarter earnings showed a loss of $9.7MM. The chain went private to avoid a continued hammering by Wall Street, but soon after ran into first a downturn in the casual dining sector followed by the Great Recession.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Health News

• Women concerned about bone density and who take powerful antacids like Prilosec, Nexium, Pepcid, Tagamet and Zantac should consult with their doctor following the release of a study showing a significant increased risk for hip & thigh fractures. So-called proton pump inhibitors and histamine-2 receptor antagonists reduce stomach acid, but doctors are also worried eliminating it will make patients more at-risk for food-borne pathogens. “Stomach acid is there for a reason,” said the study’s author, Dr. Douglas A. Corley, a gastroenterologist at San Francisco’s Kaiser Permanente Hospital. The pump inhibitors raised the risk of serious fracture 30% while the histamine-2 receptor antagonists increased risk 18%. The mechanism for the fracture increase may be the drugs’ inhibiting the absorption of calcium, which is 60% reduced by pump inhibitors according to other studies. Not surprisingly, the greater the dosage, the greater the risk, which also increased with age (the highest incidence of fractures occurred in participants over 80).

• A Chinese study of 73,223 women has shown promise that a diet rich in soy during the adolescent years might reduce the risk of breast cancer before the menopause by up to 40%. The findings were published in the American Journal of Clinical Nutrition, and showed the risk of pre-menopausal breast cancer in adults who ate the most soy or soy isoflavones was reduced by 56-59%. China has the world’s lowest occurrence and mortality rates from breast cancer, which hits over 1MM women annually throughout the world. Soy isoflavones are estrogen-like compounds found in soy-based foods and supplements marketed to fight the effects of menopause. Some research in mice, though, has shown isoflavones stimulating breast cancer cells, though population studies indicate women eating a diet rich in soy generally have lower rates of breast cancer.

• Previous studies have reported that, while the underlying mechanism is not known, it is hypothesised that the oestrogenic effects of soy isoflavones cause changes in breast tissue during childhood that may decrease sensitivity to carcinogens later in life. A similar protective effect has been found in studies of overweight girls, perhaps because fat tissue also secretes oestrogen. Replikins, a Boston biotech firm, claims its use of proprietary amino acid peptide-counting software enables it to produce an H1N1 “swine flu” vaccine in 1 week, 100x faster than conventional vaccine makers. The company says that because the vaccine is synthetic, it can be modified more quickly to counter changes by the virus. Even with this development, the Centers for Disease Control (CDC) insists it will be several months before a swine flu vaccine is available to the public.

• In other vaccine news, a salmonella vaccine may be coming. With the European Food Safety Authority and the European Centre for Disease Prevention and Control both listing the pathogen as the single biggest food-borne illness, the news that U.K. scientists have uncovered how the bacterium lives in its hosts has opened the possibility of developing a vaccine. Salmonella relies on glucose in the gut of its hosts, breaking down the sugar to create the energy needed to live and to reproduce. The researchers have created mutant variations of the bug that cannot bring glucose into the immune cells they infect, starving them and inhibiting their ability to replicate. These harmless variants could be used later as vehicles for introducing a vaccine (what scientists call a “vector”). Salmonella food poisoning hits up to 20MM people around the world annually, causing upwards of 200K to die. Additionally, it affect animals, which is how it often is spread to humans.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

BSLG in the News (Again)

This article about co-branding private label products with national brands got my blood up.

Pundits need to pun in order to justify their existence, but it makes no sense for national brands to help out store brands. They're in a dog fight with them for the soul of the American consumer, with stores like Tesco, Aldi and Trader Joe's looking to reduce or eliminate national brands entirely.

Now, the Private Label Manufacturers Association and stores would have you think:

1.) PL products are just as good as national brands

2.) They're a better value

3.) They're the wave of the future

None of these assertions is true.

Store brand items are only as good as national brands when they're manufactured by the national brand (60% of national brands make PL versions of their products, an insane statistic). Why any company would help its competitor to get a leg up on them is beyond me, but then who outside of Detroit was surprised at what happened to GM and Chrysler?

