Talking Food - Building a better working world - EY - …File/EY-talking-food-12-dec-2014.pdf4 November-11 December 2014 EY Talking Food 4 Ronald Kers commented: “The dynamics of

Issue 117

Talking FoodAn update of significant developmentsin the global food sector4 November-11 December 2014

Table of contents

Mergers, acquisitions and joint venture agreements 3

Organizational efficiency, pricing and cost savings 5

Innovation and digital 6

Health and wellness 7

Food safety and security 7

Focus on genetically modified organisms 8

Litigation and regulation 8

Focus on emerging markets 9

Focus on mature markets 11

Sustainability and social responsibility 11

Financial news/performance 13

Analyst and rating agency views 14

Management moves 15

Talking Food is published by EY every month. We hope you find itboth interesting and informative and we would welcome yourfeedback. For more information, or to request to be added to ourdistribution list, please contact:

Nicola Crouch

Talking series EditorUK +44 20 7951 [email protected]

4 November-11 December 2014 EY Talking Food 3

Mergers, acquisitions and joint ventureagreements

► Brazil’s JBS has announced that its Australian subsidiary has agreed to acquire Australian ham and bacon producer PrimoGroup from Asia-Pacific private equity firm Affinity Equity Partners and members of the founding Lederer family forUS$1.25b. JBS CEO Wesley Batista said the deal was “strongly aligned” with the company’s global strategy to expand itspresence in the “value-added product category and well-known brands” and would help JBS to “serve the Asian market.”JBS Australia CEO Brent Eastwood noted that there was “a vast opportunity for the export of Australian pork-related smallgoods” while Primo CEO Paul Hitchcock said: “We look forward to being part of JBS and capitalizing on its internationaldistribution network.” Affinity Equity Partner’s Brett Sutton commented that JBS was a “logical” owner for the companyand said: “Primo will be positioned for even stronger growth over the longer term.”1

► JBS has said that it plans to acquire AMSE02 Participações, which controls Brazilian poultry firm Big Frango Group, forBRL430m. The company described the deal as an “important step” in strengthening its position in the Brazilian and globalpoultry markets and noted that Big Frango generated sales of around BRL1b per year.2

► Parmalat, the Italian subsidiary of French dairy firm Groupe Lactalis, has said that it has signed an agreement to acquire thedairy business of Brazilian meat firm BRF for US$700m, “debt and cash free.” The previously announced deal reportedlyincludes 11 production plants in Brazil as well as the Batavo, Elegé, Cotochés, Santa Rosa and DoBon brands, with thepurchase price “subject to adjustments based on debt and working capital levels.”3

► Mondelēz International has announced plans to acquire an 80% stake in the snack food business of Vietnameseconfectionery firm Kinh Do Corporation for US$370m and said that it had the option to buy the remaining shares in thebusiness, which produces mooncakes, biscuits and crackers, one year after the initial purchase. Tim Cofer, Mondelēz EVPand President, Asia Pacific and Eastern Europe, Middle East & Africa, said the “significant investment” would strengthen thecompany’s “core snacking categories in a high-growth dynamic market” and commented: “The opportunity to take strongleadership brands and build on that success is attraction No. 1.” Cofer also noted: “The chance to expand our existingMondelēz brand through their route to market is one that is very attractive.” Meanwhile, Kinh Do Chairman Tran Kim Thanhsaid that deal was “firm recognition” of Kinh Do as a “well-loved brand” that had “earned the trust of consumers over theyears.” Mondelēz said the acquisition was subject to Kinh Do shareholder approval and was expected to close in the secondquarter of 2015.4

► Unilever has announced that it has acquired US packaged gelato maker Talenti Gelato & Sorbetto. The company saidTalenti’s 2014 sales were expected to be worth “more than” US$120m and noted that Talenti was the “best-sellingpackaged gelato” in the US. Unilever North America President Kees Kruythoff described the transaction as “another step” inthe company’s “portfolio transformation” and noted: “The acquisition widens Unilever’s position in the fast-growing gelatomarket with its artisanal offerings and its clear, distinct and recyclable packaging.” Meanwhile, Talenti said the dealprovided it with an “unprecedented opportunity to grow and expand its footprint and reach more consumers.”5

