Casual Dining Running Out of Gas

Pardon me while I rant a bit.

The casual dining segment is in the toilet.

Pizzaria Uno has filed Chapter 11.

Bennigan's already went Chapter 7 (liquidation) and was sold to its largest franchisee group.

Darden Restaurants reported an $18MM profit, but sales were down, so the profits came from cost-cutting, not reviving their business.

Yet still Darden, Brinker and several other major brands refuse to consider licensing their brands to retail. Brinker's Chili's unit is announcing it's going to discontinue its "3 for $20" deal. Frankly, the $$$-off promotions have done little but inject red ink into the ledgers of the chains that have adopted them.

Yet neither Brinker nor Darden will talk to us. We've called them, multiple times.

Our company has turned Burger King from a QSR chain into a major food company with multiple channels of distribution across multiple delivery platforms reaching consumers through multiple touch points.

We're still here, Darden & Brinker. I'm waiting for your call.

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.

Food Lion Says ¡Olé!

While many firms talk about catering more to the Hispanic shopper, Food Lion is walking the walk.

Two more markets in North Carolina focusing on Hispanics will be expanded from the current five, with 10 old Triangle stores being converted to serve this new customer base. Estimates put the Hispanic grocery market currently at $30bn. Besides the usual offerings of dry goods like beans, tortillas and spices, the stores carry meat cuts and produce Hispanic shoppers normally search for at specialty markets. Employees receive Spanish language instruction and training in Hispanic culture so as to avoid gaffes and alienating the new clientele.

Signs announcing “Sabor Latino” (“Latin Flavor”) adorn the stores, and even Food Lion’s other stores are offering more products aimed at Latins. Marketing has relied on word-of-mouth, and the news has traveled quickly with sales up according to the company. When finished, 59 stores (roughly 10% of Food Lion’s 503 North Carolina locations) will have an Hispanic focus. FMI (the Food Marketing Institute, a grocery industry trade association) reports 61.8% of food retailers report increasing their ethnic products as a competitive strategy. While Hispanic products are attracting Hispanics, the foods are also luring in non-Hispanic customers looking for new options.

Food Lion isn’t the only one seeing dollar signs in the growing Hispanic market: homeopathic remedy marketer Hyland’s has launched a social networking site for Latina mothers. ComienzosSaludables.com (“healthy beginnings”) offers fully-bilingual culturally-relevant health information to the 25% of U.S. moms of Hispanic origin. The information includes pregnancy, infant care, raising a family, healthy lifestyle and, of course, treating a family’s health issues with natural medicines. The new venture follows Hyland’s other efforts to reach the growing Hispanic market, first with bilingual packaging, a baby development calendar in Spanish, and sponsorship of a community health worker program called Salud con Hyland’s.

According to eMarketer, 23MM U.S. Hispanics went online last year, with the total expected to reach 29MM by 2012 (though only 32% of Spanish-dominant Hispanic adults go online). Statistics show 70% of Latina mothers are under the age of 30, and the social networking component of Comienzos Saludables will include community forums, photo galleries, blogs, personal profile pages, and monthly newsletters.

According to Information Resources, Inc. Hispanic spending topped $34bn in 2008 and will grow to $52bn by 2015. Spending per household among Hispanic consumers significantly outpaces the national spending averages across nearly every channel. Johnson & Johnson launched a Spanish-language version of its parenting web site BabyCenter (Baby Center en Español), and Procter & Gamble (already one of the largest advertisers in Spanish magazines) directed $1MM of its ad-spend on Pampers Swaddlers against Spanish mothers in 2007. Besides baby care, other strong market opportunities among Hispanics include beauty care, laundry care and food and beverages that are either youth-oriented, offer specific health benefits (e.g., low sugar, high fiber) or are an ingredient or component of ethnic meals.

Clients of Broad Street Licensing Group and subscribers to our weekly newsletter received a free overview of the Hispanic 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.

Blurring the Line Between Channels

This post by The Grocerant's Steve Johnson is worth reading through.

Steve "gets it." The very title of his blog says it all: grocers and restaurants no longer are separate channels of distribution. Consumers are just as likely to pick up sushi in a Kroger, eat a snack or a meal at 7-Eleven, or look for some California Pizza Kitchen pizza at Costco. Meal occasions are blurred, too, with snacking taking over as a separate meal and not just something to get you from lunch until dinner.