Store brands used to be a better value, but prices have been rising steadily, thanks in part of greed and the idea that consumers are going to switch permanently to store brands. This hasn't been proven over time, and is like any other assertion that "things will never change." That kind of thinking was what got us into this mess in the first place: no one could imagine things prior to the real estate bubble, and banks, Wall Street and most financial institutions assumed they could go on acting irresponsibly forever.

Finally, there is no indication that consumers will not switch back to national brands IF THE BRANDS CONTINUE TO HOLD VALUE. Brands are a promise to consumers. In the case of food, this has meant greater safety, quality and value for money (not "value," as in "cheap"). When commodity prices ramped up two years ago, the national brands were guilty of passing on these costs indiscriminately to consumers. That gave store brands an edge.

But in the grocery business, where 1-3% margins are commonplace, stores realize that private label products are a better bet for them. When consumers began switching in large numbers to Private Label, the stores themselves got greedy. Prices on PL products have risen dramatically in the past few months, and so store brands are no longer the "value proposition" they were.

It makes me recall something Lenin said: "The Capitalists will sell us the rope with which we will hang them."

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

World News

• Wal-Mart Stores has reported a 7.8% rise in 1st quarter profits thanks largely to its British subsidiary, Asda. Wal-Mart is the world’s largest retailer with more than 100 million shoppers a year from over 7,900 stores in 16 countries. Sales were up if adjusted for a constant rate of exchange 9.1% ($26.1bn) with the best results in Brazil, Mexico and China. Gains were reported in top line sales in virtually every country according to CEO Mike Duke. A stronger dollar cut operating income 16.2% ($880MM) that came on a 11.1% fall in sales ($21.3bn). Wal-Mart records approx. 25% of its sales in markets outside the U.S. Gross profit margins internationally were off in the first quarter because of the closure of 6 Sam’s Clubs stores in Canada, along with price cuts in Brazil and Japan. But the Asda numbers were glowing, with sales growing for the fifth straight quarter to 8.4%.

• That was better than #1 U.K. retailer Tesco’s 3.4% and #3 Sainsbury’s 6.2%. Asda’s value line Smart Price and George line of clothing led the surge. Food prices have flattened, which may hold down sales growth, though volumes this quarter are up.

• Wal-Mart’s Mexican subsidiary, Walmex, reported a 3.3% rise in sales despite being in the epicenter of the Swine Flu outbreak. Brazilian sales rose 12.6% on the basis of discounting, cash-and-carry promotions and the opening of new stores. In China, comparable store sales slipped 1.8% at Wal-Mart China and 5.8% at Trust-Mart.

• Salt— again: The U.K.’s Food Standards Agency (FSA) is an independent government department charged with lobbying for the public’s interests in matters relating to food & nutrition. Recently is has been embroiled in the salt question, and has just revised reduction targets for 2012 in upwards of 80 food categories. Manufacturers had already agreed to voluntary goals for 2010, but the F.S.A. described the new numbers as “more challenging than previous targets, to make sure food retailers and manufacturers maintain the momentum in reducing salt levels.” Levels for salt in bacon went down from 3.5 grams to 2.88 grams, while bread and rolls are now at 1 gram (from 1.1 grams). Potato crisps (chips) fell to 1.38 grams (from 1.5 grams). According to the agency, consumers have enjoyed a 1/3 reduction in the average level of salt in pre-packaged sliced bread, and a 44% drop in the salt found in branded breakfast cereals.

• Safeway has announced placement of its private label O Organics and Eating Right brands in two additional countries: 150 Shoprite stores in South Africa and 100 Exito outlets in Colombia. America’s 4th-largest grocery retailer already sells the brands in Taiwan, Hong Kong, Singapore, Mexico, Chile, the Philippines and Saudi Arabia. Additionally it has sales to four regional U.S. chains (Albertsons, Big Y, Price Chopper and Hy-Vee). Industry insiders have been skeptical of the retailer’s ambitions to be a private label manufacturer for other store chains, but the economies of scale they provide to smaller firms have helped them penetrate areas where they don’t compete. als go ahead they will also be sold at 150 Shoprite outlets and 100 Exito stores.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tesco (Still) Looking for Right Message in U.S.

