nbr food industry week

Privately circulated to decision-makers of the fast-moving consumer goods industry

Salt study focused on fast foodNevil Gibson

A Canadian-based research project on salt levels in high-profile fast-food outlets in six countries may not reflect wider industry reduction moves.

The study, published in the Canadian Medical As-sociation Journal, included New Zealand and was also done in the US, Canada, Australia, the UK and France, it measured sodium levels in Burger King (Hungry Jack’s in Australia), Domino’s, KFC, McDonald’s, Pizza Hut and Subway. The data were collected from 2124 indi-vidual offerings on websites in April 2010.

It found average levels in New Zealand were above those in the UK and France (the lowest) but below those of the US, Australia and Canada.

The study also measured and compared serving sizes, finding that serving sizes varied considerably among countries. This was a key reason for some of the differ-ences seen in the sodium content per serve.

Food & Grocery Council chief executive Katherine Rich, who doesn’t directly represent the fast-food indus-try, said food companies were continuing to make “great strides” in reducing the amount of salt.

“Although many companies started reducing salt in foods a decade ago, this work continues to gain major momentum,” she said.

“Great progress has been made, for example, by the bread and breakfast cereal industry, while work is begin-ning on processed meats.

“Bread reformulation has taken place quickly, and I’m informed that manufacturers have been able to reduce the salt content of many leading breads by 15%, resulting in about 150 tonnes of salt being removed from the bread

supply each year.”Cereal makers have been reformulating their prod-

ucts over a long period but in one year alone a total of more than 7.5 tonnes were removed from many popular brands.

“And as the companies are continually reformulating, they are achieving reductions of between 5% and 25% at one time, as determined by consumer acceptance.

“However, reducing salt in some foods has to be gradual to give time for peoples’ taste buds to adjust. Be-cause humans’ taste preference for salt is learned, a grad-ual reduction allows our taste buds to adapt so changes are not noticeable.”

Rich warned that regulating salt in foods was “sim-plistic and unrealistic.”

“No country in the world has regulated the reduction of salt in foods. Lowering salt content can be a techno-logical challenge, and companies spend a lot of time and money investigating ways of doing it. Salt is an integral part of the manufacturing process and is involved in the end taste, texture, and flavour of food.”

She said the Heart Foundation’s HeartSAFE pro-gramme was a collaboration of food manufacturers, food industry associations, and health and regulatory agencies.

MoNday Update

Starbucks is phas-ing out the use of a natural colouring derived from crushed beetles in its Strawberry Frappuc-cinos and smoothies, as well as a few sweet treats, after a storm kicked up by the vegan community in the US.

Ground up cochineal beetles is a common, government-approved food colouring found in many products, from yogurt to snack cakes. Starbucks began using it in January in an effort to move away from artificial ingredients.

Last month, blogger Daelyn Fortney launched a campaign against the switch to cochineal extract, advo-cating the use of red beet, black carrots or purple sweet potatoes instead.

Faced with an unexpected public-relations problem, Starbucks began searching for an alternative colouring.

Last week, the company’s US president, Cliff Burrows, said that “after a thorough, yet fastidious, evaluation, I am pleased to report that we are reformulating the affected products to assure the high-est quality possible,” using a tomato-based extract called lycopene.

Burrows acknowledged Starbucks “fell short” of cus-tomer expectations and said the company intended to be “fully transitioned” to the new products across the US near the end of June.

Fortney’s campaign, which gained more than 6000 signatures, “originally began as a story to inform vegans that the Starbucks Strawberry Frappucino was no longer safe to consume, but ended up being an issue that both-ered many people,” she said.

April 23 2012 / ISSUE 827

to page 2

NBR Food Industry Week

Tjeerd Jegen, Woolworths’ newly installed super-markets boss in Australia, is determined to reclaim the title of best-performing retailer.

Jegen quit as chief executive of Tesco Malaysia to join Woolworths in October last year,

He is charged with turning the tables on Coles, which for more than two years has outstripped its ri-val on sales growth in existing stores.

Woolworths’ food and liquor division reported sales growth of just 1.1% in the second quarter of this financial year, excluding the benefit of new store openings – its slowest quarterly sales growth from comparable stores in 13 years.

The result was less than one-third the 3.7% in-crease reported by Coles, and the10th consecutive quarter in which Woolworths’ comparable-store

sales growth has lagged behind.“It’s a very big concern – the universal measure

of strength in retail is comparable sales growth, and it’s not good that we’ve had such a big gap between us and Coles,” Jegen told The Australian.