And given that the usage of the stove in American kitchens has stayed flat or declined for the past two decades, who's cooking all the new food now that we're eating out less? It's the microwave. Consumers want convience, and when they say they want "value," that doesn't always mean "cheap."

Restaurants have been slow to "get it." Massachusetts-based Uno Restaurant Holdings Corp. (owner of the Uno Chicago Grill restaurant and pizzeria chain) filed for Chapter 11 protection January 20, 2010. They won't be the last casual dining chain to seek help or simply die outright.

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.

Walgreens Grows the Food Retail Category

Now it's Walgreens.

Steve Johnson reported it on LinkedIn and on his blog, but I could've predicted it.

If I were in the prognostication racket.

But my business is helping restaurants and food brands navigate the rapidly-changing retail grocery business. And it's changing even more rapidly than in the past.

The rise of the "grocerant" has been detailed here and elsewhere. What's new is the embrace of food products by non-grocery retailers. Just as grocery stores are pretending to be restaurants, non-food outlets like CVS, Dollar Stores, and now Walgreens are moving into the food category. They've hired Jim Jensen as divisional merchandise manager in charge of fresh foods. He comes from Tesco's Fresh & Easy Markets, and will be in charge of ramping up Walgreen's "W" lines of prepared and fresh foods. Fresh & Easy was touted when it started out as "a convenience store on steroids," and while Tesco has stumbled here for a variety of reasons, the appeal of convenient food for busy consumers remains a sound one (especially since most c-store customers are males, not your traditional grocery buyer).

Walgreens already sells milk, eggs and other perishables, but they're looking for ways to up that load, citing stats that say 80% of Americans don’t know what they’re going to have for dinner at 4 in the afternoon. It's logical, then, they would be looking at “grab-and-go meals," salads, and sandwiches, along with selling its own private-label foods, especially what the company calls “meal components.”

The reasons are pretty simple for Walgreens' move: in the Great Recession, the only retailers who've thrived are those selling food. Hard goods titans like Target now look like drunken sailors, stumbling from one miscue to the other. The brand experts continue to sing the Minneapolis trendsetter's praises, but the numbers don't lie: food is the reason Walmart has thrived.

Surprisingly, grocery stores seem to think they can sell non-food items, which have a much higher profit margin than food (traditionally in the 1-3% range). We'll see about that.

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.

The Enemy of My Enemy is My Friend

It might seem strange to see a chain restaurant promoting a film that savages the food industry.

But Chipotle Mexican Grill is partnering with Magnolia Pictures, Participant Media and River Road Entertainment to promote “Food, Inc.” The company is sponsoring free screenings in 32 cities, is promoting it in all of its restaurants, and will add a bonus feature to the DVD release about its commitment to supporting sustainable agriculture. With films like “Supersize Me” and “Fast Food Nation” exposing the dark underside of America’s industrialized agribusinesses, backing “Food, Inc.” offers some level of risk, though the company has been banging its “Food with Integrity” program for some time, claiming to serve more naturally-raised meat.

That translates to food animals not being given antibiotics or hormones, are fed a vegetarian diet (some feed cattle are fed chicken scat and ground-up parts of other animals, one of the ways mad cow disease spread from sheep to cattle) and raised in what the company insists is a “humane way.” Currently 35% of Chipotle’s beans are organic, and it strives to purchase locally-grown produce when seasonally available. Finally none of the dairy used by the chain is made with milk from cows given bovine growth hormone (rBGH).

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.

Lobbying Group Formed to Fight Food Taxes

Fearful the government will use taxes to pay for health and obesity programs, several food industry trade groups have formed Americans Against Food Taxes, which they describe as "a coalition of concerned individuals, working families, and small and large businesses to combat the devastating effect of new taxes on beverages and food."

Which is like saying the National Rifle Association is a group of angry hunters.

It's true Congress is already looking at a new tax on juice drinks and soda. While the group admits it hopes to prevent the enactment of taxes it calls "regressive and discriminatory" (presumably against their members), it also insists resources will be applied to promoting "healthy lifestyles by informing Americans of scientifically backed solutions that address economic realities."

Huh?

Not surprisingly, members include the American Beverage Association, the National Supermarket Association, the Grocery Manufacturers Association, the Can Manufacturers Institute, the Council for Citizens Against Government Waste, the Corn Refiners Association, the Food Marketing Institute, the International Dairy Foods Association, the National Association of Convenience Stores, the National Grocers Association, the National Restaurant Association, the Snack Food Association and the National Taxpayers Union.

