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FOOD BUSINESS NEWS:

Discussions about the food industry, restaurants, and licensed food brand extensions

A World Leader

A World Leader
One of the World's Top 20 Licensing Agents

Monday, April 12, 2010

We Have Moved!

You can now find this blog at the new Broad Street Licensing Group Website:

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Bitter Fight Over Sugar


Despite the scoffing of most experts, several large CPG companies have warned the Obama administration they will raise prices drastically and lay off workers if the government doesn’t relax restrictions on tariff-free imports of sugar.

Kraft Foods Inc., General Mills Inc., Hershey Co., Mars Inc. and Krispy Kreme insist their profits are in jeopardy— oops, I meant to say they see shortages unless regulations are relaxed that aid the domestic sugar industry. Sugar beet farmers in the Northern Plains and cane-sugar farmers in the South have used lobbying and political muscle to prop up U.S. prices to more than 2x the world level.

Adding to the problem: sugar prices, both in the U.S. and globally, have soared in the past year and show no signs of declining.

Price increases have the most direct impact on candy and other sweets, but sugar is ubiquitous in the processed foods industry. Gonnella Frozen Foods, for example, has raised prices for its rolls, hamburgers and hot dogs because of sugar used in the dough. Sugar makes up 1%, 6% and 8%, respectively of costs for ConAgra Foods Inc., Kraft, and Hershey.

Major sugar exporters like Brazil and India are barred from selling their sugar in the U.S. without high import tariffs. One big factor in the rise in prices is the diversion by Brazil (the world’s largest sugar producer) of large amounts of its crop to making ethanol, much as ethanol production has driven corn prices up here. Getting congressional buy-in for raising the amount of tariff-free sugar (50% demanded by the food industry) will run square into Rep. Collin Peterson (Dem., Minnesota), chairman of the House Agriculture Committee, and whose district is a major beet-sugar producer. The American Sugar Alliance, the trade group for cane and sugar-beet farmers, is “absolutely opposed” to relaxing sugar-import quotas, since it would lower prices paid to growers here.

The association claims each one-cent drop in sugar prices costs U.S. farmers $160MM in revenue. The lobbying group also points out allowing more foreign sugar into the U.S. will likely not show up as price reductions for consumers. So far, the large soda manufacturers Coke and Pepsi (who mostly use high-fructose corn syrup) have shied away from this fight.

Most recently, the American Bakers Association has come out in favor of lifting the quota numbers. The trade association cited the historic high prices of sugar reached this past February as evidence of how the quotas hurt consumers. Recent domestic raw sugar futures stood at 31.1 cents/lb, down 25% from the peak of 42 cents this past Winter, but still more than 50% above the 2000-07 average of just under 21 cents. The current Tariff Rate Quota (TRQ) is 1,139,195 tonnes (1,256,000 short tons).

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.

Friday, April 9, 2010

Fresh & Easy Going Healthier


Supermarket News reports that Fresh & Easy will attempt to correct their retailing missteps with a line of healthier prepared foods.

Launched under the EatWell umbrella, it's a line of 17 ready-to-eat prepared meals and sides, including salads, soups, noodles, and various entrees. The price range is pegged to $3.99. All of the items are supposed to contain fewer than 500 calories, and less than 25% of the U.S.D.A. recommended daily allowance for fat and sodium (based on a 2,000 calorie diet). Such numbers have proven elusive for consumers with regular testing of supermarket products showing a wide variation in actual calories, fat, sodium and other markers.

Fresh & Easy has struggled since opening its smaller footprint stores in the CA, AZ and Nevada markets. Initially the company had too few SKUs and the wrong product mix, as if they had never really studied the American consumer (Fresh & Easy is owned by UK giant Tesco). Then the lousy economy hit those areas especially hard.

But given the goal of making Fresh & Easy a rival for convenience stores (who are pushing for more foods, including healthy options), this new line holds out some hope of turning the chain's fortunes around. The only question is: will 7-Eleven sit still long enough for Fresh & Easy to figure this all out?

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.

Thursday, April 8, 2010

Online Ads Apparently DO Work


After years of ad companies and their clients wondering whether online ads work, a new study by comScore and marketing consultancy dunnhumbyUSA over a three month period shows they do.

A large sampling of 200K panelists selected from supermarket loyalty programs (including measured retail-buying behavior) was tracked through point-of-sale UPC scanners at checkout. Those exposed to online CPG advertising were 9% more likely to buy than the control group. Ad campaigns included both static banners and rich media ads for a range of products including tea, pizza, snack bars, deodorant and toothpaste.