Woolworths supermarkets are still much larger and growing faster in absolute terms than Coles, re-porting food and liquor sales of $A19.6 billion in the first half of the financial year, up $A799 million from a year earlier, compared with Coles’ $A13.4 billion, up $A619 million.

Analysts expected Woolworths’ third-quarter sales numbers would include comparable-store sales growth of between zero and 0.75%, compared with an expected 3% at Coles, which will report along with Wesfarmers’ other retail businesses this week.

Woolworths aims to topple Coles

2 NBR Food Industry Week

Nestlé scored a victory in the coffee wars as the European Patent Office upheld a patent that protects the Nespresso coffee system from compatible capsules made by other companies.

Three rival producers of single-serve coffee pods that are compatible with the Nespresso system had demanded the patent be removed. But the patent, which protects the interface between the coffee capsule and the machine, was upheld by the EPO’s panel of experts.

The three Nestlé rivals – Sara Lee, Ethical Coffee and Vergagno (of Italy) – now can challenge the decision at the EPO’s court of appeal, whose decision is final.

Nestlé’s Nespresso business has been fighting legal battles against a string of rivals, including Swiss discounter Denner, that have launched their own versions of capsule coffee that are compatible with Nestlé’s machines.

Nespresso has grown into a business with sales of more than three billion Swiss francs in 2011 and profit margins among the highest in the company.

Nestlé chief executive Paul Bulcke said the patent would “continue to provide adequate protection to our intellectual property.”

It is too early to say whether the decision means the rivals must remove their capsules from shop shelves.

Nespresso chief executive Richard Girardot said it wasn’t against competition, with the brand facing competition from 50 other companies in the coffee capsule business. But Nespresso would continue to defend its intellectual property where necessary.

premium blendMeanwhile, a new premium Nescafé uses a blend of soluble and finely ground micro-granulated coffee designed to meet specific tastes in indi-

vidual countries. It was first launched to Japanese consumers as a luxury coffee called

Nescafé Koumibaisen last year. In the United Kingdom, it was launched as Nescafé Azera, it has been launched in Brazil as Nescafé Duo Grão. and as Nescafé Molienda in Mexico.Different tastes – Nescafé asked researchers at the Nestlé Product Technology Centre in Orbe, Switzerland, to help them understand how to match its coffee to consumers’ taste preferences and habits.

The researchers found out that consumers in Mexico do not like bitter coffee, but prefer a smoother taste.

The Japanese like their coffee stronger and rich in aroma, while the British like a well-balanced coffee taste.

Brazilians prefer their coffee with a smooth but aromatic taste.

Tailoring the product – “From Brazil to Japan, we discovered that consumers have really diverse tastes,” explained Michael Briner, of the Beverage Strategic Business Unit at Nestlé.

“Lifestyle, consumption and daily patterns all made a difference so we used our coffee expertise and know-how to tailor the product to each country,” he added.

Determine different aromas – Nescafé selected a blend of Arabica and Robusta coffee beans to achieve specific tastes, choosing beans that pro-vided a smoother or more bitter taste.

The beans are either lightly or deeply roasted to determine the different aromas. The roasted beans are then ground down to micro-granules and blended together with soluble coffee to provide a unique and specifically crafted cup of coffee.

It aimed to support the work already done by manufacturers and encour-age further salt reduction in popular pre-prepared foods.

Companies that had reduced salt included Goodman Fielder and George Weston Foods with bread; Kellogg, Hubbard and Sanitarium with breakfast cereals; Bluebird with many of its snack ranges; Nestlé across a wide num-ber of foods; Mars with its sauces; as well as Heinz Wattie’s, Arnotts and Unilever.

However, she admitted more could be done to overcome the health dan-gers of salt over-consumption.

“We need a concerted effort to bring the nation’s salt intake down,” she said. “Action is already under way in some parts of the food supply – such as cafés, bakeries, restaurants and fast-food outlets – but more is needed.”

One of the 10 researchers in the study, Associate Professor Cliona Ni Mhurchu, of the University of Auckland’s Clinical Trials Research Unit, said it showed the high risk to the population’s health and gave an urgent message about the need for change.

“If the UK and France have similar products with much lower salt levels, this shows that New Zealand could be – and should be – heading in the same direction,” she said.

“In the UK there is a long-standing programme where agreements be-tween government and industry on salt targets have driven down the salt lev-els of processed food.

“The study demonstrates there is still clear room for improvement in the UK and even more so in New Zealand. The research refutes the standard industry protest, since it shows there is no technical reason why salt content of our food can’t be reduced.”

A diet high in sodium leads to higher blood pressure, and to a greater risk of heart disease and stroke. Fast foods such as pizza and burgers are a leading source of excess dietary sodium.

