Broad Street Licensing Group Food News

Marketing News from Around the World

June 18th, 2013

Kraft

 

  • All the news has been about Kraft’s snack division going its own way under the bizarre Mondeliz name, but the North American grocery division will soldier on with the old, venerable Kraft name, and is planning to use its beverage division as its driver for growth in a static package goods channel. Kraft branded beverages include Crystal Light powdered drinks, Capri Sun juices and the new MiO liquid flavoring additive for water, which all together generate $1.5bn in sales.
  • Retailing juggernaut Dollar General has opened its 10,000th store.
  • Portland, OR, in addition to being lampooned in the cable series “Portlandia,” is now a hotbed of bagels following the sale of the five stores of local chain Kettleman Bagel Company to Einstein Noah Restaurant Group, Inc.
  • South Florida is a magnet for new grocery stores, including new stores from Publix, Winn-Dixie, discounter Aldi and Whole Foods. Walmart and Target are also upping their grocery quotient in the region, with Trader Joe’s rumored to be eyeing the turf.
  • Cheerwine, a new cherry-flavored soda acquired by PepsiCo from its Salisbury, North Carolina roots, sees expansion to 50 states by 2017.
  • Sea Salt Caramel Pretzel-flavored soft serve frozen yogurt? From Sugar Creek FoodsHoney Hill Farms brand. You heard it here first.
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DineEquity 1Q profit declines nearly 42%

June 17th, 2013

dine equity

The IHOP and Applebee’s parent, DineEquity blames an unstable economic environment and aggressive value promotions by competitors for their nearly 42-percent decline in first-quarter net income.

At Applebee’s domestic systemwide same-store sales declined 1.3 percent for the quarter, reflecting a drop in traffic that was partially offset by a higher average check. IHOP’s domestic system-wide sales also decreased 0.5 percent for the same reasons.

Reported by NRN.com, the decline was partly based on the company’s shift to an almost all-franchised operation. During the first quarter, DineEquity owned significantly fewer Applebee’s restaurants, most of which have been re-franchised. And one franchisee filed for bankruptcy protection last month (reported by us here).

Said Julia Stewart, DineEquity’s chair and chief executive, “The industry was clearly faced with macroeconomic headwinds which contributed to viability and variability during the quarter”.

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Celebrity Spirits: What Makes Them Special?

June 13th, 2013

martini photo

There are many celebrity owned and/or licensed spirit brands on the market today.

From Dan Akroyd‘s Crystal Head Vodka (complete with creepy skull bottle) to Justin Timberlake‘s 901 branded line of tequilas, the category is suddenly hot.

What will ultimately set them apart from other spirit brands, at least initially, will be the amount of advertising (to ensure consumer awareness) and how well they are liked by their target market. For instance, the average vodka drinker is faced with at least ten vodka brands in each segment: budget, middle of the road and high end. I believe that, assuming there has been enough advertising to create an awareness to link the branded spirit to the celebrity, fans of the celebrity will feel compelled to purchase the brand based solely on the fact that they feel a sense of obligation and loyalty to that celebrity right out of the gate… Before even tasting the product!

But unfortunately for the celebrity that won’t guarantee repeat purchases!  And as the story goes, some products will be of quality and others will be pulled off the shelves before most of us even get a chance to taste them!

Danielle Foley

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Tasty Tidbits

June 12th, 2013
GMO Fish

Genetically-modified fish (image courtesy of www.glofish.com)

