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.