New Zealanders have an average salt intake of nine grams a day, com-pared with the recommended maximum of 5-6 grams a day. One third of the food that is bought is from restaurants and fast food outlets.

Comment / Analysis

Nestlé wins round in coffee-pod war

Salt study focused on fast food

PUBLISher’S INforMatIoN

Editor-in-chiefNevil GibsonDDI: 09 912 2718Email: [email protected]

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Email: [email protected]

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from page 1

dairy prices slumpInternational milk prices fell in Fonterra’s latest global auction, reversing a rise at the previous sale. The Global Dairy Trade weighted index, which covers a range of 30 products and contract periods on offer, fell 9.9%, with an average selling price of $US2983 per tonne. The index resumed its falling trend seen for much of the year, after prices rose for the first time in two months at the last auction. Prices fell for all dairy products on of-fer, with the largest fall seen in cheddar, which fell 12.1%, while rennet casein and milk powder fell 11.9% and 11.0%, respectively. The index has fallen nearly30% since hitting a near four-year peak in March last year as global commodity prices have retreated.Full details: www.global-dairytrade.info

Indonesian plantFonterra said it would invest around $20 million in a new plant in Indonesia to keep up with growing demand there for its Anlene, Anmum, and Anchor Boneeto branded milk products. The move will en-able Fonterra to package its milk products in-house. Fonterra said it was in talks with prospective partners in Indonesia, the company’s 10th largest market, and is con-sidering structural options and locations for the new plant, which it expected would be operating within 18 months.

odours close store

The Katikati Countdown supermarket was closed temporarily last week after odours from new flooring caused people to be-come ill. Progressive enterprises commu-nications manager Luke Schepen said the closure was a precaution. “We had to wait for tests and assessments to be car-ried out. The actual issue itself is the lay-ing down of the new floor, so there was reports of odours and illness and the sorts. We needed to do some testing in terms of the actual store environment.” The store re-opened 24 hours later.

NBR Food Industry Week 3

Hundreds of British bakers are expected to march on Downing Street this week in protest against the so-called “pasty tax” that will add 20% to the cost of hot foods, including Cor-nish pasties.

High Street bakery chain Greggs and the National Association of Master Bakers have organised the event on April 26 to protest against the proposed value-added tax (VAT).

Hundreds are expected to take part in the march, which will start at Pudding Lane and finish at Downing Street with the delivery of a petition against the plans, a spokeswoman for

Greggs said.Chancellor George Osborne announced

the tax in last month’s UK budget, saying it would bring bakeries and supermarkets selling hot food in line with fast-food outlets, which already pay VAT.

But the government has since faced con-certed opposition to the measure, with a group of Cornish MPs announcing they were looking to build a pact with Labour MPs and others from across the country to oppose the measure.

Greggs chief executive Ken McMeikan, said: “If the chancellor does not reconsider his proposals, there could be huge repercussions for the entire bakery industry.”

NZ King Salmon has aligned with two of Japan’s largest retail centralised buying or-ganisations (CBOs), giving the company access to 80 su-permarket chains comprising 2500 stores.

The company already has 3% of the Japanese market and exports some 800 tonnes of fresh salmon there each year. It now aims to triple that mar-ket share within 36 months.

Most of the fresh salmon in Japan is sold through some 55,000 supermar-kets in around 550 chains servicing a popula-tion of around 130 million.

Japan country manager Rob Morris says the new arrangements will provide benefits in marketing efficiency and new product devel-opment.

“The CBOs are helping us with sales sup-port, marketing promotions and enabling us to exhibit at their own trade shows as well as introducing us to the decision makers of their chains,” he says.

“Importantly, they are also helping with product development where necessary. Simply because of the way things are done in Japan we have identified most of our likely growth

will be in retail. “Seafood is more an everyday staple for

Japanese consumers so products such as fresh salmon tend to be purchased daily by house-holds for consumption at home.”

Morris says NZ King Salmon is selling into eight new chains and negotiating with a fur-ther 40 and working with the CBOs on trade fairs and joint sales promotions.

“We have recently employed two highly experienced Japanese managers for retail and food service who have strong and important connections with decision makers. Who you know is very important in the Japanese market and it is so big it’s vital to develop firm alli-ances and connections.”