  • One of the objections to scientifically-modified foods, including genetically-modified grains and vegetables is that consumers will reject them. A new survey finds that’s not the case.[1] If the modifications would mean less land, water or pesticides were used, then 42% would be somewhat likely to purchase cookies, pasta or other foods made from modified wheat, while 28% would be very likely to buy. About the same number said they would be willing to purchase oils that had been modified to include “more healthful fats” like omega-3.
  • Hedge fund giant Oaktree Capital Management has taken a 16% share of troubled snacks manufacturer Diamond Foods with a $225MM investment. Diamond owns the Kettle chips Emerald nuts brands, but lost its $2.3bn bid for Proctor & Gamble’s Pringles potato chips in 2011 when payment irregularities to its walnut growers resulted in the firing of its CEO and CFO. Kellogg’s swooped in and bought Pringles. There have been persistent rumors that Kettle chips would be sold off, and while the company has spun Oaktree’s involvement as a “infusion of cash,” the fund will now have two seats on Diamond’s board in return for its help.
  • Ralcorp Holdings has taken over New York-based Petri Baking Products, a maker of refrigerated cookie dough.
  • Private equity firm Thomas H. Lee Partners, who bought Dunkin’ Brands and then took it public in 2011, has purchased 25-unit Brazilian churascarria chain Fogo de Chão from Brazil’s GP Investments Ltd. for a reported $400MM. Churascarria is a form of Brazilian barbecue.
  • In licensing news. P.F. Chang’s Home Menu retail products manufactured and sold by Unilever generated $101.6MM during its first year on the market.[2] The products reached an 84% distribution rate with 7.1% trial rate and 31% repeat rate.
  • In a trend that will impact food stores and restaurants alike, 2/3 of consumers buying new mobile devices are opting for smart phones.[3] Apple has the largest market share (34%) but the Android system has 51% of the total market under Motorola, Samsung, HTC and others.
  • While the Midwest and its corn crop turn to dust in the horrible Dust Bowl of 2012, the US’s rice crop promises to be the best in three years.[4] The US Dept of Agriculture had already reported in May of 2012 that acreage planted with rice was up 8%.

[1] Source: International Food Information Council’s 2012 “Consumer perceptions of food technology” survey.

[2] Source: SymphonyIRI Group.

[3] Source: Nielsen.com.

[4] Source: FirstGrain.com.

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Think Asia, Think Hong Kong

June 11th, 2013

thinkasia website

As part of our continuing efforts to serve our clients, we are attending the “Think Asia, Think Hong Kong” event in NYC sponsored by the Hong Kong Trade Development Council.

Several heavyweight speakers will discuss topics like:

  • Hong Kong – The Gateway for Chinese Outbound Investment
  • Selling to China and throughout Asia
  • The Perspective from Chinese Enterprises

Our goal is pretty simple: keep our international bona fides current and helpful to our clients.

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F& B Marketing News From Around the World

June 10th, 2013

  • Crayola, longing to get into the food space, has partnered with Kraft for a promotion that packages cheese in crayon shapes and the toy brand’s distinctive trade dress. The promo ran in 2012.
  • Baby formula maker Nature’s One has announced an effort to remove natural contaminants such as arsenic, pesticides residue and heavy metals from its products. Arsenic is found naturally in a number of foods, especially rice. The company uses organic brown rice syrup (OBRS), and was singled out for high levels of arsenic in a February 2012 study.[1]
  • Nestlé has been accused of price-fixing in Malaysia with its Milo and Nescafé beverages. The company insists it was only trying to prevent the products from being used as “loss leaders.” The Federation of Malaysian Consumer Associations filed a complaint May 21, 2012 with the Malaysian Competition Commission (MCC). The company tried to exit Malaysia’s 2010 Competition Act.

[1] Source: Arsenic, Organic Food and Brown Rice Syrup.

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Parmalat to Re-Enter the US Market

June 7th, 2013

Parmalat-logo-

Disproving F. Scott Fitzgerald’s famous dictum that there are no second acts in America, Italian dairy giant Parmalat will reenter the US market after purchasing Lactalis American Group, Inc. (LAG) for $904MM (€715MM).

In 2004, Parmalat imploded when massive debt and fraud were discovered by European regulators. Both firms are owned by the Belgian conglomerate BSA-International, so technically speaking, this is just a reshuffling of internal monies (the company denies it).[1] The move will also strengthen operations in Latin America where Parmalat currently operates only in Colombia and Venezuela. It will now be able to include Brazil, Argentina, Mexico and other high-growth territories.