► Hershey has said that it has acquired Canadian confectionery firm The Allan Candy Company, owner of brands includingAllan, Big Foot, Hot Lips and Laces. The company said the acquisition of Allen, the manufacturer of Hershey’s Jolly Rancherhard candy and Lancaster caramels, would “greatly” enhance its business in North America and extend its ability to reachCanadian consumers. SVP Global Sweets & Refreshment Steven Schiller commented: “Allan has been a long-standingsweets manufacturing partner that will strengthen our sales and profit performance.”6

► The UK’s Dairy Crest has said that it has agreed to sell its dairy operations, including factories in Foston, Chadwell Heathand Severnside and a glass bottling site in Hanworth, to a subsidiary of privately owned Germany dairy firm Müller Group forGBP80m. Dairy Crest said the sale to Müller UK & Ireland Group would allow it to focus on its “profitable, predominantlybranded, cheese and spreads operations.” CEO Mark Allen noted that the deal would “create efficiencies in production anddistribution” and enable the dairy business to “compete globally and lead to more innovative products,” while Müller CEO

1 “JBS Buys Australian Meat Producer; Move Comes as Global Food Companies Try to Cater to Asian Demand,” The Wall Street Journal Online, 20 November 2014, via Factiva, © 2014 DowJones & Company, Inc.; “Meat Producer JBS to Pay $1.3 Billion for Primo,” Bloomberg, 21 November 2014, via Factiva, © 2014 BLOOMBERG L.P.; “Brazil’s JBS Revives Strong Appetite forAcquisitions,” Dow Jones Institutional News, 21 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.; “UPDATE 1-Brazil’s JBS says $1.25 bln Primo buy to boost Asian sales,”Reuters News, 21 November 2014, via Factiva, © 2014 Thomson Reuters.2 “Brazil’s JBS Revives Strong Appetite for Acquisitions,” Dow Jones Institutional News, 21 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.; “JBS to snap up Brazilian poultryfirm Big Frango Group,” Just-Food, 21 November 2014, via Factiva, © 2014 Aroq Limited; “UPDATE 1-Brazil's JBS says $1.25 bln Primo buy to boost Asian sales,” Reuters News, 21November 2014, via Factiva, © 2014 Thomson Reuters.3 “Parmalat agrees to buy BRF’s dairy arm for USD 700m,” SeeNews Latin America, 8 December 2014, via Factiva, © 2014 SeeNews; “Parmalat buys BRF’s dairy division in Brazil for 570 mlneur,” 24 Ore Radiocor-Newswire International Edition, 5 December 2014, via Factiva, © 2014 Il Sole 24 Ore- Tutti i diritti riservati.4 “Mondelēz International to Acquire Majority Stake in Vietnam’s Leading Snacks Company,” PR Newswire (U.S.), 11 November 2014, via Factiva, © 2014 PR Newswire Association LLC;“Mondelēz to Buy Stake in Vietnam’s Kinh Do Snack Unit,” Bloomberg, 11 November 2014, via Factiva, © 2014 BLOOMBERG L.P.5 “Unilever Acquires Talenti(R) Gelato & Sorbetto,” Business Wire, 2 December 2014, via Factiva, © 2014 Business Wire; “Talenti(R) Gelato & Sorbetto Joins The Unilever Family,” PR Newswire(U.S.), 2 December 2014, via Factiva, © 2014 PR Newswire Association LLC.6 “Hershey Acquires Iconic Canadian Confectionery Manufacturer Allan Candy Company,” Business Wire, 4 December 2014, via Factiva, © 2014 Business Wire.