Brits to protest against fat tax

King Salmon lands Japanese deals

Short bites

Greggs chief executive Ken McMeikan


NZ vegetables pick of the week is cabbage. It is here in great volume, tasting as awesome as it ever was. In recent years, it has actually been found to be very good for you.other top veggie buys are white button mushrooms, pumpkin, spinach, cauliflower, and carrots. Spinach is a wonderfully versatile vegetable, popular worldwide, with nearly every cuisine featuring it somewhere in its repertoire. The Italians are particularly partial to spinach and have hundreds of dishes using it. The words a la florentine mean the dish contains spinach. also to look out for is late season New Zealand capsicums. The journeys Christopher Columbus and the conquistadors made were partly to find spices but instead he found maize, potatoes and tomatoes. he found the native Indians flavoured their food with ground peppers, and since they was hot, like pepper, he called them peppers, too.

NZ fruitpick of the week is Jazz apples. Developed in New Zealand and now grown around the world, Jazz are a naturally bred cross between royal Gala and Braeburn. They combine the juicy sweetness and colour of the royal Gala and the tangy tartness and crunch of the Braeburn. The result is the crunchiest, densest apple in the world. other top fruit buys are new season DDC pears and late season Beryls peaches. DDC stands for Doyenne du Comice, which when fully ripe and soft would have to be the juiciest pear on the planet. The late peaches cost around $6-$8/kg.Also to look out for is new season kiwifruit, both green and gold. The gold are just a little less tart than the green early on. Imported produceThe main tropical treat is pineapple. It’s also hard not to mention grapes again, with the green and red seedless in full sup-ply. Along with the Island coconut, there are also drinking nuts from the Philippines. A whole tray of fresh dates costs only $3.99. They contain more natural sugar than any other fruit and deliver a substan-tial amount of dietary fibre and potassium.

Supplied by turners & Growers, New Zealand’s leading distributor and marketer of fresh produce.

Produce report

Coffee GoeS GreeNNescafé Greenblend instant coffee delivers 70% more antioxidant polyphenols than green tea, the company claims. Greenblend will also be the only instant cof-fee on the markets boastings a blend of green and roasted coffee beans, while not compromising the taste. research published in the British Journal of Nutrition says although a cup of green tea contains similar levels of antioxidant polyphe-nols, the body absorbs 70% more antioxidants from Nescafé Greenblend than from green tea. “Discerning coffee drinkers will notice that the delivery of 70% more antioxidants to your body than green tea doesn’t compromise the taste and aroma of Nescafé Greenblend,” says Nestlé nutritionist Susan Kevork.

GodS Go CraZyhutt Valley cheesemaker Zany Zeus has opened its first store, a short distance from its milk and cheese factory in randwick rd in Moera. For the past 12 years, owner Michael Matsis and sister Meropi have specialised in boutique cheeses, includ-ing halloumi and feta, which are distributed to hundreds of cafés, restaurants and supermarkets throughout the country. It is the first time the entire Zany Zeus cheese range will be

available to purchase in store. These include cultured products such as crème fraiche, mascarpone, cream cheese and sour cream. The company will also launch a new range of smoked cheeses – brinza, ricotta and paneer as well as the country’s first smoked yoghurt. The latest addition to its range is a premium ice-cream made with fresh organic milk and cream. This is available in 14 fla-vours, including cookies and cream, pistachio and almond brittle, feijoa and chocolate rough. Soy ice-cream and snow freeze are also available. Matsis launched the business in 2000 with his mother, Lefki Matsis, after several years researching and experimenting with the art of cheese-making.

fresh on the shelves

Hot HarVeStJust in time for winter, Old Mout Cider has created a hot new take on cider and an alternative to mulled wine, hot Berry Cider. This intense black cherry-coloured drink has a vibrant smell of boysenberries, cherries and cranber-ries, with a touch of fizz. Sales and marketing director Scottie Chapman says being the first to introduce a hot cider variant in the market is an example of the company’s commitment to provide innovation and creativity to cider lovers, all-year-round. “We pioneered the fruit cider category in New Zea-land, and as New Zealand’s largest independent and dedicated cidery, we’re always looking at ways to craft new and appealing ciders for those of us who appreciate exceptional quality and taste,” he says. hot Berry Cider is at its juicy best when gently heated (don’t boil) on the stove or in a microwave. To spice things up, add a few winter spices such as cinnamon, cloves and star anise, and garnish with fresh orange slices. hot Berry Cider (8% ABV) will be available at selected supermarkets and liquor retail outlets nationwide from the end of May with rrP $15.99 for the 1.25L PeT bottle.

The cider-making monks of Ampleforth abbey in Yorkshire are to brew a beer from an ancient recipe that has not been tried for two centuries.

Chuffed by the success of their apple orchard, which has grown to more than 2000 trees and 70 varieties of apple, the Benedictine commu-nity hopes to have £36 packs of 12 bottles of beer available by the end of June.

Known traditionally as “la bière Anglaise,” the

brew is thought to date back to medieval times before the order was suppressed in England un-der Queen Elizabeth I.