In addition, the study found that 80% of the campaigns resulted in a statistically significant sales increases for the advertised brand. The results were on a par with TV-based ads. CPG companies have lagged behind sectors like financial services and automotive in utilizing online advertising, accounting for only 6% ($1.5bn) of the $23.4bn spent on online buys in 2008 (up from 4%, or $925MM in 2007).

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.

Wednesday, April 7, 2010

More Trouble at Brinker


One begins to wonder how much longer Brinker International can survive.

Norman Brinker, the founder, was a god in the restaurant world. He's reputed to have invented the salad bar, but he's best known for helming a variety of chains when he was in charge of Pillsbury's restaurant division in the 70s and 80s, including Burger King, Bennigan's and Steak & Ale. When he passed away last June, the era of the entrepreneurial restaurant magnate seemed to come to an end.

Brinker built his empire from Chili's, a small burger joint he purchased in the 80s, adding other brands along they way, including On the Border Mexican Grill and Cantina, Maggiano's Little Italy, and Romano's Macaroni Grill. They were once the second largest casual dining chain in the world (based on locations) behind Darden Restaurants. With more than 1,900 restaurant locations in 25 countries, they were a force in the industry.

After a serious polo injury in 1993, Norman Brinker became more of a figurehead than a functioning executive, and the chain evolved in other directions. The trend has been unfortunate in many respects. The first casualty for Brinker was the loss of Romano's Macaroni Grill, sold to Golden Gate Capital in 2008. Now comes word that the Mexican concept chain On the Border is going to be sold to Golden Gate as well. Like a homeowner behind on his mortgage payments, the company has been selling off its assets to keep afloat.

But do they look at food brand licensing? You can probably guess the answer.

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.

Tuesday, April 6, 2010

World Food News & Trends


• The French organic market is the second-largest in Europe after the UK and stands at $2.3bn. Chief US exports to that market include dried fruits, almonds, aromatic plants and grapefruits, with organic baby food, food components and essential oils offering strong growth prospects. More organic outlets in France will quicken overall sales according to a report (a full report was attached to the subscription version of this entry).

The British government is wrangling over whether their dairy industry is or is not working towards greater sustainability, especially regarding the usage of recycled high-density polyethylene (rHDPE) content (an industry white paper has targeted 50% as the goal by 2020). Depending on the source, dairy manufacturers are doing well (meeting the target of 10% recycled rHDPE by 2010) or poorly.

Robert Watson, 59, of White Plains, N.Y., pleaded guilty in January 2009 to defrauding Kraft Foods, his former company, by accepting bribes Randall Rahal, a sales broker for SK Foods of Lemoore, CA, to purchase processed tomatoes. While that might sound puny, Kraft apparently bought over 230MM pounds of tomatoes and other products at inflated prices. Prosecutors have characterized SK Foods as a “racketeering enterprise” (no charges have been filed as yet). Rahal is awaiting sentencing, and will face justice with former purchasing managers from Frito-Lay and B&G Foods, along with two former SK Foods employees who pleaded guilty to other charges.

• In other police blotter news, British conman Kenneth Goldsmith has been sentenced to 3½ years in jail for conning investors with a scheme that claimed Goldsmith was friends of celeb chef Jamie Oliver. The money (£120K) was used for lavish holidays, Aston Martins and “helicopter rides.”

• Stating the stores had grown “too old,” Publix has announced it will be closing 5 Florida outlets. Last year, the chain purchased 17 of the old Albertsons stores in Florida to convert them to Publix.

• The Golden Arches announced McDonald’s Corporation’s global comparable sales rose 4.3% in July 2009, while U.S. sales were up 2.6%.

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.

Monday, April 5, 2010

Marketing Trends


• Supermarket chain Meijer has extended its marketing partnership with Kraft Foods in a campaign entitled “Dining in Makes $ense” first introduced in Winter 2008 offering discounts on future Meijer shopping trips with purchase of multiple Kraft products. Kraft has been aggressively marketing its products with retailer tie-ins. A recent inducement is a $2-off with purchase of three boxes of Kraft Deluxe Macaroni & Cheese or Velveeta Shells & Cheese. Kraft promotes the discount with floor clings showing meals made from Kraft items, along with sending consumers to their website for “deep-dish pizza casserole” and other recipes too yummy to contemplate. The program is also being flogged on the retailer’s website.

McNeil Nutritionals has launched a Benecol smoothie in the UK and Ireland hoping to reach a younger market with a product offering plant-derived cholesterol-lowering benefits along with a fruit flavor. Retailing for €4/bottle, it will be slightly higher than the market leader innocent (aimed at the 45-55 year-old consumer).

