Issue 70: 22 January 2010
Food bites . . . Do supplements really do any good?
“If vitamins are useful for anything, it’s probably for tapping into our old friend the placebo effect. In a 2008 survey, 38% of doctors confessed to recommending vitamins because they believed the pills could promote health purely through the power of positive expectations. Consider a famous 1975 study designed to probe whether vitamin C supplements alleviated colds better than a placebo, an inert lactose tablet. It turned out that it didn’t matter much which pill the subjects were actually taking. What mattered was what they thought they were getting: Those who believed they were taking vitamin C had fewer and milder cases of the sniffles than those who believed they were just swallowing lactose. That would be reason enough to pop a supplementthere are worse things than deceiving yourself into better healthif it weren’t for the emerging evidence that the pills might be capable of causing real harm.”
Emily Anthes, writing on www.slate.com
Editor’s Stuff – A sweet victory for Kraft
You’d have to have been living on another food planet to have been unaware of the transatlantic battle by Kraft, the world’s second-biggest food group, to take over Cadbury – it has dominated the food industry headlines since last August or so, and generated more words than any story I’ve ever seen in ten years reporting on the food industry.
After months of stridently rejecting Kraft’s attentions, with Cadburys top chocs calling Kraft an unfocused, unappealing, under-performing conglomerate, and urging shareholders not to let “Kraft steal your company. Reject the offer. Do not complete any form of acceptance, Cadbuy’s boards did an about-turn on the weekend, and recommended an increased Kraft bid to shareholders for a decision by February 2.
Cadbury chairman, Roger Carr, said: We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world. We will now work with Kraft Foods management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees.
The reaction in the UK has been outrage that the Yanks have stolen a national treasure, that Cadbury directors and shareholders have taken blood money, and that heads and jobs will be likely to roll down the line. The critics are probably not wrong on the last two points.
While Cadbury directors and shareholders have succumbed to profits and quick cash, one logic for the takeover, in Kraft’s eyes, is international growth. Britain’s biggest confectioner has annual sales of $390m in India, where Kraft barely exists, and of $300m in South Africa, where Kraft can only muster $50m. Cadbury also has a useful presence in Mexico and Turkey, where Kraft is relatively weak. It hopes to take advantage of Cadbury’s on-the-ground marketing and logistics to get its US snacks into these emerging markets. And in return, it can offer Cadbury new opportunities to get Creme Eggs, Dairy Milk bars and Halls cough sweets into huge emerging markets such as Brazil, India and China, where middle-class consumers are expected to have more and more spare change to spend on snacks over the next decade.
Right now, there must be some anxious Cadbury folk in Woodmead, PE, Swaziland and Botswana. But as a high-growth, high-performance node in the Cadbury world, perhaps they don’t have too much to worry about.
There are several cherry-picked articles in today’s newsletter, tackling this fascinating affair from several angles.
Enjoy this week’s read!
Email Brenda Neall, editor and publisher: email@example.com
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Kraft Wins Cadbury
Kraft nabs Cadbury with a bid worth more than $19 billion
Iconic British chocolatier Cadbury has accepted a takeover offer of more than $19 billion from US conglomerate Kraft Foods. The last-minute agreement, after months of sometimes-hostile talks, represents an increase from Kraft’s September offer of about $16.5 billion. Major Kraft investors, including Warren Buffett’s Berkshire Hathaway, are still unhappy with the deal. Read more
OPINION: Why Kraft is a corporate identity crisis in the making
First, lets get something out of the way. Theres been a lot of phony sentimentality about Cadbury and its brands during this protracted takeover. The global geographical fit between these two companies is highly complementary and the cultural gulf far less of a chasm than it appears. Sure, Kraft is a machine conglomerate that munches brands for breakfast: I wont waste time on that. But Cadbury is not quite the pure-play quintessentially British property it seems. Read more
OPINION: Kraft’s unhealthy recipe for Cadbury
Shrinking is the new growth. Cadbury chief executive Todd Stitzer may have acquired an astonishing £12m personal layer of new fat overnight, but it is no surprise that his chairman Roger Carr should admit that Kraft’s takeover deal will mean jobs cuts for British Cadbury employees. This has been the pattern for food manufacturing around the world.