The beer assumed its French name via the loyalty of exiled monks, who brewed it in France while their French colleagues made related experiments that led in due course to the 19th century’s Benedictine liqueur.

Monks revive old brew

GpG sale mooted

Guinness Peat Group and listed invest-ment vehicle CVC are exploring the sale of Green’s Foods, the Australian owner of grocery brands including Poppin micro-wave popcorn and Lowan oats, uncon-firmed Australian reports say. The move is part of a selldown of GPG shareholdings, which have previously included the sale of a majority stake in Turners & Growers to German firm BayWa.

Spike down underBoundary road Brewery has ap-pointed Ameri-can craft brew-er Brian “Spike” Buckowski to the position of The resident. Buckowski is b r e w m a s t e r and co-founder at award-win-ning Terrapin Beer Company

in Athens, Georgia. he will travel down un-der in May to complete the task of creating a new craft beer range of three bespoke brews. They will be called The resident and will be released for sale from July 2012.

Crafar sale approvedShanghai Pengxin’s controversial bid to buy 16 central North Island dairy farms was approved by Land Information Min-ister Maurice Williamson and Associate Finance Minister Jonathan Coleman. The ministers approved the Overseas Invest-ment Office’s new recommendation to let holding company Milk New Zealand buy the Crafar family farms, after a high Court judgment sent it back to the bureaucrats in February. Williamson said the OIO sought advice from Crown Law and independent advice from David Goddard QC in making its recommendation.

Branded lamb firstSilver Fern Farms’ branded New Zealand lamb range is being expanded in the UK, where it is sold in Tesco supermarkets. SFF says it is the first time branded lamb has been available in the fresh chilled lamb section of a major grocery chain in the UK. It is also he first deal of its kind for the company and for the red meat sector as a whole, The range of branded retail pre-packs was launched in October 2011 into a category traditionally dominated by su-permarket brands.


A2 Corporation is undertaking a strategic review of the business as major players in the dairy sector start to take notice of the NZAX-listed alternative milk company.

A2 has been approached by would-be partners and wants to review its options to speed up growth and maximise shareholder value, it says.

That’s seen its board appoint Sydney-based Greenhill Caliburn as principal adviser, with sup-port from New Zealand’s Clavell Capital. The re-view is expected to take several months.

“We are conscious of ensuring that we lay the appropriate platform for growth in new markets and the next strategic steps we take are important to ensure we optimise shareholder value,” chairman Cliff Cook says.

“This, coupled with recent approaches from in-dustry participants, makes this the appropriate time to undertake a full review of our strategic options.”

Meanwhile, A2 has signed a supply deal with Canterbury-based Synlait Milk to manufacture A2 brand nutritional powders, which it hopes to sell on the international market, particularly targeting in-fant formula for the Chi-nese market.

Last month, the com-pany raised $5.2 million in a share placement at 37c apiece. Its shares have surged more than 110% this year, valuing the com-pany at more than $300 million.

A2 expects to launch its product in UK markets in September this year and has formed a partnership with Robert Wiseman Dairies to do so.

For the first time since October 2009, all five sub-groups in the Food Price Index fell in March.

The monthly drop of 1.0% compared with a rise of 0.6% in February and no movement in January. On an annual basis, the index rose 0.2% from March 2011 (see tables).

Apples (down 24%), chicken pieces (down 4.0%), chocolate biscuits (down 7.8%) and bacon (down 6.5%) were the main contributors to the monthly drop.

Prices were higher for strawberries (up 24%), potato crisps (up 4.5%), avocados (up 35%) and ham (up 6.9%).

In the category with the largest fall, vegetables were down 6.2% and fruit down 2.0%. Pumpkins were down 26% for their second monthly drop and were down 54% from their peak in January. They were just 3.3% higher than 12 months ago. Grapes were down 20% and potatoes 5.8%.

On an annual basis, fruit and vegetables are now at their lowest level since May 2010.

The main annual falls were for tomatoes (down 31%), potatoes (down 15%) and lettuce (down 37%).

Discounting was the major contributor to the fall in the meat and fish category, with lamb chops down 7.8% and sausages down 5.0%.

Over the year, porterhouse and sirloin steak was 7.2% cheaper, lamb chops were down 12% and whole frozen chicken were down 9.2%.

Discounting of chocolate biscuits (down 7.8%) was the

main contributor to the monthly fall in the gro-cery category, while crackers (up 15% over 12 months), nuts (12%) and potato crisps (up 5.8%) were the main contributors on an annual basis.

Among beverages, coffee was the main up-ward contributor during the month but was 1.3% lower than its peak in May 2011.

