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Cashew foie gras? Big Food jumps on ‘plant-based’ bandwagon
MAY 18, 2019 | Financial Times | by Leila Abboud in Paris and Emiko Terazono in London

* Boom in meat and dairy substitutes sets up ‘battle for the centre of the plate’
* Nestlé recently launched the Garden Gourmet's Incredible burger in Europe and plans to launch it in the US in the autumn in conjunction with McDonald’s.
* Burger King has partnered with a “foodtech” start-up to put meat-free burgers on their menu.
* Pret A Manger is considering a surge in its roll-out of vegetarian outlets as it looks into buying UK sandwich rival Eat.

A change is afoot that is set to sweep through the global food industry as once-niche dietary movements (i.e. vegetarians, then the vegans, followed by a bewildering array of food tribes from veggievores, flexitarians and meat reducers to pescatarians and lacto-vegetarians ) join the mainstream.

At the other end of the supply chain, Big Food is getting in on the act as the emergence of plant-based substitutes opens the door for meat market disruption. Potentially a huge opportunity if the imitation meat matches adoption levels of milk product alternatives such as soy yoghurt and almond milk, which account for 13% of the American dairy market. It is a $35bn opportunity in the US alone, according to newly listed producer Beyond Meat, given the country’s $270bn market for animal-based food. 

Packaged food producers, burdened with anaemic growth in segments from drinks to sweets, have jumped on the plant-based bandwagon. Market leaders including Danone, Nestlé and Unilever are investing heavily in acquisitions and internal product development.

Laggards are dipping their toes. Kraft-Heinz, for example, is investing in start-ups via its corporate venture capital arm and making vegan variants of some of its products. Even traditional meat producers, such as US-based Tyson Foods and Canada’s Maple Leaf Foods, are diversifying into plant-based offerings to remain relevant with consumers.......“Plant-based is not a threat,” said Wayne England, who leads Nestlé’s food strategy. “On the contrary, it’s a great opportunity for us. Many of our existing brands can play much more in this space than they do today, so we’re accelerating that shift, and there is also space for new brands.” .....a plethora of alternative protein products are hitting supermarket shelves... appealing to consumers for different reasons....(1) reducing meat consumption for health reasons... (2) others concerned about animal welfare...(3) concern over agriculture’s contribution to climate change......As Big Food rushes in, it faces stiff competition from a new breed of start-ups that have raced ahead to launch plant-based meats they claim look, taste and feel like the real thing. Flush with venture capital funding, they have turned to technology, analysing the molecular structure of foods and seeking to reverse-engineer versions using plant proteins......Not only are the disrupters innovating on the product side, they are rapidly creating new brands using digital marketing and partnerships with restaurants. Big food companies, which can struggle to create new brands, often rely on acquisitions to bring new ones onboard.....Aside from the quality of the new protein substitutes, how they are marketed will determine whether they become truly mass-market or remain limited to the margins of motivated vegetarians and vegans. The positioning of the product in stores influences sales, with new brands such as Beyond Meat pushing to be placed in the meat section rather than separate chilled cabinets alongside the vegetarian and vegan options.....Elio Leoni Sceti, whose investment company recently backed NotCo, a Chile-based start-up that uses machine learning to create vegetarian replicas of meat and dairy, believes new brands have an edge on the marketing side because they are not held back by old habits. 

“The new consumer looks at the consequences of consumption and believes that health and beauty come from within,” said one industry veteran who used to run Birds Eye owner Iglo. “They’re less convinced by the functional-based arguments that food companies are used to making, like less sugar or fewer calories. This is not the way that consumers used to make decisions so the old guard are flummoxed.”...Dan Curtin, who heads Greenleaf, the Maple Leaf Food's plant-based business, played down the idea that alternative meats will eat into meat sales, saying the substitutes were “additive”. “We don’t see this as a replacement. People want options,” he said. 

 
animal-based  Beyond_Meat  Big_Food  brands  Burger_King  Danone  digital_strategies  food_tech  hamburgers  Impossible_Foods  Kraft_Heinz  laggards  Maple_Leaf_Foods  McDonald's  Nestlé  plant-based  rollouts  start_ups  Unilever  vegetarian  vc  venture_capital  CPG  diets  meat  new_products  shifting_tastes  tribes 
may 2019 by jerryking
The Missing Piece in Big Food’s Innovation Puzzle
April 1, 2019 | WSJ | by By Carol Ryan.