Susan Neely, president and CEO of the American Beverage Association, says that using taxes to discourage consumers from eating or drinking certain foods and beverages isn’t the answer to improving public health, but that "education, exercise and balanced diets" are. Nelson A. Eusebio, executive director of the National Supermarket Association, went for the Big Lie by claiming “our businesses are already struggling to survive in this recession,” despite the generally favorable profit reports from the grocery category. Pamela G. Bailey, president and CEO of the Grocery Manufacturers Association (GMA), struck a populist note, saying “food taxes are bad public policy because they disproportionately impact America’s working families.”

The group’s website facilitates sending emails to members of Congress, and so far it claims over 60K messages have been sent. Finally the group claims the beverage and food industry is working to end childhood obesity and encourage healthy lifestyles through product innovation, nutrition education and the promotion of physical activity.

Don't hold your breath for a breakthrough. Industry lobbying groups, no matter what the industry, are like high-priced defense attorneys: they're only looking out for their clients' interests.

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.

The Rise of the Grocerant

One of the smartest guys on the 'Net is Steve Johnson whose blog is called "The Grocerant."

You can visit it here.

Grocerants are hybrid grocery stores and restaurants. After all, grocery stores and supermarkets have changed a lot since the jump by Wal-Mart into the category. And now the Recession is powering the move towards the "grocerant." Oh, food retailers have always had their roasted chickens and fresh salad bars, but now they're offering sushi, Asian noodles (not really Chinese or Thai per se), hot & cold appetizers and more. Take-home meals have been commonplace with grocers, but increasingly they're replacing "take out" with "eat in" for some upscale retailers. Barnes & Noble-style cafes are no longer the rarity.

Grocers are seeing 7-10% growth in sales of prepared items, largely at the expense of restaurants. In the past, grocery stores had been losing out steadily to restaurants, with 48.5% of total food expenditures in 2008 spent away from home. Now things have shifted, with the National Restaurant Assoc. estimating restaurant sales will be off 1% in 2009 (conservative if you ask me).

In order to attract the restaurant customer, Albertsons has pegged their in-store prepared foods to the slogan “Simply Good Meals,” grouping foods together for easy menu combos and placed in the “4:15” sections in line with the time busy shoppers are looking to put together dinner.

Southern California chain Stater Bros. is adding two kinds of meatloaf for those wanting “comfort food,” but also offers carnitas and chicken teriyaki.

With trips to the supermarket steadily declining, the challenge for retailers is to keep value and not resort solely to price cuts. Chains like Stater Bros. and Albertsons have slashed prices 20% on many items, and have reported lowered earnings as a result, though some chains like Kroger report profits up. The leader in providing prepared meal innovations is Tesco-owned Fresh & Easy who features a line of meals intended to feed a family of four costing just $8. While the category can be popular and lucrative, retailers are sometimes unsure how to capitalize. Consumers think the foods are prepared on-premises (they aren’t), and some shoppers resist paying premium prices for no-name or store-branded prepared foods, so moving beyond five varieties of egg or potato salad can be a strain on supermarket supply lines.

Finally, attracting good food prep talent to work in a supermarket has been an uphill battle.

But expect more market share and "share of stomach" to go to the grocerants.

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.

Burger King Helping Haiti

Our client, Burger King, is helping out in Haiti even though they don't have any restaurants there.

"The situation in Haiti is devastating and our hearts and prayers go out to all those who have been affected by this tragedy," says Anne Chwat, president of the Have It Your Way Foundation. "Although we don't operate Burger King restaurants in Haiti, BKC's global headquarters is based in Miami, which is home to one of the largest Haitian communities outside of the island. The people of Haiti are suffering and many of our employees, franchisees, guests, and their families have also been significantly impacted. As such, we are committed to supporting the relief efforts in the country."

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.

“Natural” Beats “Organic” in Consumer Perception

In a study conducted by The Shelton Group, it seems American consumers have confused “natural” as a better indicator of an eco-friendly product than “organic.”

While the Great Recession has slowed the adoption of “green” and organics, shoppers remain interested in reducing the environmental impact of their choices, though scepticism is increasing about marketing hooey in the form of “greenwashing.” Shelton Group asked 1,006 US consumers how they know if a product is green, and the top response was “don’t know/not sure” (22%) followed by “says so on the package/label” (20%). Despite well-defined certification standards, organic products have failed to win consumers’ trust: 31% said “100 percent natural” is the most desirable eco-friendly product label claim, compared to 14% picking “100 percent organic.”

