Broad Street Licensing Group Food News

Archive for February, 2012

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Tasty Tidbits

Wednesday, February 29th, 2012


  • Whole Foods Market now has a program that evaluates and rates its chicken, beef and pork products on a five-point scale based on animal welfare standards. The program was developed by the Global Animal Partnership.
  • Whole Foods Market near Seattle now sports a café whose happy hour boasts 69¢ oyster nights, 50¢ wings on other evenings, and deals to lure customers into buying goodies like a “no corkage fee” on wines purchased in the store. Whole Foods is just the latest grocery retailer to jump on the “grocerant” bandwagon by opening sit-down eateries in their stores.
  • Congresswoman Rosa DeLauro has reintroduced a bill to create a Federal agency to oversee the nation’s food chain called the “Single Food Safety Agency Act of 2010.”
  • Tasty Baking Co. of Philadelphia, the makers of Tastykake line of processed snacks, is looking at a merger or acquisition to offset lower-than-expected savings from its move to the old Philadelphia Navy Yard, coupled with a fall in sales following the Chapter 11 filing by A&P.
  • In a development that will mean higher food costs for consumers and potentially malnutrition or even starvation in the poorest countries, the Food and Agriculture Organization (FAO) has reported it food price index in December, 2010 reached a record, topping the previous record high in 2008.
  • In an evolution of the private label trend, Publix is moving beyond the cheddar, Monterey jack and American cheeses into its own line of domestic and imported cheeses in 15 varieties, including off-beat items like Asiago and Spanish manchego.
  • A new food allergen has been identified in celery.

Posted in Tasty Tidbits | No Comments »

Health & The Environment

Tuesday, February 28th, 2012

  • A study[1] says HFCS (high fructose corn syrup) does not cause more weight gain than conventional sugars. The study is supposedly the first time researchers have measured the impact of sugar consumption on body weight, total cholesterol, and triglycerides levels. The study says research has been confused by pure glucose vs. pure fructose comparisons, which do not correlate with human consumption that combines table sugar (sucrose) and corn sugar (fructose). Unfortunately, the study was undermined because it was supported by a grant from the Corn Refiners Association (CRA).
  • Starbucks had thought its goal of having 100% of its cups be reusable or recyclable by 2015 might have been overly-ambitious, but no longer: a successful test with paper cup manufacturer International Paper and pulp mill Mississippi River Pulphas led to new cups from recycled cup material, something no other recycler currently can do.
  • Secretary of Agriculture Tom Vilsack is calling on both sides of the genetically modified (GM) crops debate for compromise and even cooperation. It has been a year of confrontation as the Center for Food Safety persuaded a federal court to ban planting Monsanto GM alfalfa and GM sugar beets. The Supreme Court subsequently reversed the ban on GM alfalfa, while delaying a ruling on sugar beets until the USDA’s long-awaited Environmental Impact Statement (EIS).[2]A federal court in San Francisco recently ordered the uprooting of GM sugar beets, but the decision was delayed until March by an appellate court.
  • According to a study from Sweden,[3] women who ate more than three servings of fish per week were 16% less likely to have a stroke compared with those who ate less than one serving. While conventional wisdom says eating fatty fish like salmon is good, the study found eating learner fish produced fewer strokes, though Swedes eat their salmon salted, with salt increasing blood pressure, leading to more strokes.
  • Research in Australia says those who had high cholesterol during childhood often saw those numbers decline when they reached adulthood. Those whose levels remained high likely smoked or gained weight. The results point to changes in lifestyle as positive risk factor reductions, and that educational programs to promote healthy eating habits and exercise could produce results.

     

    [1] Source: the American Journal of Clinical Nutrition.

    [2] Completed in December after several years of litigation.

[3] Source: the American Heart Association’s(AHA) Scientific Sessions 2010.