.......In truth, they are becoming reliant on others to do the heavy lifting. Specialist food ingredient companies like Tate & Lyle and Kerry Group work with global brands behind the scenes to come up with new ideas. These businesses can spend two to three times more on innovation as a percentage of turnover than their biggest clients.

One part of their expertise is overhauling recipes. Ingredients companies can do everything from adding trendy probiotics to taking out excess sugar or gluten. Nestlé got a hand from Tate & Lyle to remove more sugar from its Nesquik range of flavored drinks, while Denmark’s Chr. Hansen helped Kraft Heinz switch from artificial to natural colors in the U.S. giant’s Macaroni & Cheese......Another service food suppliers offer is coming up with successful innovations to help revive sales. Nestlé’s ruby chocolate KitKat, which has become very popular in Asia, was actually created by U.S. cocoa producer Barry Callebaut, for example.

=============================================
See also, "For innovation success, do not follow the money"
07-Nov-2005 | Financial Times | By Michael Schrage "There is
no correlation between the percentage of net revenue spent on R&D
and the innovative capabilities of an organisation – none,"...Just ask
General Motors. No company in the world has spent more on R&D over
the past 25 years. Yet, somehow, GM's market share has
declined....R&D productivity – not R&D investment – is the real
challenge for global innovation. Innovation is not what innovators
innovate, it is what customers actually adopt. Productivity here is not
measured in patents granted but in new customers won and existing
customers profitably retained..
Big_Food  brands  flavours  food  foodservice  health_foods  healthy_lifestyles  ingredients  ingredient_diversity  innovation  investors  Kraft_Heinz  large_companies  Mondelez  Nestlé  new_ideas  R&D  shifting_tastes  start_ups  Unilever 
april 2019 by jerryking
Tyson Made Its Fortune Packing Meat. Now It Wants to Sell You Frittatas.
Feb. 13, 2019 | WSJ | By Jacob Bunge

Tyson’s strategy is to transform the 84-year-old meatpacking giant into a modern food company selling branded consumer goods on par with Kraft Heinz Co. or Coca-Cola Co.
.....Tyson wants to be big in more-profitable prepared and packaged foods to distance itself from the traditional meat business’s boom-and-bust cycles. America’s biggest supplier of meat wants to also be known for selling packaged foods........How’s the transformation going? Amid an historic meat glut, the company’s shares are worth $4.9 billion less than they were a year ago—and are still valued like those of a meatpacker pumping out shrink-wrapped packs of pork chops and chicken breasts....Investors say the initiatives aren’t yet enough to counteract the steep challenges facing the poultry and livestock slaughtering and processing operations that have been the company’s core since....1935.....Record red meat and poultry production nationwide is pushing down prices and eroding Tyson’s meat-processing profit margins. Tariffs and trade barriers to U.S. meat have further dented prices and built up backlogs, while transport and labor costs have climbed. .......The packaged-foods business is itself struggling with consumers gravitating toward nimbler upstart brands and demanding natural ingredients and healthier recipes........Tyson's acquisition of Hillside triggered changes, including the onboarding of executives attuned to consumer trends. Tyson added managers from Fortune 100 companies, including Boeing Co. and HP Inc., who replaced some meat-processing officials who led Tyson for decades. The newcomers brought experience managing brands, understanding consumers, developing new products and building new technology tools, areas Tyson deemed central to its future......A chief sustainability officer, a newly created position, began working to shift Tyson’s image among environmental groups, .....Shifting consumer tastes have created hurdles for other packaged-food giants, such as Campbell Soup Co. and Kellogg Co. .... the meat business remains Tyson’s biggest challenge. In 2018 a flood of cheap beef, fueled by enlarged cattle herds, spurred a summer of “burger wars,” meat industry officials said. .......investment in brands and packaged foods hasn’t insulated Tyson’s business from these commodity-market swings. ........The company is also trying to improve its ability for forecast meat demand..........developing artificial intelligence to help Tyson better predict the future.........Scott Spradley, who left HP in 2017 to become Tyson’s CTO, said company data scientists are crunching numbers on major U.S. metropolitan areas. By analyzing historic meat consumption alongside demographic shifts, the number of residents moving in and out, and the frequency of birthdays and baseball games, Mr. Spradley said Tyson is building computer models that will help plan production and sales for its meat business. The effort aims to find patterns in data that Tyson’s human economists and current projections might not see. ......Deep data dives helped steer Tyson toward what executives say will be one of its biggest new product launches: plant-based replacements for traditional meat,
Big_Food  brands  Coca-Cola  CPG  cured_and_smoked  data_scientists  Kraft_Heinz  meat  new_products  plant-based  prepared_meals  reinvention  shifting_tastes  stockpiles  strategy  sustainability  tariffs  Tyson  predictive_modeling 
february 2019 by jerryking
Consumer goods make appetising target for US activists | Financial Times
Scheherazade Daneshkhu and Lindsay Fortado in London, and Anna Nicolaou in New York JULY 21, 2017
Cadbury  CPG  Danone  Kraft_Heinz  Mondelez  Nelson_Peltz  Pepsi  shareholder_activism 
october 2018 by jerryking
3G Capital’s rigorous diet of cost cutting is weighing down Tim Hortons owner RBI, Kraft Heinz
APRIL 18, 2018 | The Globe and Mail | by IAN MCGUGAN.