Despite strict regulations, shoppers think of the organic category as both more unregulated and, of course, more expensive. “Natural” is virtually meaningless since there are no standards or government regulations for its use on products. “Natural” has soared in popularity among marketers, and is the leading label claim on new launches according to research by Mintel. Globally 23% of all new products last year carried the “natural” claim. Dean Foods’ Horizon brand, America’s largest organic milk brand, is launching a “natural” (but not organic) yogurt aimed at toddlers, and single-serve milk targeted toward children. The dairy products are produced conventionally, though the company is insisting they “naturally produced without added growth hormones, artificial colors, flavors or preservatives and no high fructose corn syrup.”

Unlike with organics, the cows can be fed with foodstuffs treated with pesticides, herbicides and other artificial additives. The problems of organic integrity may be partially at fault for the label’s lack of trust from consumers, along with a healthy mistrust of Washington bureaucrats. Organics regulations have been relaxed for some products, partly as demand has pushed the category to over $24bn in annual sales with major players like Kraft and Coke investing in or buying up organic brands. For example, grated organic cheese can contain wood starch to prevent clumping, and organic beer can be made from non-organic hops.

Under the original organics law in 2002, 5% a USDA-certified organic product could be non-organic provided it was approved by the National Organic Standards Board. The original list had 77 substances and has since grown to 245. Manufacturers have to appeal the inclusion every five years by explaining why an organic alternative is not possible or practical. In addition, the law’s mandate for annual pesticide testing was left optional. One problem with enforcing organics standards is that major food companies have taken control-of or purchased outright most small, independent organic companies. Kraft owns Boca Foods, Kellogg owns Morningstar Farms, and Coke has 40% of Honest Tea, President Obama’s favorite organic beverage.

Lobbying is a natural result of this situation. For example, organic infant formula labels trumpet the additives DHA and ARA, synthetic fatty acids that some studies claim help the growth of nerves, but are synthetics that don’t meet the organics standards because they are produced with a potential neurotoxin known as hexane. According to The Washington Post, Deputy USDA administrator Barbara Robinson, who administers the organics program, overruled her staff’s ban on the additives after being lobbied by William J. Friedman, a lawyer representing baby formula makers.

Maryland-based Martek Biosciences, which produces the fatty acids used by formula companies, claims no hexane residue is present. Other actions by Robinson include giving farmers permission to feed organic livestock non-organic fish meal, which may contain mercury and PCBs. The law requires animals slaughtered for organic meat be raised entirely on organic feed. Other problems with the program include the variability of testing companies, with farmers prompted to shop around to find certification for things like liquid fertilizer that is non intended for organics, but is desirable for growing big crops due to its juiced-up nitrogen levels.

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.

Share of Stomach

Mary Boltz Chapman, editor of Chain Leader, is very smart.

But I was amazed that in an article about driving traffic back to restaurants she made no mention about how retail versions of restaurant products do just that.

It's one of the truly impactful ways of driving business back to the core brand because it both reinforces the brand with existing customers AND introduces it to consumers who either haven't tried the chain or haven't been in some time.

Brands like Burger King, Boston Market, California Pizza Kitchen and TGI Friday's have all had significant success at retail. Now, in the interest of full disclosure, we are the architects of client Burger King's program, so we're prejudiced. But the phone rings every week from chains who are thinking about how retail can help them.

Too many, sadly, end up doing it on-the-cheap, in-house, or else tentatively with some exploratory efforts in limited distribution. But all those who undertake retail for their brands realize that you miss significant numbers of meal occasions by focusing your business entirely on foodservice.

Consumers no longer segment their meal solutions, they eat whenever and wherever they want. That might be sushi from a supermarket's fresh section, frozen dinners from the freezer case, or take-out from the local eatery. It's called "share of stomach" and is more important for the New Economy than "market share."

Too few restaurant marketers are thinking along these lines, which is evidenced by their focusing on money-losing prospects like so-called "value menus" and money-off promotions. All these seem to do is lower profits and enrage franchisees. But until companies start bringing in marketers from outside the restaurant business, this isn't going to change, at least not short of bankruptcy court.

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 NPD Group in their A Look into the Future of Eating claims consumer preference for convenient food options will grow over the next 10 years. The data for the study comes 5K persons tracked for two weeks to record their eating choices.