We may be deluded enough to think that successful manufacturing is still about making things, and that growth is about making more of them more profitably, but in fact for the last decade “growth” has meant freeing up more and more cash to be handed out to shareholders and top executives in the form of share buy-backs, dividends and bonuses. It has been achieved by taking on debt, closing factories, even profitable ones, selling off assets, and eliminating direct employment. In the upside-down world of impatient finance capitalism, manufacturers’ “growth” has actually required the destruction of companies’ productive capacity. Read more
£2m a day cost of Cadbury deal plus £12m for the boss
The chief executive of Cadbury stands to pocket cash and shares worth £12m from the company’s £11.9bn sale to the American food giant Kraft in a deal that also hands fees of at least £250m to legions of City advisers.
The scale of the payments for Todd Stitzer contrasts sharply with the uncertainty faced by thousands of Cadbury factory workers, after the group’s chairman Roger Carr admitted he had put shareholders first and job losses were inevitable. Read more
Kraft letter sparks fears over Cadbury redundancies
Irene Rosenfeld, the chairman and chief executive of Kraft Foods, has warned employees at the US company not to talk to Cadbury staff in the run up to the £11.9bn takeover of the British confectionery company.
In a letter sent to Kraft employees, Ms Rosenfeld said: “We should all continue our planning full speed ahead, but I would ask that you not yet reach out to friends and counterparts at Cadbury. We will keep you posted on our integration plans, including the timetable for reaching out to people at Cadbury.” Read more
Chocolate, chewing gum and corner shops: why Kraft couldn’t resist Cadbury
The sprawling Chicago-based food multinational Kraft will have to grasp the difference between a biscuit and a cookie, one US radio presenter remarked, as its £11.9bn takeover of Cadbury sparked anxiety over cultural clashes and transatlantic sensitivities.
Aware of British dismay over the takeover, Kraft’s chief executive, Irene Rosenfeld, chose “the best of both” as her endlessly repeated mantra of the day and insisted adamantly that Cadbury’s “strong presence in the UK” would be safeguarded.
For Kraft, the attraction of Cadbury comes down to brands, sheer scale, geography and distribution channels. The American company is stuffed full of big names such as Maxwell House coffee, Philadelphia cream cheese, Oscar Meyer frankfurters and Kraft cheese slices. But many of these have been around for years and are in unexciting market sectors. Read more
Two very different chocolate tastes
Britain and America’s so-called “special relationship” stops short of the nations’ tastes for chocolate. One reason for the taste divide on either side of the Atlantic is the demand for cocoa solids in products. In the UK, chocolate must contain at least 20%, while In the US cocoa solids need only make up 10%.
There are also variations on the type of powdered milk used, which can impact the flavour. A typical American bar also has more sugar than a bar of Dairy Milk, and, crucially perhaps, its ingredients list contains the additive PGPR, which can act in place of the more expensive cocoa butter. Read more
How did Quakers conquer the British sweet shop?
Cadbury, which has been sold to US firm Kraft, is one of several great British firms founded by Quakers. But how did they gain such a stranglehold on the chocolate industry and why were they so successful in business? [Very interesting historical perspective. Ed] Read more
SA Industry News
High mercury levels found in SA fish
A new study by CSIR scientists shows that several fish caught off the South African coastline are contaminated with poisonous levels of mercury that could damage the health of regular fish eaters. Read more
Good time for tea
It could be an English horror comedy inspired by the Monty Python team: there isn’t enough tea for everyone! A global shortage of the world’s most widely consumed drink, after water, has pushed prices to record levels.