Tesco continues to “evolve” in the U.S. market, though some analysts say the chain has simply faltered after posting a $220MM loss for the fiscal year ending in February.

Those who see the U.K.-based giant's "small footprint" strategy as the future of grocery retailing should take note of the shortfall between vision and execution. With the Southwest where it launched perhaps the hardest-hit by the Recession, the retailer now plans to shore up its “value” message by adding 1,000 new items, a hefty increase to its small-format Fresh & Easy stores, which typically carry 3,500 products (10% of the typical U.S. supermarket). Tesco had originally sought to use these c-store-like locations to attract busy consumers by emphasizing fresh produce and easy shopping experiences, along with offering more “heat & serve” prepared foods, a segment underserved by the larger supermarket chains. Among the new items will be a house brand quiche, pita chips gourmet hamburger buns, cereals and even some national brands like Guerrero tortillas.

The company insists sales at stores open at least a year are up 30%, but critics say Tesco has misunderstood the market, and has offered a retail solution in search of a customer base. Analysts worry Tesco’s blues in the States could effect its ambitions to tackle other global markets, including China and India. The chain operates 120 stores in Southern California, Las Vegas and Phoenix. Planned expansion to 200 stores by 2009 is on hold, with Northern California and other locations in the Southwest shelved (even with some stores completed but unopened). Leases signed on properties in the new suburbs of Arizona, California and Nevada (where growth over the past few years had been torrid) have backfired now that these locales have some of the highest home foreclosure rates in the country. Urban stores have also performed poorly, another area where Tesco went against supermarket retailer experience.

Fresh & Easy may have blundered into cultural myopia by focusing on heat-and-serve meals, since the U.S. has an abundance of inexpensive fast food restaurants (in contrast to Britain where “ready meals” are a major component of the grocery business). Fresh & Easy’s trumpeting its “EXTRA-LOW prices” is also running up against both Walmart’s entrenched position in that segment, coupled with the shift by most other grocery retailers (including Whole Foods) to the value segment. Additionally, their refusal to honor manufacturers’ coupons, which have seen a resurgence in the current down economy, has hurt their appeal to price-conscious shoppers. Still, Tesco continues to be upbeat, and has set something of a standard in pushing new retail ideas in the segment, including a heavy reliance on social media marketing including email blasts and Twitter alerts.

Another problem for the company is that Tesco traditionally establishes its own distribution centers. The failure of Fresh & Easy to meet its expectations has rumors flying the company will purchase the US brands of Holland's Royal Ahold (Stop & Shop and Giant Food). The move would increase the number of stores to levels that would allow for economies of scale.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Digital Marketing Surges Forward

Unilever is the latest manufacturer to join the rush to digital marketing.

Consumers can display cell phone coupons (developed by Samplesaint, a Chicago mobile-technology firm) to supermarket cashiers, much as airline travelers currently can show airport screeners their digital boarding passes. The test will be in a ShopRite store in New Jersey, and will discount some of the giant packaged goods company’s top brands, Breyers ice cream, Dove soap, Hellmann's mayonnaise and Lipton tea. Customers visit Samplesaint.com to secure the coupons which are then sent to their cell phones. After the cashier redeems the coupon, it is deleted from the phone to prevent “double dipping.”

Mobile marketing currently stands at $3.3bn, and grew at 35% last year, but has tailed off to half that (17%) during the current slowdown. Cell phones seem the ideal coupon dispenser, since they are now seen by many consumers as the organizer and focal point of their lives. The intersection of digital couponing and supermarkets would seem to be a marriage made in heaven, since Icom (a division of Epsilon Data Management) claims 87% of survey respondents who use coupons redeemed them at grocery stores, as compared to restaurants (47%) and department stores (41%).

Supermarkets are fishing in the same waters, too: Randalls Food Markets (a division of Safeway) is partnering with Cellfire and Shortcuts.com to link cents-off offers to loyalty cards, and is also exploring cell phone couponing with the discounts registered at the store and automatically deducted during check-out.