• Walgreens pharmacy same-stores sales increased 9% during June 2009 thanks to increases in 90-day prescription plan customers and an extra weekday on the calendar. In all, Walgreens generated total sales of $5.24bn (vs. $4.8bn one year ago).

• Rite Aid reported same-store sales down 0.6% due to an increase in the use of generic drugs. Rite Aid’s total sales were $1.97bn (vs. $2.02bn a year ago).

• Overall, retail clinics, which had looked like a gold mine for health care providers, were down as flu, sore throats and immunizations associated with colder weather were down. Wal-Mart announced 2 years ago it would open 400 clinics within 3 years and 2,000 within 7 years, but has only 34, down from 43 last Fall.

• Grocery chain Niemann Foods Inc. has contracted with American Digital Signage to provide a digital marketing program that will include digital signage and mobile text messaging communicating store announcements and sales promotions in a test at its Quincy, IL store.

• Husband forgot your anniversary? A small study from Australia suggests daily supplements of soy isoflavones could help boost a man’s mental function and memory.

• Having been called a “runaway train” by one industry analyst, McDonald’s continues to show why it dominates the fast food restaurant market: by giving away 10MM coffee samples as part of its “McCafe Mocha Monday” nationwide event that includes voting for the “McCafe Your Day” song-test and sweepstakes.

• As concern over food safety remains prominent, the US market for active & intelligent packaging is expected to grow 8.3% annually to $1.9bn by 2013, well above the overall packaging industry. “Active” and “intelligent” prolong shelf life for foods or react to spoilage by changing color.

• The European Food Safety Authority (EFSA) has declined to offer regulations governing the term “probiotic” despite pressure from both manufacturers and the scientific community who feel the term lacks precision and is being abused for commercial gain.

• Decatur, IL-based Archer Daniels Midland Co. has had its price-fixing fine reduced by the European Court of Justice to €29.4MM ($41.2MM) from €39.69MM ($55.5MM). The European Commission levied the original fine, describing the firm as “the leader in a secret cartel” of five companies that illegally fixed the worldwide price for citric acid from 1991-1995. The substance is a widely-used preservative in jams and jelly, as well as canned fruit.

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

• A new study says that caffeine may interact with estrogen in women, possibly resulting in more cancer. Several studies have found connections between caffeine and breast and ovarian cancers, though the findings have not always been consistent. There is no verdict on whether the caffeine is a direct risk or influences other body processes, though estrogen and other sex hormones definitely play a role in both cancers. The study published in the journal Cancer found that as caffeine increased in premenopausal women (in coffee and other products), levels of estradiol, a form of estrogen, declined proportionally during the second half of the menstrual cycle. Higher caffeine also kicked up levels of progesterone. Among postmenopausal women, greater coffee and caffeine intake only yielded a link to higher levels of sex hormone-binding globulin (SHBG) which decreases the activity of estradiol and testosterone. The result in those cases was a lower risk of breast cancer. In theory, lower estrogen levels in premenopausal women should protect women against ovarian cancer, so the spike in that disease among premenopausal women puzzles researchers.

• Ocean Spray has been granted a patent for using cranberry seed oil for “treating” or “preventing” cancer other diseases almost six years after the application was submitted by inventor Wassef Nawar.

• Data from 14,960 people in seven countries indicates eating more fish, especially the oily kind, may reduce the risk of dementia by about 20% (source: the American Journal of Clinical Nutrition).

• A study by the University of Bristol in the UK suggest that campylobacter and salmonella may become more virulent in chickens during transporting due to the secretion of a stress hormone. Noradrenalin is released during times of stress, and increases iron in the chicken’s system which in turn stimulates the growth and spread of both campylobacter and salmonella. Previous data has found that bacteria which cause food poisoning can increase tenfold in the guts of chickens after being sent to slaughterhouses and feed lots.

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.

Aldi

German retailer Aldi plans to make an impact in the US market.

Unlike most American grocers, Aldi has a smaller footprint (10K square feet), with fewer SKUs, it charges for bags (5-99¢ depending on the size) and requires a deposit on shopping carts (25¢). It carries few national brand-name products, and doesn’t accept either checks or credit cards. It relies on prices “up to 50%” below other supermarket chains. The company achieves its value proposition by skipping the other services its competitors offer like banking, pharmacies, bagging clerks, check cashing, or photo processing.