Tough, cost-conscious management is a vital ingredient at any good company. But right now, shareholders in Restaurant Brands International Inc. and Kraft Heinz Co. should be asking whether a lean and mean operating style is hitting its limits when it comes to peddling doughnuts and ketchup.

In recent months, RBI, the parent of Tim Hortons, and Kraft Heinz, maker of your favourite burger condiment, have disappointed investors....... the 3G approach is beginning to show some flaws. Critics argue that managers who focus on streamlining existing operations can create a temporary bump in earnings, but have less time to spend on product development, corporate innovation and brand building. The danger, skeptics say, is that efficiency increases but sales and earnings per share don’t.

“We harbor serious doubts about the management team’s ability to generate sufficient product innovation to grow its collection of ‘retro’ brands in highly commoditized categories,” Robert Moskow of Credit Suisse wrote this week in a report that downgraded Kraft Heinz to “underperform” status.....But softer measures suggest the profits are coming at a cost. Consider a survey of 1,501 Canadian adults published this week by Angus Reid Institute. Thirty five per cent of respondents said their opinion of Tim Hortons had worsened in recent years. While Tim Hortons’ advertising campaigns have tirelessly promoted the chain’s deep roots in Canadian communities, the reality on the ground appears to be shifting.

At Kraft Heinz, signs of stress are also becoming apparent, according to Mr. Moskow. The company’s Oscar Mayer cold cuts and Kraft natural cheese brands are losing market share to private labels, while Canadian retailers recently reduced their inventories, he said.

Employees may not be all that happy, either. Mr. Moskow said industry sources have expressed concern about growing turnover rates among Kraft Heinz staffers.
3G_Capital  Tim_Hortons  cost-cutting  product_development  innovation  Kraft_Heinz 
april 2018 by jerryking
Produce or Else: Wal-Mart and Kroger Get Tough With Food Suppliers on Delays
Nov. 27, 2017 | WSJ | By Annie Gasparro, Heather Haddon and Sarah Nassauer

