The natural guys looking at the big guys

Organic food and drinks companies are increasingly looking at teaming up with MNCs (multinational corporations). MNCs with large distribution networks provide easy access for niche product companies that are struggling to penetrate larger chains.

The natural product segment is currently one of the fastest growing segments, making it very attractive for MNCs. As large companies try to diversify away from slower growth segments, natural product companies are being snapped up.

However, staying independent within a large conglomerate can be challenging. Brands can get diluted, and some consumers might view it as “the nice organic guys selling out to the evil empire”. Cost cutting efforts such as substituting for cheaper ingredients, will also have severe negative implications in the long run. As one executive put it, maintaining “we are the world let’s hold hands” culture, is sometimes very difficult for larger organizations.

The link between chocolate and heart disease

Scientists are to investigate whether eating chocolate can reduce the risk of heart disease in women with diabetes. BBC 29/04/08

A focus on inflation

As price increase Consumer Goods companies are struggling to cope. A new study in the US shows transportation, energy, and raw material costs will be a major issue to deal with. Progressive Grocer 25/04/08

The global food crisis needs further action

The rise in food prices is likely to put enormous pressure on emerging market inflation and lead to increased political instability.

A number of factors have helped contribute to the rise in food prices.

Changing consumer spending. Changing consumer spending habits and growing consumer income have pushed up demand for food products. A growing population has also not helped in any way.

Climate change. Temperature changes and flooding have had a severe affect on food production and supply. Sub Saharan Africa and vulnerable countries like Bangladesh will be under increased pressure to meet food output targets.

Alternative energy. The drive for alternative energy, in particular ethanol, has increased staple food prices which are in turn contributing to rising inflation. Consumers and farmers ranging from the US and Mexico to South Africa are feeling the impact. Some of these strategies were ill conceived from the outset and need to be reevaluated.

Hedging and speculation. Hedging and market speculation are further driving up prices. Countries like Singapore are building up supplies to hedge against further price increases. The Philippines police are currently playing a game of cat and mouse with rice hoarders.

The crisis, however, provides some unique opportunities for governments. Food subsidies in the west are currently hurting millions of farmers in developing countries while benefiting a few. By reducing food subsidies, millions of consumers across the globe will benefit. After all, poor emerging market consumers are currently hurting the most. Unfortunately, recent food scares in China have played into the hands of the farm lobbies and protectionist groups. Action is needed and the recent World Bank measures will not go far enough.

Emergency measures to address rising food prices

The World Bank announced measures to tackle rising food prices. BBC 14/04/08

Global rice supply

Global rice supply: Video snapshots BBC 11/04/08

Emerging market inflation

With food prices rising across emerging markets, governments are forced to take steps to curb prices and in some cases even reduce exports. In the Philippines the government is threatening rice traders with imprisonment if found hoarding rice.

Rice prices have jumped 50 percent in the past two months. In India the government scrapped import duties on cooking oils and maize. Higher food prices are fueling inflation, hurting consumer confidence and will slow down growth across Asia, Africa and the Middle East.

Higher food prices may turn attention to nutritious food

Analysts predict as food prices rise for less nutritious food, organic food may become more accessible to shoppers. NYTimes 02/04/08

Rising rise prices

The rising price of rice is benefiting rice merchants and millers rather than farmers. Rice prices have doubled over the last year partly due to hoarding and speculative trading. Bangkok Post 30/03/08

Turning green

Americans are increasingly turning towards greener products. Progressive Grocer 19/03/08