• The #1 marketing tag for confections last year was “upscale” with new products bearing the tag rising for 9% in 2005 to 13.8%. It is no surprise chocolate is the largest confectionery category with a 50.9% share of the U.S. market ($18.4bn). Cereal bars are the fastest growing category in Europe with growth forecast at 31.7% to 2012. Overall in Europe, the most frequent claims made on new products were those claiming “no additives/preservatives,” “organic,” “vegetarian” and “microwaveable.”

• Not only is the grocery business regional, but costs vary depending on where you are in the U.S. Grocery store prices in Chicago are cheapest overall in the store-brand, national brand and organic food categories ($115.73 per cart ), though with the highest organic prices ($142.95 per cart). Overall Los Angeles was the most-expensive ($124.43 per cart), followed by New York City ($122.66). LA had the least-expensive organic costs ($137.52 per cart).

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.

Friday, April 2, 2010

Wal-Mart says "Si!"

With Hispanics the largest-growing segment in the US population, it’s no wonder that grocery retailers continue to chase the Latin consumer.

The latest is Wal-Mart: its Más Club targets recent immigrants who until now have found their familiar foods in local bodegas. A Sam's Club spinoff, the concept is part of the company’s efforts to secure the Hispanic shopper’s food dollars. With Sam’s Club’s share of the parent company’s $401bn sales having slipped from 13.3% in 2005 to 11.7%, the goal is to bring the division more in-line with the domestic market.

Internationally, Sam’s revenue has increased from 18.7% to 24.6% during the same period. Given the amount of small businesses who shop at Sam’s Club, the Bentonville Behemoth has also launched Supermercado de Walmart. While local markets offer personal service, Wal-Mart execs believe they can compete on price, but are moving beyond the Sam’s model of frozens and pre-packaged foods to include a tortilla bakery, 20 varieties of fresh-made Mexican pastries, and a butcher shop selling custom cuts and ethnic delicacies like cow tongue.

Yet despite the firm’s muscle, pitching to Hispanics means entering a crowded marketplace with some established competition not limited to the corner bodega . Additionally the road to Hispanic marketing heaven has been littered with some glitzy failures, including Safeway’s Tianguis. Other retailers have chosen to slant existing stores to Hispanic tastes, rather than open stand-alone stores aimed at the Latin shopper, including both Winn-Dixie and Publix.

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.

Thursday, April 1, 2010

More Problems with Organics

Organic food sales will slip 1.1% to $5.07bn according to a forecast from Chicago-based research firm Mintel.
No, that's not an "Arpril Fool's Day" joke.

Fuel prices especially have cut into profits on organic soybeans, whose price has jumped to $28/bushel; conventional soybeans sell for $12 per bushel according to the U.S.D.A. Dean Foods calls the “natural” designation “a large, growing industry.” Critics say the totally-unregulated (and meaningless) “natural” category (including empty buzz words like “eco-friendly,” “fair trade” and “sustainable”) have gutted the organic category.

Unlike the strict rules for organic certification (and their attendant cost), the “all natural” rubric has no requirement for testing, evaluation or regulation. A recent survey of consumers found that an overwhelming majority believed “natural” is better than “organic.” WhiteWave (a Dean brand), for example, claims it works with Conservation International to ensure its soybeans are grown without genetic engineering, and are sourced in a “sustainable, socially responsible and ethical manner.” The Food & Drug Administration has expressed its reservations to the industry about using the ambiguous term “natural,” but no regulations have discouraged companies from using the term despite its ambiguity.

Meanwhile, Private Label organic products have grown from 13.6% of the total organic products sold in 2007 to 22.7% in 2008. Part of the growth can be seen in Safeway’s effort to peddle its organic products to other retailers, and SUPERVALU has extended its Wild Harvest organic brand to from 150 to over 300 items. Overall, private-label organic food sales increased 34% to $1.1bn; in comparison, only three years earlier (2005), organic private-label sales were only $166MM. The meteoric growth of organic foods has slowed during the recession, with shoppers trading down to conventional products in the face of 100%+ price differences. In years passed, the organic category saw 20% annual increases, while the previous 52 weeks have seen this taper off to 4.6% ($18.3bn).

Stores are retaining organic customers with private label products that have slashed prices from boutique and big brands alike. Deflation, however, is a real worry with organics, however, with a ½ gallon of reduced fat 2% organic milk retailing for $3.78(vs. $2.96 for a gallon of conventional milk). As a result, organic farmers are scaling back expansion plans. And Whole Foods Market Inc., has reported consecutive quarters of declining same-store sales. Its $8bn in annual sales makes up over 1/3 of the organic industry.

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.