Ronald Kers commented: “The dynamics of the UK fresh-milk market are unsustainable for dairy processors in the mid- tolong term and this acquisition will allow us to reduce our costs, increase our efficiencies and invest in the future.” Müllersaid that it expected the deal to take “several months” to close and that it was conditional on competition authority andDairy Crest shareholder approval. Meanwhile, British Dairy Association CEO Judith Bryans commented: “Dairy Crest andMüller are progressive successful dairy businesses and their announcement reflects a sector which has seen anunprecedented level of investment during the last year.”7

► Danone has confirmed the sale of its Danone Dairy Indonesia business to Indolakto, the dairy subsidiary of Indonesia-basedIndofood CBP Sukses Makmur. A Danone spokesperson said that the deal, which includes the Milkuat milk beverage brandand is reportedly valued at US$20.53m, would “ensure the long-term sustainability” of the business. Indofood CBP said thetransaction was “aimed at increasing” production capacity “to meet demand for dairy products in the western part ofIndonesia,” as well as “strengthening” the company’s “position in Indonesia’s dairy industry.” Meanwhile, a spokespersonfor Danone said that fresh dairy represented under 5% of turnover in Indonesia and noted that the company was “marketleader in the waters and early life categories” where it would “pursue its investments “in order to keep growing strongly inIndonesia in the years to come.”8

► Danone’s Board of Directors is reportedly meeting to discuss the future of its medical nutrition unit. According to anunconfirmed report, the Board “could decide to sell or keep the business.” Separately, it was reported that German healthcare group Fresenius and European private equity firm Permira had submitted a joint bid for the unit.9

► United Arab Emirate private equity firm Abraaj Investment Management is reportedly working with Saudi Arabia-basedbeverage firm Al Aujan Industries to “strengthen” its offer for Egyptian biscuit maker Bisco Misr after Kellogg offeredEGP82.2 per share to acquire 100% of Bisco Misr’s shares. Abraaj had earlier raised its initial offer from EGP73.91 toEGP80.58 per share after Kellogg submitted a bid of EGP79 per share. Kellogg said that its offer to acquire “at least themajority” of Bisco Misr was part of its “strategic goal of becoming a global snacks leader.”10

► Nestlé has said that it is “exploring strategic options” for its Davigel unit, which it said “mainly” involved “identifying apartner” to help the French-based frozen and chilled food business “in its next stage of growth.” Davigel, a “leading providerof branded frozen and chilled food products, ice-cream and solutions for out of home in Europe,” reportedly had sales of€700m in 2013 and could be sold for €300m. Spokesperson Chris Hogg noted that Davigel’s business model might “notbenefit” from Nestlé’s “priority investments.”11

► Nestlé and L’Oréal have announced that they plan to end their cosmetic nutritional supplement joint venture Innéov duringthe first quarter of 2015 as the brand had “not met the development expected by both partners.” The companies noted thatthe venture, created in 2002, had a turnover of €52m in 2013 and that both partners would retain the “benefits of theresearch and intellectual property as well as the developments achieved, which could be potentially used in their respectivefields.”12

► China’s Bright Food Group has said that it is looking for acquisitions in the dairy, sugar and wine industries and that it is “indiscussion” with Irish dairy and ingredients firm Glanbia. VP Ge Junjie also said that Bright Food was planning to list UKcereal maker Weetabix in Hong Kong or London, reportedly by 2016, as well as list Manassen Foods Australia and aimed toraise 20%–30% of both companies’ market valuations.13

► Private equity firms Apollo Global Management and C. Dean Metropoulos are reportedly considering a sale of HostessBrands for US$1.7b, including debt. According to an unconfirmed report, the firms have received inquiries from potentialbuyers, have started conversations with investment banks and may put the US snack cakes business on the market in “early2015.”14