In the US, Lactalis is primarily in the high-margin cheese segment, especially soft & fresh cheeses with brands like President, Galbani, Sorrento, Precious and Mozzarella Fresca. Parmalat hopes to introduce some of its Italian brands to the US market as well.


[1] Parmalat is a subsidiary of Lactalis (France).

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Family Dollar Ups Its Frozens & ConAgra On a Buying Spree

June 6th, 2013

FamilyDollar Logo

Some restaurants we talk with are hinky about having their licensed products in “dollar stores,” but the segment has gone from the place where brands go to die to one of the rising players in the frozen food channel.

Now Family Dollar Stores is partnering with the McLane Company, a provider of frozen foods for foodservice outlets. A former subsidiary of Wal-Mart Stores now owned by Berkshire-Hathaway, McLane will be offering “local” solutions to Family Dollar’s 7,200 outlets across 45 states. Additionally, McLane will help Family Dollar set up a national supply chain system to handle its growing offerings of frozen food. Originally dollar stores carried discontinued items and lines, but now are figuring prominently in the strategies of CPG houses looking to attract the value-oriented customer.

Meanwhile, ConAgra has been acquiring companies in order to increase its ability to navigate the store brand world, and has purchased Wisconsin-based Kangaroo Brands’ private label pita chips business (Kangaroo will continue to own its pita bread & frozen sandwich operations). The giant food marketer has been on something of an acquisition spree during the past two years after its bid to buy giant Ralcorp Holdings failed to happen.

In addition to Kangaroo, it has already bought up Odom’s Tennessee Pride (breakfast sandwiches & sausages), Del Monte Canada (packaged veggies, fruits & snacks) and National Pretzel Company (private label pretzels). The strategy appears to be the acquisition of a market basket of targeted manufacturers rather than a large holding company like Ralcorp.

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Tasty Tidbits

June 5th, 2013

coke_circle_logo

  • Coke has consistently denied reports in the press it planned to increase its market share of the energy drink category by purchasing Monster Beverage. With an estimated value of $11bn, any such acquisition would be the largest for Coke, which purchased Glaceau vitamin water for $4.2bn in 2007. Energy drinks have lately attracted a great deal of negative publicity over charges they are bad for kids.
  • In other energy drink news, Jamba Juice has ended its license with Nestle USA and will take over the products launched in the Northeast. Jamba intends to become a global brand at both retail and foodservice. The health & wellness beverage category is estimated globally at $50bn. In a related move, Jamba has acquired Chicago-based Talbott Teas, a boutique tea company that markets its products in tea specialty stores, gourmet grocers, on TV (QVC) and via the company’s website.
  • And finally, Starbucks has acquired Evolution Fresh juices for $30MM, a leader in the $3.4bn cold juice category, and launched Starbucks Refreshers, which combines fruit juices and green coffee extracts. Starbucks will trumpet the fact that Evolution juices are not heated, but is treated with high pressure pasteurization (HPP), while the Refreshers is intended to appeal to the health & wellness niche. Both brands will have a role at retail.
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Government Regulation in the Food Biz

June 4th, 2013

Walmart_New_Logo tiny

  • While Wal-Mart’s Mexico operations were the darling of growth, the Bentonville Behemoth is now squarely in the crosshairs of the NY Times. An exposé on April 22, 2012 accuses the company of bribing Mexican officials, and corporate regulators of having swept the matter under the rug. With over 2,000 supercenters, Sam’s Clubs and bodegas across the country, Wal-Mart is not only the largest retailer but also the country’s largest employer. Worldwide the company has 9,800 stores and sales of $419bn (up 3.4% in the fiscal year ending January 2012).
  • You may not be lying awake at night worrying about nanotechnology in the food supply, but the government has been pondering it, and the Food & Drug Administration (FDA) is working on draft guidelines for the use of nanos in food & beverages. Since very few understand the implications of these particles so small they can’t be seen with an ordinary microscope, the agency is asking manufacturers to consult with them before going ahead. Nanotechnology has been suggested as a means for delivering nutrients or in preventing microbes in packaging, but may be inhaled and create health problems in humans and animals.
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