The key to the success of these programs is simplicity, with current obstacles to greater use of cell phone coupons including the limitations on company websites that only allow for printed coupons, cell phone technology glitches that requires time-consuming and complex code entries, and the usual incompatibilities between different software and hardware. CVS/pharmacy is tackling this issue by launching a “coupon center” on its Web site that helps customers compile coupons, browse categories and share savings by sending e-mail alerts. Still, most marketing experts are skeptical consumers will embrace a technology that requires them to print out coupons or load them onto their cell phones before heading to the store.

But the potential to target coupons to receptive consumers is a Holy Grail for marketers, who have seen coupon usage skyrocket as “value” has trumped most other factors in purchasing decisions. Food Lion, for example, is running TV ads showing shoppers searching for “big game” value instead of touting outdoor grilling products as they normally would this time of year. Despite the huge usage of coupons by manufacturers and retailers, statistics show less than 1% redemption for most newspaper and print coupons.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

High-End Frozen Yogurt Recession-Proof

If it’s pricey, probiotic, Asian-sounding and frozen yogurt, then consumers apparently are ready to pull out their wallets.

Pinkberry, the leading “better-for-you” brand, is now using bicycle messenger services in to deliver frozen yogurt at 6 New York City stores for purchases over $10. Rival chain Red Mango has launched Tangomonium, a tangerine-flavored variety. Although both companies had to close stores in the over-saturated Southern California market, sales and new stores are jumping despite the recession. The key seems to be exotic flavors like green tea and “good for you” versions like pomegranate, topped with none of the usual candy-in-disguise toppings. Instead both retailers push fresh strawberries and kiwi. Pinkberry has even tried to conjure up the seashore with floors made from pebbles.

“Health” yogurt isn’t even a “small” portion of the $8.1bn frozen yogurt market in the U.S., but it is the fastest-growing segment, with Pinkberry and Red Mango likely to have upwards of 1,000 stores by 2013. Analysts explain the appeal of the two chichi companies is from the illusion of health is a dessert product. A lower-priced, self-serve alternative is coming into the market via Yogurtland. It’s all good news to the frozen dessert market, where sales of ice cream are flat or declining. While we’ve gone down this road during the 1980s with TCBY and I Can't Believe It’s Yogurt, the new stores have found a way to lock in their mostly female clientele who is concerned about calories, fat and natural ingredients. Among the Pinkberry customers are First Daughters Malia and Sasha Obama.

If the marketing and cost ($4.50 for a 16-ounce cup of Pinkberry) sound like Starbucks, it should surprise no one that company’s founder, Howard Schultz, sits on the board and has invested his own money in the chain. Both companies are going heavily down the digital marketing route (Facebook & Twitter, plus digital coupons on the former), but are also using conventional techniques, too, including loyalty rewards: Club Mango already has 20,000 members, with members amassing 10 points for each dollar spent and receiving a $5 voucher for every 500 points accrued. Pinkberry has also announced its intension to license its brand to retail in the future.

But no upscale firm is safe if McDonald’s decides there’s enough money in probiotic blends, as Starbucks found out once the Golden Arches went into coffee.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

News from the Great Recession

Envirosell keeps tabs on what shoppers are buying.

According to them, chocolate, lipstick, fishing equipment, running shoes, wine (but cheaper vintages), gold coins, seeds, tanning lotion, Dinty Moore canned stew & Spam (the edible variety, both from Hormel Foods Corp.) are all up. Cars and major appliances are (surprise!) way down. Hershey’s profits were up 20%, and Kraft saw double-digit sales increases in the ultimate “comfort food,” mac & cheese. No one is quite sure if romance is up or folks are putting off kids, but the spike in condom sales reported here in an earlier edition reached 5%. Perhaps romance is the reason, since Match.com had its best year in the past seven. Not all staples that increased were the positive kind: laxative liquids and powders jumped 11.5% and stomach over-the-counter remedies such as Pepto-Bismol surged 8%, probably as investors watched their portfolios crumble. Wal-Mart Stores Inc. continues to be a winner, but for the first time ever Dollar Tree Inc. made the Fortune 500 (# 499). Luxury retailers like Saks Inc. saw their sales tumble (32%); Goodwill Industries International had a rise of 7%.