Posted in Environment, Health | No Comments »

Marketing Around the World

Monday, February 27th, 2012

  • Broad Street client The Culinary Institute of America (CIA) has partnered with Dunkin’ Donuts for a bake shop on the CIA’s new campus in San Antonio, TX. A $900,000 pledge will support the facility and education efforts about traditional Latin American baked goods.
  • Nestle is franchising the Toll House Café by Chip to Royal Food Services Company for cafes in three Middle Eastern countries. Up to 48 locations are planned over the next 10 years. Although Nestle has opened two cafes in the US, awareness of the brand is considered stronger overseas.
  • Nestle isn’t the only one looking to the Middle East as a growth strategy: with Schlotzsky’s trying to rebound from the bankruptcy of its largest franchisee, it is expanding overseas with a deal for 40 restaurants in Egypt that would give it nearly 4x its current international presence. Development company Food & Entertainment already franchises 11 brands, including Schlotzsky’s parent company FOCUS Brands’ Carvel and Cinnabon concepts, as well as Seattle’s Best Coffee.

Posted in Marketing Trends, World News | No Comments »

French Fry Wars

Friday, February 24th, 2012

The results are in on fries:

Brand Keys’ Customer Loyalty Engagement Index has consumers ranking the major chains rank for their fries vs. an ideal fry (100%). While the Golden Arches no longer cooks their fries in beef tallow, they do flavor the oil, propelling them to a #1 finish:

  • McDonald’s (91%)
  • Arby’s (89%)
  • Hardees (85%)
  • Carl’s Jr. (81%)
  • Nathan’s (80%)
  • Jack-in-the-Box/White Castle (tie: 75%)
  • KFC/Chick-Fil-A (tie: 71%)
  • Wendy’s (65%)
  • Popeye’s (60%)
  • Sonic (58%)

Posted in Consumer Trends and Habits, The Restaurant Business | No Comments »

Organics Struggle in the New Economy/”All Natural” Litigation

Thursday, February 23rd, 2012

Despite an upbeat assertion that the world-wide organics market has reached $60bn and that the US has surpassed Europe as the largest segment of that market, a recent report[1] shows that challenges are keeping growth stagnate or non-existent.

Years of double-digit expansion were replaced by 4.7% overall growth in 2010, with downturns in Europe because of the economy and the perceived price differences between organic and conventional products holding back growth (the actual price difference is often around 15%). With demand outreaching supply in the US, Latin Americahas become the #1 source of organic fruits, vegetables, meats, nuts and seeds.

One of the reasons organic has stalled is consumers perceive “all natural” to be just as good. Of course, what they don’t realize or seem to care about is that “all natural” has no legal or regulatory underpinnings: bread made with sawdust could conceivably be labeled as “all natural,” since on a certain level, it IS all natural.

Not surprisingly, with a vacuum in the regulatory framework, litigation has come to the fore instead. This post from an excellent blog about the food industry & the law written by David L. Ter Molen talks about the many class action lawsuits filed against “all natural” claims. Some are relatively straightforward: Kashi is supposedly using sodium molybdate, phytonadione, sodium selenite, magnesium phosphate, and other jaw-breakers “that have been declared to be synthetic substances by federal regulations.” Seems pretty cut & dried to me.

Another suit against Arizona Beverages contends that their use of high fructose corn syrup (along with citric acid) constitutes the use of non-natural products. There is no scientific basis for seeing HFCS as anything more than another form of sweetening (like beet sugar), and so the lawsuit seems to be hair-splitting of the most arcane form. What else, though, can we expect with the lack of clear guidance by either the FDA or USDA but for the lawyers to run wild (pace to Mr. Ter Molen and his firm, LOL). There’s even a suit against Ben & Jerry’s that is going forward despite the fact this division of Unilever has agreed to drop its “all natural” claims!

Several of the lawsuits in the article focus on the use of genetically-modified crops in prepared foods, including corn and soybeans (often in their oil form). The biggest seems to be against “the evil empire,” Frito-Lay. Plaintiffs claim “[t]he reasonable consumer assumes that seeds created by swapping genetic material across species to exhibit traits not naturally theirs are not ‘all natural.’” It’s a fascinating issue, since some scientists believe GM crops will eventually take over from non-GM ones through the process of cross-pollination.

Where will that leave us (and the lawyers) then?

 

[1] Source: market research firm Organic Monitor.

Posted in Opinion, Organics | No Comments »

Supersize Me

Wednesday, February 22nd, 2012

Are we surprised?

A study[1] says combo meals encourage unhealthy eating. Duh!

Consumers perceive value in the bundled meals, which typically have much more calories than if ordered separately simply because restaurants offer larger sizes. Those participants who didn’t order fries in an a-la-carte–only scenario ordered a bundled meal with medium fries, a 380-calorie increase. Those who ordered small fries from the a la carte–only menu chose a bundled meal with medium fries, 150 calories more. Restaurants like combo meals, both for profitability (because of deals from beverage suppliers) and convenience (by speeding up service). They also find consumers want them. El Pollo Loco, for example, says its research tells it that customers prefer combos.