Grocers are giving food companies a tougher mandate: Ship on time, or pay the price.
Food retailers want their suppliers to resolve the persistent problem of delayed or incomplete deliveries, which they say costs them millions of dollars a year in lost sales and overtime pay.
Retailers used to give suppliers more leeway, since any number of factors—bad weather, a surge in demand, technology malfunctions—can foil deliveries of cereal, cheese, candy and other packaged goods from warehouses scattered around the country.
But now as traditional grocers battle Amazon.com<http://Amazon.com> Inc. and other online retailers that prioritize delivery speed, as well as price-cutting discounters, more are taking a strict line with suppliers, telling them on-time deliveries will translate directly into more sales and profits.
Delayed deliveries can leave holes on store shelves. Sales of some $75 billion a year are lost because products are out of stock or unsalable for other reasons, according to the Food Marketing Institute, a trade organization. That is about 10% of annual grocery sales industry-wide at a time when sales growth is hard to come by. “It’s a massive opportunity from a financial and customer standpoint,” .....The country’s biggest grocers are leading the charge. Kroger is fining suppliers $500 for every order that is more than two days late to any of its 42 warehouses, and Wal-Mart Stores Inc. is charging suppliers monthly fines of 3% for deliveries that don’t arrive exactly on time, according to the retailers. They began issuing the fines in August........Wal-Mart has signaled it could do more than levy fines if problems persist. Charles Redfield, executive vice president of food for Wal-Mart U.S., told suppliers they could also lose shelf space if they don’t solve their delivery issues, according to people in attendance at a supplier meeting earlier this year. Retailers can threaten suppliers with loss of promotional space in stores, analysts said.....Packaged-goods companies are straining to keep up with the demands and remain in the good graces of retailers. They need GPS trackers and software to adjust routes in real time. Filling full orders fast is also challenging, since many manufacturers house items all over the country. That is particularly true for refrigerated items needing costly cold storage—which has fueled investments in more fulfillment centers......“Shipping complete orders on time is a completely reasonable request but turns out it’s harder than it sounds.”...
Wal-Mart  Kroger  grocery  supermarkets  supply_chains  retailers  delays  food  shipping  Amazon  cold_storage  penalties  delivery_times  fulfillment  CPG  Kraft_Heinz  P&G  on-time  shelf_space  supply_chain_squeeze 
november 2017 by jerryking
Big-Name Food Brands Lose Battle of the Grocery Aisle - WSJ
By Annie Gasparro
Updated April 30, 2017

America’s packaged-food giants are losing the battle for retailers’ shelf space, complicating their efforts to break out of a yearslong slump. Instead of promoting canned soup, cereal and cookies from companies like Kraft Heinz Co. Kellogg Co., and Mondelez International Inc., grocery stores are choosing to give better play to fresh food, prepared hot meals, and items from local upstarts more in favor with increasingly health-conscious consumers. [Grocery stores] are seeking ways to... maximize return on our shelf space,..........[Grocery stores] like other retailers, aren’t giving up on big brands. But finding new ways to entice people to walk through the center aisles again is tricky.

Some brands are seeking ways to get their products into the fresh and prepared foods section of the store. But, Mr. Fitzgerald says: “If we overrun perishables with all the big packaged brands, we lose our competitive edge.”

Instead, retailers such as Wal-Mart Stores Inc. are pressuring big brands to lower their prices as a way to attract customers..........Companies like Hershey and PepsiCo Inc. said they are working with retailers to be creative. “That’s a conversation we’ve been having with some of the retailers, to say ‘how can we help you rethink the center store so that we can bring growth back,” said Pepsi Chief Indra Nooyi on a conference call last week, when it reported declines in its Quaker Foods division. “Our hope is that with the rejuvenation of the center store, our categories will grow, too.”.......Big brands are increasingly focusing on improving profitability through cost-cutting and consolidation. Kraft and Heinz combined two years ago as slow growth spurred a need for savings. Kraft Heinz Co. has been able to cut more than $1 billion from the two predecessor companies’ budgets. Some analysts say Kraft Heinz’s sights could be set on Mondelez, which unsuccessfully attempted to buy Hershey last year... Kraft and Mondelez used to be part of the same conglomerate until 2012, when it was split in two.
grocery  supermarkets  brands  retailers  CPG  Kraft_Heinz  shelf_space  Kellog  Mondelez  Hershey  PepsiCo  prepared_meals  perishables  fresh_produce 
may 2017 by jerryking
From Diaper to Soda Makers, Big Brands Feel the Pinch of a Consumer Pullback - WSJ
By Sharon Terlep, Jennifer Maloney and Annie Gasparro
April 26, 2017

Some blamed the weak start of the year on higher gas prices, bad weather and other external factors, while other executives pointed to shifting consumer tastes. Analysts say some big brands, such as Gillette and Yoplait, are losing ground to upstarts. Overall purchases of consumer packaged goods in the U.S. declined 2.5% in unit terms in the first quarter, according to Nielsen.....consumers are cutting back purchases, aggressively seeking deals and drawing down supplies at home. At the same time, he said, a growing affinity for beards has played a big part in driving down razor sales, which contributed to a 6% organic sales decline for P&G’s grooming unit....PepsiCo, like big food rivals Kraft Heinz Co. and Nestlé, is struggling as consumers shift away from diet sodas and processed foods to fresher and healthier options. It has launched new products, such as a premium bottled water brand, to adjust to the shift.....For food and nonfood staples, big brands are struggling more than the overall industry. The 20 largest consumer packaged goods companies last year had flat sales while smaller ones posted sales growth of 2.4%, according to Nielsen.