In the foodservice channel, fast casual is king this month. As many as 700 new chains will debut in 2009, and sales of the Top 100 fast-casual restaurant chains grew 10.8% last year ($16.7bn total). The National Restaurant Association has predicted sales will fall by 2.5% across the restaurant category during the same period. Career women are the reason the chains are doing well by providing quality in an upscale setting, with top performers Chipotle Mexican Grill, Panera Bread and Cosi, Inc. Twenty-five per cent are working women, while only 15% are homemakers. Career men make up just 18%.

In the grocery biz, sales increased 5.2% in 2008 with identical-store sales up 4.5% according to the most recent report released by the Food Marketing Institute (FMI). After adjusting for inflation, sales actually declined 0.5% (identical-store sales falling 1.2%). Industry net profits dropped to a slim 1.43% percent (down from 1.82%) due to intense competition, as well as increases in the cost of goods, health insurance and credit card interchange fees. Highest profits were from independent retailers (1-10 stores) with net profits and identical-store sales going up by 1.90% and 5.11% respectively. In order to meet consumer demands for lower costs and added value, stores are lowering prices and offering more private label products (up to 9.7% of all good carried from 7.5% in 2007).

Last year 69.9% of stores focused on a lower price strategy, rising to 78.4%. More than (93% of retailers now plan to increase private label products, which account for 15% of their sales (up from 11.5% two years ago). Full-service supermarkets were identified by 56 percent of shoppers as their primary store, down from 60 percent last year. Customers are loyal to their primary store, with just 6 percent saying they changed stores to save money on groceries, but when it comes to making a secondary trip, 42 percent of shoppers occasionally shop at other stores, such as supercenters and warehouse stores, to take advantage of specials. Supercenters have 27 percent of the market share when it comes to grocery shopping, and are steadily raising their share from 22 percent in 2005.

FMI has outlined the way consumers shop with most using a full-service supermarket (75%), followed by a distant second with supercenters (39%). The average number of trips per week was 2, though slightly more for the most price-sensitive shoppers. More than ¾ said they “almost always” check the price of a product before buying it the first time. Spending on groceries averaged out at $98.40 per week, up marginally from 2008’s $97.80. Over half claim to be preparing more meals at home than previously, with 92% believing they eat healthier at home, despite admitting their choices at home could be healthier than they are (57%). Apparently they believe less-healthy foods are better for them if prepared at home. Time-saving, affordable and healthy choices were stressed as highly desirable with “easy-to-make” listed by 48%, “meals for $10 or less” 44%, and “convenient placement in the store” 28%.

Retailers who provide information online and in stores to help make healthy choices at the supermarket got high marks (71%), along with in-store pharmacists who provide health-and-wellness advice (70%). In-store health clinics have been a topic of much discussion in the grocery business, but only 8% listed them as important. Most shoppers indicate they are relatively confident with food safety, though 31% indicated they had stopped buying a specific food because of a safety concern or recall. Not surprisingly shoppers are more confident purchasing food grown in the U.S. (90%) while less than half are comfortable with imported foods. They gave higher marks to supermarkets to insure food safety than the government.

Local products continue to be important with 72% claiming to buy them on a regular basis. Reasons for this popularity include freshness, supporting the local economy, taste, and “concern about the environmental impact of transporting foods across great distances.” Recycling and sustainability initiatives were important to over half of those surveyed, with up to 40% of shoppers now bringing their own bags. Data for the survey was collected by Harris Poll Online among a nationally representative sample of 2,040 U.S. shoppers.

FMI also reports new product launch rates continued to rise in 2008 with 35,999 (up 9.3% but slower than 2006’s 11% upturn). The total new food & beverages category reached 18,244, a slight increase (2.3%) and far below the 11% jump in 2006 (17,828 total new products).