But one of the study’s authors points out that restaurants have removed small drink options, substituting massive 44 oz. “super sizes” instead.

[1] Source: “Consumption Effects of Bundling: Consumer Perceptions, Firm Actions, and Public Policy Implications” in the Journal of Public Policy & Marketing by Kathryn Sharpe (University of Virginia’s Darden School of Business) and Richard Staelin (Duke University’s Fuqua School of Business)  called

Posted in Consumer Trends and Habits, Health, Opinion, The Restaurant Business | No Comments »

Licensing News & Marketing Tidbits

Tuesday, February 21st, 2012
  • Mrs. Fields Famous Brands will license Major League Baseball Properties for team-specific cookie tins or as individually wrapped cookies, including the 2011 World Series Champion St. Louis Cardinals. Hard to imagine that Mrs. Fields cookies were once a powerhouse. And she’s still the exception to the rule that amateurs can’t develop products for retail.
  • Brookshire Grocery, which operates 150 supermarkets and pharmacies in Texas, Louisiana and Arkansas, is partnering with Bling Nation to let customers pay for groceries and prescriptions with their cell phones. Transactions are captured by Bling Nation (supposedly without personal data) and credited toward either Berkshire’s loyalty program or Bling Nation Citizens. A 5% savings on every purchase up to $100 can be credited to Brookshire items using a BlingTag, a microchip the size of a quarter that’s placed on the back of a mobile phone (much like Exxon Mobile’s Speedpass): simply put the phone next to a payment kiosk, record the transaction and it’s done.
  • McDonald’s Corp. is the world’s largest restaurant chain, and its business is increasingly shaped by events outside the US. To wit: it has increased prices at is over 1,200 locations in China to offset costs now that food inflation there has reached a two-year high of 4.4% in October. It took McDonald’s nearly 20 years to open its first 1,000 restaurants in China, but plans to have another 2,000 by 2014. China’s artificially-low currency means it has the world’s cheapest Big Mac’s ($2.18 vs. $3.71 in the US). The government has announced plans to curb inflation, including price limits on food and tougher penalties for speculation.
  • The other big international restaurant chain, Yum! Brands, is planning to invest over $100MM in its Yum! Restaurants India unit to triple its Pizza Hut, KFC and Taco Bell restaurants on the subcontinent to 1,000 by 2015.
  • Regular readers of our Food Industry Newsletter know that bisphenol A (BPA), the plasticizer used in can linings, polycarbonate water bottles and infant formula bottles, has been under fire from a variety of groups seeking its ban. Now the European Union advocacy group, Health and Environment Alliance (HEAL), is calling for a total ban in food packaging. The EU is already considering a ban in baby bottles.
  • A recent federal survey[1] found nearly 45% of full-time food preparation & foodservice workers smoke, a higher percentage than in any of the other 21 major occupational categories studied. The lowest rate of cigarette use (12%) was in education, training and library occupations.
  • Emerging markets led H.J. Heinz Co. to a 9% increase in income for the during the second quarter of 2010 ending October 27th. Income was $251.4MM on sales $2.6bn, off 1% from the same quarter of the previous year.
  • Bob Evans Farms, Inc. (parent of the Bob Evans and Mimi’s Café chains) is staking future growth on— take-out. We kid you not. The new focus will come at the expense of the Bob Evans in-store retail program, which the company said was a “crutch” preventing them from “getting after carryout sales. Our guests were screaming for this, and we weren’t providing it in a way they wanted it.”[2]
  • [1] Source: the Substance Abuse and Mental Health Services Administration.

    [2] Source: CEO Steve Davis.

Posted in Licensing News, Marketing Trends, World News | No Comments »

Private Label v. National Brands (Again)

Monday, February 20th, 2012

This blog post at Marketing Daily‘s website has some interesting statistics about the continuing wrestling match between store brands and national brands (Marketing Daily frequently quotes Broad Street Licensing Group in its stories about the food & restaurant business).