Wal-Mart Stores Inc., meantime, has been reducing inventories and slashing prices as it fights to compete with Amazon.com Inc. and European discounters moving into the U.S. Those cuts are eating into its own profit and, in turn, leading the world’s biggest retailer to put pressure on its vendors.........The dynamics are driving tough choices for companies as they are forced to decide between reducing prices and ceding market share. PepsiCo and Coca-Cola Co. have been shrinking packages and raising prices.
brands  hard_choices  large_companies  volatility  P&G  Gillette  Yoplait  CPG  PepsiCo  healthy_lifestyles  Kraft_Heinz  Nestlé  Wal-Mart  Coca-Cola  price-cutting  price_hikes  Fortune_500  upstarts  supply_chain_squeeze  shifting_tastes  Amazon  Big_Food 
april 2017 by jerryking
Hyena capitalism receives a swift kick from the Unilever giraffe
25 February/26 February 2017 | FT| Robert Armstrong.

the rise in hyena capitalism — broadly, the emphasis on squeezing the maximum present return out of assets — is an effect of low economic growth. When the number of US workers was increasing and innovation was delivering faster productivity growth, there were lots of reasons to invest. Today it just makes more sense to focus on cost.....More generally, it may be that, since the financial crisis, spooked managements and, in the case of public companies, investors have become increasingly risk averse — more so than the state of the economy would justify. So money piles up on balance sheets, is paid as dividends, or goes to repurchase shares. Investment falls, despite the availability of cheap credit to fund new projects.
It also looks increasingly likely that the change in management incentive structures, in particular the increase in share-based incentives and shortening tenures for top executives, have made company leaders less inclined to invest. there is a risk that it could become self-reinforcing. Lack of investment affects not just future productivity, but also demand. At the extreme, if no one invests, no one earns and there is no growth. If companies are forgoing opportunities to invest, they are depriving the economy of customers with money to spend.
More insidiously, it could be that hyena capitalism undermines trust in the institutions and mores that makes corporate capitalism possible in the first place. If workers know they are regarded as dispensable cost centres, why should they commit to learning company-specific skills and procedures? Why not shirk instead? If the gains from corporate transformations go overwhelmingly to investors and financiers, why should voters support free market policies?
Capitalism needs both giraffes and hyenas. But in a time of modest growth, low productivity growth and rising inequality, one must keep an especially close eye on the hyenas.
CPG  Unilever  3G_Capital  private_equity  public_companies  consumer_goods  Kraft_Heinz  inefficiencies  capitalism  sweating_the_assets  undermining_of_trust  deprivations 
march 2017 by jerryking
The ‘Warren Buffett of Brazil’ Behind the Offer for Unilever
FEB. 17, 2017 | The New York Times | by LIZ MOYER.
Profile of Jorge Paulo Lemann.

Mr. Lemann, 77, a Harvard-educated former Brazilian tennis champion, ranks 19th on the Forbes list of world billionaires, with a fortune estimated at $29 billion. He and his partners at 3G have developed over the years what many call a playbook for extracting costs from companies by eliminating frivolities like corporate-owned aircraft and expensive office space, revamping management and slashing jobs.

They instill strict austerity that forces managers to justify expenses beyond basic operating needs. Their model makes expansion overseas crucial for increasing returns.

They have also focused on major consumer brands rather than on diversifying......Mr. Lemann and Mr. Buffett share a similar investment philosophy: patience. Instead of selling his portfolio after he has cut and remodeled companies, Mr. Lemann has used Anheuser-Busch InBev and now Kraft Heinz as base camps for further global expansion.
3G_Capital  private_equity  Brazilian  patience  Unilever  Kraft_Heinz  Harvard  moguls  high_net_worth  cost-cutting  Warren_Buffett  playbooks 
february 2017 by jerryking

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