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• Japan remains a prime focus of all companies doing business internationally, and its supermarket industry has been undergoing a major restructuring. Large retail groups (both domestic and foreign) are taking over the mom & pop stores that used to dominate the Japanese grocery business. Among the new players are Wal-Mart Stores Inc. and the U.K.’s Tesco PLC, but also Germany’s Metro AG. The key advantage the foreigners have is the strength of their enormous supply chains, which favor large footprints. Merging with some of the regional players may allow either one or both to take market share rapidly. The attraction of the Japanese market might puzzle observers, since its overall size has declined every year since hitting their peak in 1998 of ¥16.8 trillion. By last year, sales had shrunk to ¥13.3 trillion according to the Japan Chain Stores Association. In contrast, domestic companies have no growth options other than consolidation and improving their supply chain efficiencies. The Japanese population is aging more rapidly than almost any other industrialized power, and the bursting of the country’s real estate bubble has tarnished many businesses, so much so that not all international retailers are looking to play the game: France’s Carrefour S.A. left in 2005 after selling its operations to Aeon Co. (Japan’s #2 supermarket chain by revenue). Even Wal-Mart has found it harder to turn around its local subsidiary Seiyu Ltd. Tesco is working its way into the local market through a Tokyo chain Tsurukame, and is now bringing its convenience store-sized Tesco Express concept to the country. The supermarket channel is led by Seven & I Holdings Co. with sales of ¥5.8 trillion.

• While Carrefour may have fled Japan, it is looking to enter the Russian market in a big way by acquiring 75% of the supermarket chain Sedmoi Kontinent for $1.25bn (938 million Euros).

• A fight is looming with China over U.S. bans on the importing of cooked chicken products. China has already filed a complaint with the World Trade Organization (WTO). Chicken products were blocked in 2004 following concerns about avian flu. China imported $442MM worth of American poultry products in 2008, including chicken feet, which are a delicacy in Chinese cuisine, but are considered offal by most Americans.

• A German administrative court has upheld a ban on Monsanto Co.’s genetically engineered MON810 corn as a threat to the environment. Monsanto currently is suing to have the ban overturned, and had sought a temporary lifting prior to the outcome of the lawsuit. Although the EU authorized the sale of the seeds in 2004, Germany’s Agriculture Minister, Ilse Aigner, banned both the sale and planting of MON810 seeds. The company touts the corn’s ability to produce toxins that ward off insects, but critics worry about the spread of the corn’s DNA to other strains or to the wild, and potentially might harm beneficial insects.

• In another regulatory matter, a minor trade war was averted when the U.S. agreed to shelve a proposed 300% tariff on Roquefort cheese from the EU as both sides worked to settle their differences. It’s about time….

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