The shortage has been caused mainly by drought and late rains in some of the world’s major tea-producing countries, including India, Sri Lanka and Kenya. But there has also been an unprecedented surge in demand for the beverage, worsening the shortage and further pushing up already high prices. Read more
New beer war in Angola
Angola is shaping up as the next battle ground in Africa’s beer wars. With an estimated GDP per capita of almost US$5 200 in 2008, Angolan consumers are now richer than their regional counterparts – though wealth is unevenly distributed. Because they are able to spend more freely on beer, research company Business Monitor International rates Angola as one of the sub-Saharan beer markets with the best potential for growth. Read more
Pick n Pay rebranding strategy hits the spot
Two years on, has Pick n Pay’s R110m gamble – hailed as its biggest rebranding exercise to date – paid off? CEO Nick Badminton says the changes have lifted sales in many categories within the PnP range. “An excellent example is yoghurt. From January to October 2009 we saw a 138% value in units increase, with participation in this category growing from 8,7% to 18%,” he says. The same trend has been picked up in other categories. Read more
See related article: 4 000 pack designs for Pick n Pay? Berge-Farrell gets cracking
Westfalia launches new avo products
South Africa’s avo supremo, Westfalia, is extending its offerings with the launch of frozen and refrigerated guacamole products, accompanied by a fresh marketing campaign for its range of avocado oils. Read more
Food Industry News
UK: Mars to slash saturated fat content
Mars is to cut the levels of saturated fat in a number of its chocolate bars in the UK by “at least” 15%. The confectionery giant has said that Mars, Snickers, Milky Way, Topic and Flyte bars will all benefit from a programme that had cost 10m (US$14.4m). Mars added the change will take place “without any change in the taste or quality” of the products. Read more
Africa: Coke to nurture African farmers with $3 million partnership to help fruit growers
Coca-Cola is planning to spend $3 million to help mango and passion fruit farmers in Uganda and Kenya increase their productivity and reach new markets. The goal is to get 50,000 farmers into the supply chain of Coca-Cola, which will buy the fruit and use it to make juices for sale in Africa … It is aimed at reducing poverty across Africa by supporting entrepreneurial farmers, helping them raise more and better crops and sell their goods in new markets. The goal is to double the farmers incomes by 2014. Read more
Pepsi brings in the health police
Derek Yach, a former executive director of the World Health Organization and an expert on nutrition, took a new job with PepsiCo, his mother worried that he’d lost his mind. “You are aware they sell soda and chips, and these things cause you to get unhealthy and fat?” she asked him. Yach’s former colleagues in public health circles murmured similar concerns.
Yes, he said, he knew what Pepsi made. But he wanted to help guide the $43-billion snack food multinational toward a more balanced product menu. The company describes its current portfolio of “healthy” fare as a $10 billion business – a figure CEO Indra Nooyi says she wants to see jump to $30 billion over the next decade. Read more
UK: Getting tough on binge drinking
Pub and club promotions that encourage binge drinking will be banned within months in a government retreat from its policy of liberalising licensing laws.
Licensees face fines of up to £20,000 or up to six months in jail for offers such as All you can drink for £10 or Free drinks for women under 25. The announcement of a tougher code of practice is an admission that reforms allowing 24-hour drinking have failed to produce what the former minister Hazel Blears described as a continental café-bar culture. Instead, ministers have acted amid rising public concern at the extent of public drunkenness and alcohol- fuelled disorder on the streets. Read more
Starbucks to make first entry into the RTD coffee category in Europe
Arla Foods will manufacture, distribute and market Starbucks premium milk-based ready-to-drink coffee beverages, enter a coffee market in Europe that’s valued at approximately $550 million. Extending its brand into new distribution channels globally is part of Starbucks long-term plans to target international growth in key regions such as Europe. Read more
Health & Nutrition Stuff
Is your junk food habit making you depressed?
A new study published in The British Journal of Psychiatry makes a strong case that processed junk food can trigger or contribute to depression, while eating whole and healthy food seems protective … Junk food may taste good, but along with the detrimental effects of all that sugar and fat on your body, eating it makes you feel low as well. The researchers are pretty confident that they’ve uncovered a true cause-and-effect relationship.