In dairy products, cheddar cheese was back at February 2010 levels and 18% lower than the peak in September 2008; butter was down 11% on a year earlier and 16% below the June 2011 peak; and fresh milk was 1.7% lower than its peak in February 2012.

a2 weighs options

all groups fall in food price Index

Short bites

Source Statistics New Zealand

Food price indexMonthly change%

-2

JM A M2011

J

Food price indexAnnual change%


8

6

4

2

0JM A M

2011J

A

-1

0

1

2

3

A

S

S

O

O

N

N

D

D

J2012

J2012

F

F M

M


Food price indexMonthly change%

-2

JM A M2011

J

Food price indexAnnual change%


8

6

4

2

0JM A M

2011J

A

-1

0

1

2

3

A

S

S

O

O

N

N

D

D

J2012

J2012

F

F M

M


CoCa-CoLaExpansion of its reach worldwide and turning to a variety of smaller drink sizes helped boost profits and keep rising com-modity costs in check. Although volume growth came from all regions, increases were far greater in emerging markets. In the region encompassing Russia, India, the Middle East and Africa, for example, volume grew 9%, compared with a 2% increase in North America.

Global volume for bottled water grew 15% in the quarter, while volume for energy drinks rose 25%. That surpassed the volume gains in the company’s namesake Coca-Cola, which increased 4%. Even the slight bump in volume in North Amer-ica was driven largely by the company’s Powerade sports drinks, Dasani bottled water and zero-calorie Vitaminwater.

Despite the competition and market saturation at home, CEO Muhtar Kent said: “We believe North America is a growth market for our business.”

Total revenue was $US11.14 billion for the three months ended March 30, up 6% from $US10.52 billion a year ago. Earnings were $US2.05 billion, up 8% from $US1.9 billion a year earlier.

HeINeKeNThe 2012 growth outlook was confirmed after first-quarter net profit rose 15.9% to €175 million due to rising volumes in all regions except western Europe. The figure included a €20 mil-lion revaluation gain on a stake in a Haitian brewer.

Excluding the gain, profit was almost flat due to a rise in fixed and input costs. Revenue at €3.83 billion, up 6.4%, also surpassed analysts’ expectations.

Heineken is banking on continued growth from markets in Asia, Africa and Latin America to offset sluggish growth in mature markets. It will continue to make investments in Africa, Latin America and Asia in an effort to capitalise on growing populations and rising incomes.

The company still expects input costs to rise 6% a hec-toliter, primarily reflecting higher prices for malted barley. It aims to mitigate this impact by implementing planned revenue growth initia-tives and efficiency programmes.

teSCoIt will spend £1 billion revamping its ailing UK op-erations and cut back its domestic expansion plans to regain market share from its rivals after reporting a slight rise in full-year net profit.

Chief executive Philip Clarke said the major-ity of future growth would be online and in smaller stores on the high street, rather than large-scale hypermarkets. “We will reduce new space opening by 38% this year in the UK.” he said.

Tesco shares have fallen more than 17% since its first profit warning in Jan-uary, as analysts and shareholders have questioned the priorities after a period of aggressive international expansion that has seen the company open stores in China and embark on a so-far loss-making Fresh & Easy venture in the US.

Same-store sales excluding petrol were up 1.9% in Asia and 12% in the US over the year to February 25. Revenue in the UK, excluding petrol and value-added tax, was down 0.9%, while trading profit in the home market fell 1% to £2.5 billion.

Full-year net profit of was £2.81 billion, up 5.6% from £2.66 billion a year earlier and matching consensus expectations. Overall sales, excluding VAT, were up 6.8% at £64.54 billion.

SaBMILLerEmerging markets are continuing to drive growth in beer volumes, despite weakness in mature economies.

It benefited from strong performances in Africa, Asia-Pacific and Latin America, where rising incomes and populations of drinking age are fueling consumption. Developing economies account for about three-quarters of the company’s earnings, helping it outper-form its rivals in recent years.

Demand in Europe and North America remained weak as tax increases, spending cuts, below-inflation pay rises and rising un-employment squeeze consumer spending.

Volumes for the newly acquired Foster’s Australian business dipped 4% in the most recent quarter, even as the rate of decline slowed compared with the previous three months,

Fourth-quarter group revenue excluding acquisitions and dis-posals on a constant currency basis rose 10%, while group revenue per hectoli-ter increased 5%. In the full year, the increases were 7% and 4%, respectively.

things go better at Coke

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CORPORATE ROUND-UP

US: Nestlé closes in on pfizer deal

Pfizer is close to selling its infant-nutrition business to Nestlé for at least $US9 billion, the Wall Street Journal reported, quoting unnamed sources. If it succeeds, it would be one of the largest deals so far this year. Other bidders were France’s Groupe Danone and Mead Johnson Nutri-tion, which had explored a joint bid for the business. Pfizer is also going ahead with an IPO for its animal health products business, though a sale of that division can’t be ruled out either, the Journal said.