7 “Dairy Crest agrees to sell its Dairies operations,” Regulatory News Service, 6 November 2014, via Factiva, © 2014; “Dairy Crest sells dairies unit to Müller,” Financial Times, 6 November2014, © 2014 The Financial Times Ltd.; “Dairy Crest Sells Milk Operations to Rival,” Dow Jones Institutional News, 6 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.8 “UPDATE: Danone plans investment in Indonesia following fresh dairy sale,” Just-Food, 26 November 2014, via Factiva, © 2014 Aroq Limited; “Indofood CBP takes over Danone’s local dairyunit,” The Jakarta Post, 22 November 2014, via Factiva, © 2014 The Jakarta Post; “Indofood ramps up Indonesia acquisitions,” Nikkei Report, 11 December 2014, via Factiva, © 2014 NihonKeizai Shimbun, Inc.9 “Fresenius, Permira Make Joint Bid For Danone Medical Unit — Sources,” Dow Jones Top Global Market Stories, 19 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.; “Danoneboard to meet Thursday on future of medical nutrition unit – source,” Reuters News, 10 December 2014, via Factiva, © 2014 Thomson Reuters.10 “Abraaj teams up with Saudi Al Aujan to boost bid for Egyptian Bisco Misr – Report,” SeeNews Middle East and Africa, 3 December 2014, via Factiva, © 2014 SeeNews; “UPDATE 1-Kelloggraises stakes in bidding war over Egypt’s Bisco Misr,” Reuters News, 30 November 2014, via Factiva, © 2014 Thomson Reuters; “UPDATE 2-Kellogg and Abraaj battle for Egypt’s Bisco Misr,”Reuters News, 26 November 2014, via Factiva, © 2014 Thomson Reuters; “Abraaj Returns With Fresh Bid For Bisco, Tops Kellogg’s Offer,” Ventures Africa, 24 November 2014, via Factiva, ©2014 Ventures Africa; “Dubai’s Abraaj offers USD 118m for food maker Bisco Misr,” SeeNews Middle East and Africa, 4 November 2014, via Factiva, © 2014 SeeNews.11 “Nestlé to explore strategic options for the development of Davigel,” Thomson Reuters ONE, 14 November 2014, via Factiva, © 2014 Thomson Reuters; “Nestlé Explores Sale of Frozen FoodUnit Davigel,” Dow Jones Institutional News, 14 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.12 “L’Oréal and Nestlé announce the project to end the activity of their joint venture Innéov,” Thomson Reuters ONE, 27 November 2014, via Factiva, © 2014 Thomson Reuters.13 “China’s Bright Food Plans Weetabix Food IPO; No Time Frame Provided for Planned Offering,” The Wall Street Journal Online, 6 November 2014, via Factiva, © 2014 Dow Jones & Company,Inc.; “Bright Food Targets Listing Cereal-Maker Weetabix by 2016,” Bloomberg, 6 November 2014, via Factiva, © 2014 BLOOMBERG L.P.14 “Hostess Brands owners to explore sale of Twinkies maker – sources,” Reuters News, 13 November 2014, via Factiva, © 2014 Thomson Reuters; “TALE OF SWEET EQUITY Twinkie maker’ssuccess story is tempting Entenmann’s,” New York Post, 12 November 2014, via Factiva, © 2014 N.Y.P. Holdings, Inc.


Organizational efficiency, pricing and costsavings

► Unilever has said that it will create a separate unit for its North American and European margarine and spreads business,not including Hellmann’s mayonnaise and Marmite sandwich spread. CFO Jean-Marc Huët said the new unit, to be calledUnilever Baking, Cooking and Spreading, would have a dedicated management team and be operational by the middle of2015. Unilever noted: “We are not planning to sell or spin-off spreads. It remains a core part of our business and the cashdelivery is important to us. This proposal is all about reigniting the growth of our spreads business.”15

► General Mills has said that its cost savings program, to streamline its North American supply chain network and reduceoverhead costs which the company earlier said was expected to bring US$40m in savings during fiscal 2015, will generateUS$260m–US$280m in cumulative annual savings by 2016 and “exceed” that level in 2017.16

► Mondelēz has announced plans to invest US$24m to increase capacity by 20% at its confectionery plant in Gebze, Turkey,by adding a new production line as part of the company’s supply chain “reinvention” plan. The company said the expansionto the facility, which produces gum, candy and chocolate for 50 countries, was expected to be completed by the end of2015. Mondelēz Turkey Managing Director Antoine Collette commented: “This new investment enables us to play an evenbigger role in supporting the growth of our global confectionery business.”17