“Our finding shows a strong association between diet and depressive symptoms after controlling for a large range of socio-demographic factors, and for health behaviors such as smoking, physical activity, and health status,” notes lead study author Tasnime Akbaraly, PhD, an epidemiologist with the National Institute of Health and Medical Research in Montpellier, France. Read more
When gym isn’t enough
Young men love supplements, but is there any muscle behind them? In the US, bodybuilding-related products powders and pills with names like Muscle Milk, Amplified Mass XXX and N.O.-Xplode represented a $2.7 billion industry in 2008, but one whose benefits are in serious dispute. The products are a subset of the more-familiar category of nutritional supplements, which includes mainstream items like vitamin-infused waters and energy bars. That market represented $25 billion in revenue in 2008, according to Nutrition Business Journal, a trade publication.
Top-selling products like creatine, whey powder and nitric oxide are widely available under many brand names but they are also minimally regulated. And that, sports medicine doctors say, points to the problems: there is little or no uniformity among products, the labels are confusing and the ingredients are arcane. Often, the main active ingredient is simply caffeine. Read more
Trends & NPD
Datamonitor’s 2010 trend forecast
New product marketers can look forward to a number of new trends in the coming decade, according to Datamonitor, among them a move to more humane treatment of meat animals, a growth in meat-flavoured products, new types of degradable packaging, muscular functional drinks and the use of more exotic super fruits. Read more
Beverage innovation: looking back, looking ahead
The soft drinks and water industries hailed the beginning of the 21st century as a brave, new world for the two categories. This article hails the major role played by innovation over the last ten years, and considers the perils and pitfalls for NPD in the future. Read more
Nestlé develops nutritional product for the elderly
Nestlé will be rolling out a new product in Europe which aims to address the specific nutritional needs of the elderly population. Resource SeniorActiv will first be introduced in Switzerland later this year and if successful will be distributed in other European countries in the future.
The food manufacturer has researched the most common deficiencies in older peoples’ diets and produced an oral supplement to help address these. Read more
Food Science & Technology Stuff
Ingredients: the functional options
As demand continues for health-promoting foods and beverages, so the industry responds with innovative functional ingredients and healthy solutions. Claire Rowan of Food and Beverage International looks at some of the functional products showcased at last years Fi Europe exhibition.
Despite the hurdles posed by the European Health Claims directive, the functional foods market continues to enjoy considerable growth and is forecast to account for around 25% of the global food market by volume by 2010, according to the Future Institute in Kelkheim, Germany. Read more
Low-adhesion chewing gum clears safety hurdle
A study has found no safety problems with Rev 7, an indigestible gum polymer that makes chewing gum less sticky. The findings might clear the way for an alternative gum base, easing the environmental and economic costs associated with gum removal. Read more
The ultimate anti-obesity ingredient?
Scientists at Birmingham University’s school of chemical engineering are one year into a four-year project to find an aid for those who want to cut back on the desire to snack.
They have developed an aqueous solution that gels into a solid structure in the stomach, thereby helping to curb appetite. The four-strong team at Birmingham is headed by Professor Ian Norton, formerly chief scientist (foods) at Unilever, and the man who oversaw the development of Flora as an alternative to butter. Unilever is among a group of big manufacturers and retailers who are indirectly financing this and other universities to develop potentially health-enhancing products through the Diet and Health Research Industry Club, otherwise known as Drinc. Other members include Coca-Cola, Cadbury, United Biscuits and Marks & Spencer. Read more
Rosemary extract beats synthetics for edible oil preservation
A carnosic acid-rich extract from rosemary may extend the shelf-life of sunflower oil, and perform better than synthetic preservatives, says a new study. Antioxidant-rich rosemary extracts were capable of inhibiting oxidation of sunflower oil, according to findings from a Chinese study published in Food Chemistry.