The post references this article in The Wall Street Journal about the rise of private label products, and their ascendency over national brands. Some of that is just the WSJ waking up to what those of us in the business have known for years. It fails to understand that the see-saw, back & forth dance of death between brands and PL isn’t a destination but a process. At the height of the recession, national brands found they had to fight back against consumers switching to cheaper store brands. That fight has cost them margin and profits, but they’ve regained share or exceeded it in some cases. PL products will likely ebb & flow as the economy shifts.

While PL products cost, on average, about 30% less than national brands, their prices have been rising at three times the rate of the big brands (5.3% v. 1.9%) with perishables up 12% (vs. 8% for national brands). The article gets all squishy about some PL products being positioned at premium prices. Wow, that’s only been going on for years, especially in Europe where retailers like Tesco have “good,” “better” and “premium” lines.

The competition from store brands is good for national brands, both the innovation some products bring and the product offerings that aren’t cost-effective for large package goods houses. With CPG houses like Kraft needing $100MM annually in sales to make a line worth their time means that store brands can fill a niche the bigs won’t bother with. However, articles that tout this or that innovative product like Safeway’s resealable bags for their Snack Artist line of chips make it seem like this is an across-the-board development, when in fact most store brands are still just copy-cat products at (somewhat) cheaper price points (but higher profit margins for the retailer). And with several large CPG houses producing store brand products quietly, the products in many cases aren’t even copy-cat: they’re the same.

It’s a business practice we find insane, but we don’t run the CPG houses.

Finally, the myth that PL products are “just as good as” or even “better than” brands is just that: a myth. I recently tried the Shop Rite nonfat yogurt, and it was significantly inferior, both in terms of taste, mouthfeel and fruit to the Axelrod product I have been purchasing for years. The price difference? About a nickel per container. I’m worth a nickel for better yogurt.

Posted in Consumer Package Goods (CPG), Grocery Stores, Private Label, Retailing | 2 Comments »

Social Networking Ahead of the Curve?

Friday, February 17th, 2012

Almost everyone has jumped onto the social networking bandwagon (Broad Street Licensing Group has jumped off after finding there was less to the trend than its proponents would have us all believe).

A new study[1] has shown that even among social networking’s most enthusiastic users (college students) the results for campus foodservice operators are underwhelming. Students said they were eager for information on Promotions/Deals/Discounts; Nutrition/Ingredient Information; Daily Specials/Today’s Menu; Hours/Location of Operation; Pricing; and Delivery. But only around half of those surveyed said they were getting the information they want. Part of the problem appears to be the means operators are using to disseminate: the social media mix included Facebook (88%), Twitter (72%), and blogs (18%), while the students surveyed indicated they get their information from primarily from the university website (25%) and university e-mail (21%). Facebook was used on 16%, barely beating out the campus newspaper(12%). Twitter was a disappointing 3% and blogs didn’t even rate a mention.


[1] Source: Y-Pulse, LLC who surveyed approx. 300 students and 20 college and university foodservice operators.

Posted in Consumer Trends and Habits | No Comments »

Breaking News: Kellogg’s Rides in to Scoop Up Pringles Brand

Thursday, February 16th, 2012

Regular readers of this blog know that Diamond Foods‘ plans to buy the Pringles brand from Proctor & Gamble failed when its CEO & CFO were sacked for financial improprieties.

Now comes word that Diamond’s misfortune may be Kellogg’s advantage.

The giant cereal maker has made a $2.7bn bid for the mega snack franchise, and it looks like P&G will see a profit of up to $1.4bn on the sale. The acquisition suddenly rockets the Battle Creek, MI package goods house into the stratosphere of snack companies, making it #2 behind PepsiCo‘s Frito-Lay. It not only will augment its Keebler (cookies), Cheez-It (crackers) and Kashi (snack bars) brands, but could lead Kellogg’s to make a play for some or all of the wound Diamond snack brands that include Kettle potato chips and Pop Secret popcorn. Kellogg Chief Executive John Bryant has refused to rule out what he characterized as “bolt-on” acquisitions now that snacking has taken on such prominence.

Kellogg’s business will now be as much from savory snacks as its famous cereal lines, once more transforming the global snacking marketplace now that Kraft is breaking into two separate companies. And in addition to acquiring the Pringles product line, Kellogg gains distribution efficiencies in markets like Asia where its existing snacks portfolio is weaker.

Posted in Consumer Package Goods (CPG) | No Comments »

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