Like a good German retailer, it isn’t open 24 hours a day, and doesn’t redeem manufacturers’ coupons. About 40% of its selling space is devoted to fresh, refrigerated or frozen foods highlighting 1,400 “fast-moving” items (95% Private Label). It’s no surprise customer loyalty cards are nowhere to be found (Whole Foods also eschews loyalty programs). Aldi currently has 1,000 U.S. stores and plans to add 80 more in 2009.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.

American-Style Health Concerns Spread to Asia

Obesity rates are soaring in the US, but Asians are catching up.

With affluence usually comes a sedentary lifestyle, and with it the usual health problems associated with obesity, including heart disease and diabetes. A third of the residents in Asia and the Western Pacific were overweight in 2005, numbers expected to rise to over 50% among men and 45% among women by 2015 according to the World Health Organization. Up to 23% of the population is overweight and WHO predicts by 2030 diabetes cases will double to 42MM. India is the world diabetes capital with 40MM, a total that will likely double by 2025. As a result, the health foods market will grow from its current $200MM to over $1bn by 2012. Obese people make up ¼ of the populace in some Indian cities.

As a result, oats, yoghurt and vitamins are all catching-on with a new generation of Asian consumers. While the Chinese diet, for example, is relatively healthy with plenty of vegetables, smoking is widespread, and fast food chains have expanded, bringing with them ice cream and chocolates not native to the local scene. Health foods currently make up 5% of food products sold in Asia, far below the rest of the world, but flaxseed, wheat germ and soy-based products are part of a $20bn market. Besides health foods, supplements (including vitamins and protein mixes) totaled $14bn in Asia in 2006 (not including Japan).

Asian health food products are often quite different than mainstream ones in the West, including root powders (ginseng), herbal teas and variations of chicken soup, a staple of Chinese herbal medicine. Cerebos Pacific, maker of bottled Essence of Chicken, had a 33% growth in profits over the last four years. Another growth area is healthy beverages. Coca-Cola has launched a new bottled spring water in Japan and grew the product line in Hong Kong with preserved almond, jujube and pear flavors. PepsiCo has brought its SoBe line to Asia, and is selling fortified teas, fruit drinks and energy drinks in India. Nestle has introduced its probiotic yogurts, and Tata Tea (India’s leading tea and coffee company, and purchasers of A&P’s Eight O’Clock Coffee brand), now has a line of cold drinks with tea, fruit and ginseng.

Ingredient makers are doing well there, too. American ginseng has long been prized by Chinese consumers, and the Almond Board of California has seen sales grow 24% in the past four years (to $485MM) by stressing the anti-oxidants and protein contained in its nuts.

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.

Consumer Spending & Cost-Cutting Strategies Examined

Perhaps at no time in recent memory have consumers been so thoroughly, closely and frequently studied as those living during The Great Recession.

Another report about their spending and cost-cutting strategies from Information Resources Inc. has detailed which groups will be most likely to continue these habits long-term. According to company president Thom Blischok, “we went beyond studying the common spending, self-reliance and self-health strategies that are becoming common place in today’s environment and examined how economic pressures have driven different types of consumers — by income level, household composition and even varying consumer mindsets — to change their strategies.”

Citing what it calls a “Misery Index” reflecting consumer economic wellbeing and expectations about the economy’s future, it currently stands at 14% (vs. 13% one year ago and below 8% in 2007). With most forecasters seeing a slow 2009 and a modest improvement in 2010, the report says current spending strategies will stay with consumers. The company maps the buying landscape with three factors:

• Income Level: consumers in the under $35K bracket have seen the most-drastic change in expectations and plans, though nearly ½ of those in the over $100K bracket report postponing non-grocery purchases (For more details go to Appendix item 1)

• Household Composition: Asked whether households w/o children were more or less likely to continue purchasing brand names, 78% of households with kids earning under $55K are postponing non-grocery purchases; but 64% of this same segment will continue treating themselves to affordable indulgences vs. 54% earning the same without children present.

• Consumer Sentiment: IRI identified three categories of shoppers: optimists, maintainers and pessimists. Pessimists are the poster children for the behavioral change researchers are claiming for all consumers, such as searching for sale prices (87% vs. 82% for all households), making personal care products last longer (62% vs. 55%), and buying fewer prepared meals at grocery stores (61% vs. 55% for all households).

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.

Why Local Isn’t Always Possible

There’s a term for everything and those who want to buy local produce and foods are a locavore.

And right now, “local” is the new “organic.”

Indeed, the problems with the organics movement our newsletter (and this blog) have documented mean that “local” trumps “organic” in the minds of most shoppers.