Though sunflower oil is difficult to stabilise because of high linoleic acid content, [25, 60 and 98 per cent carnosic acid preparations] were proved to show strong protective effects against lipid oxidation of sunflower oil during accelerated storage, wrote the authors, led by Ying Zhang. Read more
FDA calls for more research on BPA
The US FDA has issued an update calling for more studies on bisphenol A (BPA), a chemical used in the manufacturing of many hard plastic food containers such as baby bottles, reusable cups, and the lining of metal food and beverage cans including canned liquid infant formula.
Recent studies have reported subtle effects of low doses of BPA in laboratory animals. While BPA is not proven to harm children or adults, these newer studies have led federal health officials to express some concern about the safety of BPA. Read more
In a more agenda-driven article, a US environemental group says the ‘announcement by FDA is the beginning of the end of exposing our children to this toxic, hormone-altering chemical during the earliest stages of life.’ Read more
Sainsbury’s to switch tomato packaging from tins to Tetra
Sainsbury’s supermarket is to switch its “Basics” range of tomatoes from tins to cardboard cartons, in a move that it claims will cut half a million kilos of packaging every year.
The tomatoes are the most popular non-fresh item in its stores, with around 22m tins sold every year. Sainsbury’s started selling food in such “Tetra Recart” packaging in 2007, but says this is the first time cartons have been used for tinned items in such large volumes. The switch will go some way towards helping the supermarket achieve its target of reducing packaging by a third by 2015, and reducing carbon emissions by 156 tonnes per year. Read more
Is Tetra Pak better for the environment than tin cans?
An increasing amount of the food is being packaged in Tetra Pak cartons rather than tin cans. Is this better for the environment? Read more
UK: Return to slop bucket as homes face ban on sending food waste to landfill
Food waste at landfill sites is estimated to generate about 18 million tonnes of carbon dioxide Householders will soon have to keep food waste in the modern equivalent of a slop bucket, the British government said this week. Hilary Benn, the Environment Secretary, said that instead of being thrown away on landfill sites, food waste would be used for composting or turned into energy.
Britain throws away 8.3 million tonnes of food each year, costing families with children £680 a year, according to government figures. Food waste at landfill sites is also estimated to generate about 18 million tonnes of carbon dioxide a year, the equivalent of emissions from four million cars. Read more
UK: Tesco Says “BOGOF” to Food Waste
Tesco this week launched the first of its new Buy One, Get One Free Later deals helping customers across the country take advantage of fantastic deals and cut down waste.
Over the next two weeks customers choosing pineapple, melon, salad and lettuce offers can claim their free product on the same day or pick one up the following week. Read more
Homeopathy by the (mind-boggling) numbers
You can purchase a packet of Boots-brand 84 arnica homeopathic 30C Pills for £5.09, which Boots proudly claim is only 6.1p per pill. Their in-store advice advises that arnica is good for treating bruising and injuries, which gives the impression that this is a very cost-effective health-care option.
Unlike most medication, it doesnt list the actual dose of the active ingredient that each pill contains. On checking on the British Homeopathic Association website, it nonchalantly states that to make a homeopathic remedy, you start with the active ingredient and then proceed to dilute it to 1% concentration. Then you dilute that new solution again, so there is now only 0.01% of the original ingredients. For the 30C pills this diluting is repeated thirty times, which means that the arnica is one part in a million billion billion billion billion billion billion. The arnica is diluted so much that there is only one molecule of it per 7 million billion billion billion billion pills….Its hard to comprehend numbers that large. Read more
Did a thirst for beer spark civilization?
Drunkenness, hangovers, and debauchery tend to come to mind when one thinks about alcohol and its effects. But could alcohol also have been a catalyst for human civilization? According to archaeologist Patrick McGovern this may have been the case when early man decided to start farming. Why humans turned from hunting and gathering to agriculture could be the result of our ancestors simple urge for alcoholic beverages. Read more
That’s all for this week!
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