US: Mcdonald’s taps asia head as Coo McDonald’s appointed Tim Fenton as its new chief operating officer. he will succeed Don Thomp-son, who will become chief executive when Jim Skinner, 67, retires after 41 years with the com-pany. Fenton, 54, is president of the Asia, Pacific, Middle east and Africa division and will assume his role on July 1. he has been with McDonald’s almost as long as Skinner. The promotion of the 39-year veteran can be seen as a nod to the company’s stronger focus on emerging markets for restaurant expansion and growth.

Holland: Unilever ends factory-farmed chickenUnilever says it will phase out the use of factory-farmed chicken in its products. In Dutch, factory-farmed chickens are commonly known as plofkip – blown-up chicken – because they grow so large and so fast that they are ready for slaughter in just 42 days. Unilever has told animal rights organisation Wakker Dier the phase out will start in the first quarter of next year, beginning with its chicken hot dogs and later following with its soups and other food products. The industrially farmed chicken will be replaced with chicken that qualifies for at least one star in the Dutch “better life” meat production rankings. One-star chickens are not bred as quickly and have access to a covered outdoor area.

UK: Internet outrage at Milk tray changesWebsites and social networking forums have been inundated with concerns about the poor taste of Cadbury’s Milk Tray chocolates and claims that old favourites have been reformulated or dropped completely. The Daily Mail reports there is particular outrage about the orange truffle, a replacement for the traditional orange cream. Consumers say that the modern crescent-shaped version is a poor imitation of its rich, creamy predecessor with only a hint of orange flavour. The hazelnut whirl has also been the subject of vigorous debate, with many claiming it has been re-formulated and its distinctive hard-edged grooves replaced with softer whirls. Meanwhile, eagle-eyed shoppers have also noticed the absence of coffee creams and mocha-flavoured chocolates, and bemoaned the loss of the paper menu from boxes. Instead, they point out that there are now four different caramel chocolates and three separate hazel-nut sweets in a standard 7.05oz (200g) box.

Germany: obesity surge sparks crematorium firesAs the number of obese Germans rises, the funeral industry is scrambling to make adjustments in how larger bodies with more fat can be safely incinerated. A number of crematoriums have suffered severe damage when burning fat overwhelmed their emergency measures. The funeral industry has adapted with plus-size coffins and crematorium furnaces outfitted with larger doors. But one problem remains: Due to their high fat content, obese bodies often burn so hot that they overtax crematorium facilities. In several cases, chimneys have become so hot that they have glowed redhot or melted, causing a fire. Germany has159 crematoriums and 15% of Germans are considered obese.

Singapore: ‘Hug me’ Coke tests students Coca-Cola has created an attention-grabbing publicity stunt in Singapore – a vending machine that gives out free cans of Coke in return for hugs. The whacky idea is part of the company’s Open happiness campaign designed to target young people in a gesture-based marketing stunt being tested out in Singapore. Instead of paying money, students at the National University of Singapore have to squeeze the sides of the drinks machine to receive a free can of Coke. Public displays of affection are uncommon and have long been discouraged in Singapore but are on the rise among young people. Advertising agency Ogilvy & Mather says the stunt is intended to position the brand as a non-threatening ally to demonstrating youth.


Sweden’s culture minister, Lena Adelsohn Liljeroth, caused a media storm last week when she cut a piece of cake that was part of an art installation highlighting the issue of female genital mutilation.

The exhibit at the Moderna Museet in Stockholm featured a cake of a naked black woman’s torso with artist Makode Aj Linde’s blackened face and head sticking up next to the cake’s stomach and arms.

The minister was asked to cut the cake by taking a chunk from the most intimate part of the anatomy.

The cake’s “insides” were a gruesome red. A video shows Linde screaming loudly every time a visitor hacks off another slice.

Linde posted photos of the “genital muti-lation cake” on his Facebook page.

But the images provoked a furious re-sponse, with Sweden’s African-Swedish As-sociation describing it as “a racist spectacle.”

The association demanded Adelsohn Liljeroth’s resignation, saying the cake was just “a racist caricature of a black woman.”

It said her decision to take part in a du-bious event with cannibalistic overtones showed her “incompetence and lack of judg-ment.

“Her participation, as she laughs, drinks and eats cake, merely adds to the insult against people who suffer from racist taunts and against women affected by circumci-sion,” the statement went on.