The reasons cited for buying local include concerns about the environment, a desire to support local farmers, and a conviction that locally-grown produce and meats are fresher and likely “better.” Retailers are striving to stress their local products, though the food distribution system often makes it cheaper and easier to source produce from around the world than across the county. As with the rise of organics, the food industry is struggling to find enough local produce. Consumers are just as likely to see a sticker in French (“Aubergine”) on an eggplant imported from Europe as they are to discover asparagus from Peru.

The federal government even allows stores to describe as “local” anything grown within a 400 mile radius. Advocacy groups like Food and Water Watch are complaining that marketers are stretching the “local” label beyond the point of any meaning. Stores insist American insistence on “cheap” and “available all year round” favors large, industrial farms and distribution centers. Just as it is sometimes cheaper for FedEx to ship a parcel between Washington and Atlanta via a hub in Tennessee, grocers can often secure better, cheaper fresh foods from offshore instead of nearby. Grocers are also under pressure to conform to national promotional campaigns: stressing local foods in California in June is realistic, but not in New Jersey where the growing season is different.

Whole Foods is trying to capitalize on the locavore movement not only by highlighting local produce, but even telling shoppers which farms it comes from and how far away from the store they are. But overall chains simply aren’t set up to deal with many local sources, preferring to buy from distributors or large cooperatives. Sunny Valley International in Glassboro, NJ, for example, pools the produce from nearly 20 blueberry and peach farmers. The company can then market the product to large chains like Safeway, though the retailer has been chided for promoting “Jersey peaches” before the crop is picked. Retailers insist this isn’t deliberate.

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

• Whole Foods Market has signed on to the Non-GMO Project, a non-profit collaboration of manufacturers, retailers, processors, distributors, farmers, seed breeders and consumers, promising to employ the Non-GMO’s (genetically modified organism) Product Verification Program for its private label products.

• In the licensing arena, TV’s “Deadliest Catch” fishing boat captains Johnathan and Andy Hillstrand have teamed up with Trinity Design Group to create labels for a line of Bloody Mary mix manufactured and distributed by Lakeland, FL-based Hot Wachula’s Inc.

• Those who think the European Union food regulators need to “get a life” can take some small comfort by new rules which will remove specific marketing standards for the size & shape of most fruits and vegetables. Cabbage, onions, cherries, avocados and zucchini can now be sold without restriction, though specific marketing standards will apply to the 10 most popular fruits and vegetables, including apples, citrus and tomatoes. Funny-looking versions will have to be labeled as “non-standard.”

• General Mills, Inc. has launched a line of gluten-free Betty Crocker dessert mixes almost 1 year after the company entered the gluten-free category with a reformulated Rice Chex cereal. The mixes will retail for $4.49, about $2 more than traditional Betty Crocker mixes. Up to 12% of the U.S. population is looking to eliminate or reduce their gluten intake.

• As McDonald’s goes, so goes America? The U.S. dairy industry will be looking to The Golden Arches’ espresso coffee drinks (which can contain up to 80% milk) for its next boost in sales. Per capita milk consumption rose three years ago for the first time in 20 years due to McDonald’s introducing milk in re-sealable plastic bottles in 2004.

• Researchers at California State Polytechnic University-Pomona found that young children were unable to tell the difference between regular burritos and chocolate-chip cookies and those formulated with a whole grain and soluble fiber boost. This may lead to reformulating foods to include more healthy ingredients as a way of short-circuiting diseases in school kids from disadvantaged backgrounds.

• The website Serious Eats claims at least 10 gourmet street vendors in New York City are using Twitter to alert patrons of their arrival at a specific location or their routes for the day. The owner of Rickshaw Dumpling Bar, for example, begins sending out tweets to nearly 2,000 followers mornings alerting them where the truck will be parked that day.

• The “Yuck” Factor— you know you’ve lived too long or the emperor really DOES have some cool new clothes when trendy restaurants start incorporating mass market cereals and breakfast foods in dinner offerings: NYC’s The Oak Bar has Rice Krispies in foie gras to temp jaded palates, and Eleven Madison Park has oatmeal in a lobster casserole.

• Jamba Juice is selling off up to 150 of its company stores outside California to franchisees. The new owners are pledging to expand the number of outlets.