And finally, the 100 calorie package is another victim of the recession. Consumers are turned off by the expense and what many see as extraneous packaging that is a threat to sustainability. The solution? Measuring out their own 100-calorie servings. Not to be left without a “hot button issue,” the marketing crowd and consumers are both abuzz over “safety.”

Does anyone recall trans fats?

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• The latest round in fooling the consumer comes with “smell infusions” for food packaging. ScentSational Technologies is developing with a baby-food producer to add pleasant odors to the caps so when parents open the jars, they can smell “freshness.” Similar technology is planned for cereal bags to suggest “sweet” while using less sugar.

• Louisville, KY residents eat more donuts per capita than anywhere else in the U.S. according to Interstate Bakeries Corporation (IBC) the marketers of WonderBread among other baked products. Cincinnati, Roanoke, Knoxville and Indianapolis follow behind on the top five U.S. donut-lovin’ regions with the favorite flavors glazed, chocolate, powdered sugar and plain in that order.

• No kidding: last summer, the USDA studied the U.S. goat industry for the first time, focusing on meat and dairy production.

• The Universal Product Code (UPC), a row of 59 machine-readable black & white bars and 12 human-readable digits, celebrated its 35th anniversary June, 2009. The first “live” use of a UPC was at a Marsh supermarket in Troy, Ohio, on June 26, 1974, when a cashier scanned a package of Wrigley’s gum. Every UPC incorporates 3 parts: the brand owner’s GS1 company prefix, the specific item’s reference number, and a check digit combining the other two groups to ensure accuracy. The next generation bar code, GS1 DataBar, will be introduced Jan. 1, 2010, and will be found on coupons and even loose produce like fruits and vegetables. It will include such information as “best before,” expiration dates or even lot numbers that will allow tracking for recalls.

• While not strictly-speaking a food industry development, we’re tracking the shift of the HBA market from department stores to drug stores. CVS and Walgreens in particular are revamping their departments, with CVS pushing its “Beauty 360” in-store boutique with a separate entrance that carries marquee brands once found only in Macy’s and Bloomingdale’s.

• The shift goes in other directions, too, as grocers expand their health and pharmacy sales: the Ralphs supermarket chain is giving away 30K sets of nicotine patches and gum at stores in Los Angeles after partnering with the Los Angeles County Department of Public Health and L.A. Care Health Plan to help publicize a stop smoking push.

• Coming on the heels of a report by The National Retail Security Survey that retail theft is up for the first time in six years is news from grocery retailer Winn-Dixie that internal theft is down 39% at the front end of the store with the amount per theft off 59% in the six months since the chain installed a new anti-theft technology system. The savings add up to more than $7MM. (The survey was compiled by the University of Florida).

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

World News

• Venezuelan president Hugo Chavez is looking to take his dispute with capitalism to a new level, threatening to copy the patented technology of food packaging company Tetra Pak. The goal is to reduce reliance on foreign companies, and the controversial leader has called patents “capitalist,” insisting they are “universal knowledge.” The government has already warned cardboard companies who refuse to supply packaging to state-owned food entities they will be expropriated. Tetra Pak is the second packaging company under siege from Chavez. In March, he seized 1,500 acres of land owned by the Irish company Smurfit Kappa Cartons, announcing the land would be used for “more rational” crops like yucca and beans. The government claims it will compensate the company for the land, though an additional land seizure is apparently in the works. Chavez is pursuing a strategy of nationalizing energy, concrete, telecommunications, steel and other companies central to industrial growth. The food sector already saw the expropriation of a rice plant owned by a subsidiary of Cargill saying the company had dialed to follow his price-control policies.

• Dunkin’ Brands Inc. has indicated it will open 100 stores by the end of 2009 in South Korea, its top-performing foreign market. Last year the company opened 191 stores there, with its 663 outlets in South Korean turning in 47% of non-U.S. revenue. Plans are to double the company’s presence over the next 10 years.