► Unionized employees at four US Kellogg cereal plants have reportedly voted against a proposed new employment contractreached by the company, the union and federal mediators. According to a local report, the proposed agreement includeschanges to “cost-of-living” adjustments, a leave of absence benefit and wages. Bakery, Confectionery, Tobacco Workersand Grain Millers Union International President David Durkee said that Kellogg was “likely” to close two plants if the contractwas “turned down.” Following the vote, Kellogg spokesperson Kris Charles commented: “We are evaluating ourmanufacturing network and working to ensure that we are operating the right number of plants — in the right locations — tobetter meet our current and future production needs, and the evolving needs of our customers.”18

► Unilever has reportedly chosen US enterprise cloud application firm Workday’s Human Capital Management system totransfer its human resources operations “to the cloud.” According to Workday, Unilever will have “real-time analytics intoits global workforce.”19

► Kraft Foods Group has reportedly reduced the number of North America advertising agencies in its roster from “more thana dozen” to four, to “more tightly focus” marketing activities. Kraft commented: “Engaging fewer agencies across theportfolio will allow us to go deeper with our brand assignments, providing efficiencies, scale and rich pools of talent fromeach partner.”20

► Kraft Foods Group has announced plans to increase prices on its US single serve coffee by around 9% for the MaxwellHouse, Gevalia, McCafé and Yuban K-cup packages, effective from 28 December 2014. The company said the increase wasdue to “sustained” raw material price increases and was the “first time” the manufacturer had raised prices on its US single-serve coffee.21

► J. M. Smucker has said that it will increase the price of its single-serve coffee packages by an average of 8% for its Folgers,Folgers Gourmet Selections, Café Bustelo and Millstone brands, effective from 5 January 2015. The company cited “risingcosts” for the increase.22

► Ajinomoto’s Frozen Foods business is reportedly raising prices by 5%–8% for businesses and by 3%–10% for households dueto higher input costs and the “recent rapid fall” of the Japanese yen, effective from 1 February 2015.23

► The UKs Premier Foods has said that it will “simplify” cash payments from suppliers and create “a more conventional typeof discount negotiation” that is based on price, rebates, or lump sums after previously asking suppliers for an “annualvoluntary investment.” CEO Gavin Darby said Premier’s policies had been “widely misunderstood and misinterpreted” andcommented: “Most companies look for value from their suppliers and will commonly negotiate discounts or lump sums

15 “Unilever to run spreads business as a separate unit,” Financial Times, 4 December 2014, © 2014 The Financial Times Ltd.; “Unilever to Separate Spreads Division — 2nd Update,” Dow JonesInstitutional News, 4 December 2014, via Factiva, © 2014 Dow Jones & Company, Inc.; “Unilever To Separate Spreads Business – Update,” RTT News, 4 December 2014, via Factiva, © 2014NoticiasFinancieras.16 “General Mills Updates Targets For Fiscal 2015 Growth And Multi-Year Cost Savings Initiatives,” PR Newswire (U.S.), 7 November 2014, via Factiva, © 2014 PR Newswire Association LLC.17 “Mondelēz International to Invest $24 Million to Expand Confectionery Plant in Turkey,” PR Newswire (U.S.), 13 November 2014, via Factiva, © 2014 PR Newswire Association LLC.18 “Kellogg union rejected proposed contract,” The Commercial Appeal, 9 December 2014, via Factiva, © 2014 Scripps Howard Publishing, Inc.; “Kellogg’s union rejects concessions,” TheCommercial Appeal, 10 December 2014, via Factiva, © 2014 Scripps Howard Publishing, Inc.19 “Unilever moves its HR system to the cloud with Workday HCM,” Computing, 4 November 2014, via Factiva, © 2014 Incisive Media Investments Limited.20 “Kraft Foods cuts down its ad agency roster,” Chicago Business Journal Online, 10 November 2014, via Factiva, © 2014 American City Business Journals, Inc.; “Kraft Consolidates To FourCreative Shops,” MediaPost.com, 10 November 2014, via Factiva, © 2014 MediaPost.com.21 “UPDATE 1-Kraft to raise K-Cup coffee prices for first time,” Reuters News, 3 December 2014, via Factiva, © 2014 Thomson Reuters.22 “J.M. Smucker to Raise Single-Serve Coffee Pack Prices by 8%,” Dow Jones Institutional News, 10 December 2014, via Factiva, © 2014 Dow Jones & Company, Inc.23 “Ajinomoto to Mark Up Frozen Foods for Households,” Jiji Press English News Service, 9 November 2014, via Factiva, © 2014 Jiji Press, Ltd.; “Ajinomoto to Raise Frozen Food Prices inFeb.,” Jiji Press English News Service, 4 November 2014, via Factiva, © 2014 Jiji Press, Ltd.