• Beekeepers are reporting up to 90% losses of their colonies from Colony Collapse Disorder (CCD), a mystery condition that threatens to harm the food chain due to the importance of bees in pollinating crops. No cause has been discovered as yet, though starvation, viruses, mites, pesticide exposure and climate change have all been advanced. Now the food industry is making plans to implement honey substitutes. Bell Flavors & Fragrances is looking at both natural and artificial honey flavors that would reduce the amount of honey in recipes. In addition, Häagen-Dazs Ice Cream has launched the “Häagen-Dazs loves Honey Bees” campaign to raise money for research. While the company does not use honey extensively as an ingredient, it claims more than 40% of its flavors are dependent on honey bee pollination. Finally, the USDA (US Department of Agriculture) is providing $4MM to the University of Georgia to study the causes of CCD.

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.

Nestle to Acquire Kraft's Frozen Pizza Business

Kraft's hostile takeover bid to acquire Cadbury just got a HUGE lift.

Nestlé has announced it will NOT bid on Cadbury, clearing the field for Kraft. And Kraft will have $3.7bn more in its coffers for the takeover because Nestlé will buy its frozen pizza business.
Nestlé has many fine brands, and is a powerhouse in frozens thanks to its Hot Pockets, Lean Cuisine and Stouffer's lines. Kraft is the largest frozen pizza manufacturer in the U.S. with the DiGiorno, Tombstone and Jack’s and Delissio house brands, as well as the 13 year-old California Pizza Kitchen license. Kraft’s frozen pizza business had sales of $2.1bn in 2009 with a profit of $297MM. The U.S. is currently the largest pizza market in the world (sales of $37bn), but pizza is a fast-growing export trend and Nestlé is brilliant is cornering the market this way.

Paul Bulcke, Nestle CEO, said: "This frozen pizza business greatly enhances Nestlé's frozen food activities in North America, bringing together a selection of great US and Canadian brands, industry-leading R&D and excellent route-to-market capabilities, which complement our existing ice cream direct-store-delivery. With total sales of around CHF 3bn, Nestlé will become the world leader in the attractive, fast-growing frozen pizza category." One of the keys to the deal is defintely marrying Nestlé's R&D capabilities, including their openness to new technology through a variety of sources, with the pizza category and its ability to be extended into other platforms (e.g., pannini).

Kraft isn't out of the woods on Cadbury yet, with the U.K.-based confectionery giant resisting the hostile takeover both financially and in some nasty personal attacks on Kraft's business model and "ethics" (i.e., Kraft is American and therefore beneath contempt). And both Hershey and Ferraro have said they're considering counter-offers. The only sure thing is the likelihood of Cadbury staying independent appears to shrink daily.

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.

Why The Restaurant Industry Struggles

We try to help restaurants succeed.

But some of them just don't get it.

The latest results from the National Restaurant Association’s Restaurant Performance Index (R.P.I.) tell of continuing contraction in the foodservice market.

Yet our calls to restaurant brands often get a polite "we're not interested."

Some chains can't leverage their brands to retail because of ill-thought-out franchise agreements limiting them from rolling out retail versions of menu items. The restaurant industry likes franchising because it spreads the risk out to others, and brings in large amounts of revenue without much outlay.

And franchisees usually think the chains just want to bleed them white. So any efforts to look at alternatives like licensing are met with skepticism. Despite sales figures that consistently rise at restaurants with robust retail presences, franchisees I've talked with are convinced consumers would rather buy food in the supermarket rather than eat out.

If so, it must be a reflection on their poor service, dirty facilities or lack of imagination.

But it doesn't work that way. Consumers are only interested in meal solutions. We need to change our thinking away from "market share" to "share of stomach."

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.

Love in All Its Forms

According to a survey by Church & Dwight, makers of the iconic Trojan brand of condoms, Americans find their sex lives as just above average (6.5 out of 10). Both men and women report having sex 84 times a year, (7x/month), and 71% report looking for ways to increase pleasure in the bedroom. 60% think pleasure aids such as personal massagers could spice things up. Only 20% were “extremely satisfied” with their sex lives, while 33% were “dissatisfied.” Men were more likely (73%) than women (53%) to want more frequent sex. Overall 83% of those surveyed believe good sex is an important part of overall health and wellbeing.

The hot cities with the highest satisfaction rating were Atlanta (73%) and New York (71%); surprisingly the lowest was San Francisco (63%) followed almost immediately by Philadelphia (64%). Randiest American cities were Houston, whose residents report having the most sex per year (101 times annually) with Atlanta a poor second at 88 times per year. I guess too many San Franciscans are getting lost in the fog, since they have the least sex (60x/year).

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.