• Dean Foods is acquiring the Alpro division of Vandemoortele N.V., Europe’s largest branded soy beverage and food manufacturer, €325MM ($450MM). The Alpro soya and Provamel brands had net sales of €260MM last year. The company has manufacturing plants in Belgium, the U.K., France and The Netherlands.

• The global soft drinks market grew by 3.2% in 2007 to reach $329.4bn, with forecasts predicting it will hit $399.3bn by 2012 (21.2% more than 2007). The largest soft drink category is carbonates with 44.2% of the market, and the Americas are the largest soft drink market with 43% of global revenue share.

• In their first try at melding the two brands since the merger, Wendy’s/Arby’s will build 135 dual-branded restaurants in 9 countries of the Middle East and North Africa over the next decade.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

"Green" & Health News

• The fragile seafood ecosystem is generating action among food retailers. Readers and subscribers to Food Business Newsletter already know that Wegmans has joined the “Take Marlin off the Menu” movement designed to get retailers and shoppers to stop eating swordfish. Now Canadian retailer The Overwaitea Food Group (OFG) has become the first major retailer to support a policy of sustainable seafood. The company has 117 stores in Western Canada, and has promised to no longer sell yellowfin tuna, Chilean sea bass, and orange roughy among other threatened species. SeaChoice is providing consulting to grocers on implementing a sustainability protocol with backing from the David Suzuki Foundation, Sierra Club British Columbia, and the Canadian Parks and Wilderness Society. The retailer recognizes that some of the fish under pressure are inexpensive and replacements will likely cost more and drive off business, but believes “doing the right thing always pays off.”

• Another company pushing green and sustainability is Unilever through an online advertising campaign with National Geographic. Photos and video of its Lipton tea farms in Kenya are complimented by a Facebook fan page and Twitter alerts. Geographic has already partnered with Dow Chemical and Frito Lay, though the Society says it will not work with just any company. Lipton is looking for “rainforest certification” for its tea in an effort to borrow some of the magic that rainforest coffee has brought to companies like Starbucks. They currently purchase from approximately 500K farms, and plan on having all of them certified by 2015.

• Meat gets a bad rap. But there is another school of thought (probably financed secretly by the meat industry) that says eating meat has health benefits. It contains many important nutrients, including compounds like taurine, L-carnitine, creatine, conjugated linoleic acid (CLA) and endogenous antioxidants, according to Dr. Yeonhwa Park at the Institute of Food Technologists (IFT), a non-profit scientific group. Dr. Park says meat contains other important nutrients like iron and zinc that are hard to find or lacking in the average diet, as well as vitamin B-12. The key may be adding probiotics, fiber or omega-3 fatty acids may help improve meat's functionality as a food. Breeding and changing meat types could reduce cholesterol levels, one of the drivers in the rise of grass-fed beef. The "tough" stringiness of free range beef and its much-higher price have both limited the appeal of the concept with retailers and consumers so far. Probiotics added to fermented meats like sausage could offset the health concerns about nitrosamines, though there's skepticism it could fully counter those potential ills. In addition, the probiotic strains chosen would have to be able to overcome the salts used in their preparation. Omega-3 enriched meats could help offset the pressure on wild salmon stocks and the environmental concerns about fish farms and allegations such farms are encouraging the growth of disease and parasites in the wild varieties.

• The importance of inflammation and other conditions that previously were seen as symptoms unrelated to mortality have been changing, and the latest focus is psoriasis: people who have it suffer a 78% higher incidence of heart disease, 70% higher risk for stroke and a 98% higher incidence of peripheral arterial disease. According to a researcher, “psoriasis imposes the same level of risk as high blood lipids and smoking.”

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

How Beneficial Are Functional Foods?

Today is Black Friday, traditionally the biggest retailing day of the year, and the start of the Christmas buying season.

Functional foods— food that contains added vitamins, minerals, anti-oxidants, etc.— are big business.

According to the research giant Packaged Facts, they already comprise a $30.7bn market with predictions of 40% growth during the next five years. Mintel’s Global New Products Database tracked 68% new products over the past two years that were fortified with omega-3 (over 1,550 items). The products included orange juice, cereal, bread and peanut butter.