Adelsohn Liljeroth, however, said she sympathised with the association’s criticisms but denied she had done anything wrong.

She conceded the cake installation was provocative and rather bizarre but said she had been invited to speak about artistic free-dom and the right to offend.

She added: “They wanted me to cut the cake.” Ultimately, the artist was to blame for any confusion, she said, arguing that the situ-ation had been misinterpreted.

“[The association] claims that it challeng-es a romanticised and exoticised view from the west about something that is really about violence and racism,” she said. “Art needs to be provocative.”

Biting into controversy

International News


The US operation of Domino’s Pizza has a different strategy in emerging markets and it means doing it the same as at home.

Its competitors, such as KFC’s Pizza Hut, have completely reinvented themselves for China, India and other emerging markets. But Domino’s is going strong with tradition-al pizza delivery, just as it has always done.

So far, the formula has worked. It has flourished in India, where it has about 440 locations. Same-store sales have increased 21% compounded annually over the past five years. This compares with same-store sales rising 6.8% in the international divi-sion as a whole in 2011. Domino’s says it has the potential to have at least 1000 loca-tions in India.

Domino’s is increasingly focused on growing in other emerging markets such as China, Malaysia and Turkey. But the competition there is greater and pizza isn’t exactly a popular meal among locals in those places.

In Malaysia, Domino’s is targeting 100 stores by the end of this year, from around 70, and Turkey is becoming a bigger focus with more than 200 stores.

When Pizza Hut ventured into China, parent company Yum Brands opted to introduce Pizza Hut Casual Dining, a chain that resembles more of a Cheesecake Factory in terms of menu and motif, with a vast selection of American fare, including ribs, spaghetti and steak, as well as café latte.

Domino’s isn’t interested in table service, even if that is what locals are used to.

“We go in there with a tried and true business model of delivery and carryout pizza that we deploy around the world,” international president Richard Allison told the Wall Street Journal.

“In the emerging markets, we’ve got more tables than you would find in the US but we have no plans to lean toward a casual dining model where a server comes out and takes an order.”

But some are questioning whether the model will continue to work.In China, McDonald’s, Pizza Hut and KFC are offering delivery ser-

vice, moving into Domino’s turf. Pizza Hut Home Service in China has roughly 135 stores that deliver. Domino’s has no more than two dozen stores there.

Domino’s has blamed its struggles in China in part on the fact that cheese and bread aren’t traditional staples of the Chinese diet and also on some of its own “self-inflicted wounds.”

“We brought in a new partner in China about a year and a half ago,

and have been working with them on redoing the brand’s products, pricing and image,” Allison says. “We are now well on our way of re-launching in that market, and we see substantial opportunity.”

Russia and Brazil are two other emerging markets that Domino’s concedes it has some work to do to improve its brand awareness and capitalise on the potential.

Domino’s uses “master franchisees” in emerging markets, which means they collect a smaller percentage of sales as a royalty fee, in return for the franchisees’ local expertise and ability to provide both the capital and the employees to build the business.

“Pizza is a product that lends itself to innovation,” Allison says. “In-dia has a lot of vegetarian pizzas; Malaysia has a pizza with prawns on it. With the help of our franchisees, we’re able to adopt it to the local tastes.”

domino’s shows difference by staying the same

OddSpot

A new advertising campaign that urges consumers to “fuck the diet” has enraged German-language purists – and, surprisingly, not with its profanity. Cosmopolitan Germans have long flaunted their worldliness by littering their speech with Angli-cisms, whether striking a deal over “ein Business-Lunch” or discussing the threat of “ein Cyberkrieg.” Unilever’s Du darfst (literally: you may, or you’re al-lowed) low-fat fast products advise German women – in their native tongue – that the range is for “those

who don’t want to hold back, those who want to eat until they are full.” Accompanying images of

beautiful women with excellent teeth slurping low-fat spaghetti bolognaise, the voiceover says, “You can’t be bothered to count calories? Then don’t! With Du darfst, you can enjoy your-self without worrying – Du darfst means above

all that you don’t have to do anything. Just help yourself: fuck the diet!” See for yourself at www.

du-darfst.de.

n Domino’s Pizza enterprises, an ASX-listed company, holds the ex-clusive master franchise rights for the Domino’s brand and network in Australia, New Zealand, France, Belgium, the Netherlands and the principality of Monaco. Domino’s Pizza enterprises now extend across five countries, with more than 845 stores employing approximately 21,000 people and making more than 60 million pizzas a year. Sales for the half-year to January 31 were up 10% to $A401.1 million.

nbr food industry week

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