But these so-called “Frankenfoods” are raising concerns among scientists and dieticians over their true effectiveness. After all, most doctors will tell you that vitamin and mineral supplements, despite their popularity, rarely deliver anything approaching the benefits derived from naturally-occurring ones that come from eating a balanced diet. There is also concern about the cost-benefit ratio in fortified foods: a two-tablespoon serving of Hearts and Minds Peanut Butter with Omega-3 and Olive Oil has 100 mg of the beneficial omega-3, while a 3.5 oz. portion of salmon or other oily fish has 1,500 mg. A single slice of Wonder Classic Calcium Fortified Enriched Bread has only 10% of the daily recommended value, whereas a cup of milk has 30%.

The concept of using foods to deliver health additives began in 1924 when iodine was added to salt in the state of Michigan to fight goiter. The experiment spread to the rest of the country, and led to other additives, including niacin thiamin, riboflavin and iron in 1943 for breads and grains, which stamped out pellagra, a disease that ravaged the brain and skin, but which is unknown now. In 1998, the U.S. Food and Drug Administration (FDA) required adding folic acid to enriched grains in breads and cereals hoping to fight neural-tube defects in the unborn. A 25% reduction in infants born with the condition has been credited to the move, though some researchers are concerned too much folic acid can be toxic.

One advantage of dispensing additives in food over taking supplements is many are fat-soluble, meaning the body digests them better taken with food. There is also the fact that ¾ of Americans don’t reach the U.S. recommended daily allowance for vitamins and nutrients. Including them in food insures they are ingested, though processing destroys nutrients, so eating food in an unprocessed form is preferable. Protein-fortified pasta, for example, contains as much protein as meat, though they have higher simple carbohydrates, which contribute to obesity.

Additives may provide “cover,” too, for unhealthy foods. Is a bag of potato chips containing fiber mean it’s more than empty calories? Sports drinks provide nutrients but are overloaded with sugar, something the beverage industry plays down and most consumers ignore. Since the FDA does not regulate probiotics, omega-3 or other nutrients, manufacturers are not required to tell consumers the amount contained in their foods or whether it’s a lot or a little. Yet in the end, researchers concede fortified processed food is generally better than unfortified processed food.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

No Posts for Thanksgiving

There will be no posts today, as it's Thanksgiving in the US. Tomorrow is Black Friday, traditionally the biggest retailing day of the year, and the start of the Christmas buying season.

To subscribe to our regular newsletter or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Non-Grocery Retailers Moving to Food

Regular subscribers to our subscription service Food Industry Newsletter already know that non-food retailers, especially Target, are looking to emulate Wal-Mart’s success during the Great Recession by selling more food (currently 40% of Target’s sales).

Now Family Dollar Stores (FDO) is ramping up its food sales with national brands like Jif peanut butter and Triscuits driving its recent 6.4% surge in sales. Even Toys R Us is pleased with its food offerings aimed at parents. In the past, these same retailers turned up their noses at the thin margins in the food category, but hard times are making foodies of them, especially as cost-cutting regimes put into place in past years to compete with Wal-Mart are paying dividends in efficiency.


Groceries and health & wellness products sold $243 billion last year making up 60% of Wal-Mart’s total revenue $405.6bn. With shoppers spending less, frequent repeats are key, something Family Dollar Stores has discovered by upping its food offerings. Overall, without Wal-Mart’s food sales, same store sales across the retailing sector would have fallen 4% in 2008 compared to the actual decline of just 0.5%. Profits were off 12% across the board, but would have tumbled 17%. The gap between the Bentonville Behemoth and the rest of the retail industry has closed as everyone has learned to cut costs from suppliers and in stores. The stock prices for retail have swung 180 degrees during the interim as Wall Street has lost its enthusiasm for discounters and are betting on discretionary retailers like Macy’s and Target once the economy recovers.


Wal-Mart’s customer base is also more vulnerable to tight credit and the soft job market, but the company insists new customers will make the difference. So far 17% of its increased traffic came from new customers, with new shoppers spending 40% more per visit than the company’s average transaction.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125). Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.