wherever they can.” Darby noted: “The most important aspect for us is that we continue to develop strategic supplierpartnerships that are focused on delivering mutual growth.” Earlier, Simon Walker, Director General of the UK’s Institute ofDirectors, said that “the news that Premier Foods could be forcing its suppliers into controversial ‘pay to stay’arrangements” was “deeply disturbing” while Mike Cherry, National Policy Chairman for the Federation of Small Businesses,said: “It’s abundantly clear from their comments that Premier Foods still doesn’t get how serious and untenable this kind ofattitude is towards their supply chain.” The UK Department for Business, Innovation and Skills said that the government had“already taken action on the issue of supplier lists,” noting the Grocery Supply Code, and commented: “We are concernedby recent reports, and are consulting to assess the evidence so we can establish what more we can do.”24

Innovation and digital

► Unilever has announced the Philippine launch of Unilever Foundry, the platform that provides a “single entry point” for“innovative start-ups” looking to partner with the company. Unilever reportedly selected the Philippines as its “second”launch country, following the UK, because of its “vibrant energy in the startup community and the huge market for suchapplications” and has selected six participants, including scheduling and messaging app MyChild, online energy usagemonitoring system WattSmart, real-time alert app Mobkard, brand analysis platform Senti, sustainable alterative lightingmanufacturer Salt and data management firm Codnex.25

► Unilever and GroupM, part of global advertising firm WPP, are reportedly asking online publishers to adopt new standardsfor online video, including that “at least” 50% of the video is played when 100% of the player is “in view,” that the video’ssound is turned “on,” and that the viewer “clicks to start it, rather than it playing automatically.” The two companies arealso reportedly requesting that online display advertisements be 100% “viewable in a browser.” Unilever Americas VP MediaRob Master commented that the “frequency and volume” of online display and video advertisements were “not issues” andsaid: “There’s an unbelievable amount of inventory, and if it’s not viewed by a human, we want it out of the marketplace.”26

► Mondelēz has commented on its use of “personalized” video campaigns, including Facebook photos, in Australia and India.Senior Director Global Communications Planning and Media Josep Hernandez said that the marketing program for itsCadbury chocolate brand provided a “boost” to product innovation and noted: “We believe that personalization can enhancethe overall product experience — particularly in gifting.” Mondelēz reportedly plans to expand its use of personalized videocampaigns “worldwide” following the “success” of the program which included a reported 65% “click-through” rate inAustralia.27

► The UK Advertising Standards Authority (ASA) has said that a set of five Mondelēz YouTube advertisements, that promotedthe Oreo brand and featured sponsored “vloggers,” had not clearly indicated the commercial relationship between thecompany and the vloggers. The ASA said that as the advertisements were “online video channels that were usually non-promotional, the commercial intent should have been made clear before viewers clicked on the content.” In response,Mondelēz commented that it was “disappointed” with the ruling and said: “We accept the ASA ruling and will ensure theadverts will not appear in their current format again.”28

► Nestlé’s Mexican subsidiary has apologized for an “unauthorized” posting on its local Twitter account for Nestlé’s Crunchcandy bar that was related to 43 students that are missing in the country. The company said: “Once more we offer thesincerest apology for this offensive tweet which is completely contrary to our values.”29

► Hershey has announced a “new concept” for the candy section at Bi-Lo Holdings’ Winn-Dixie US supermarket in BatonRouge, Louisiana, which it said had committed to the new design for one year. Described as a “store within a store,”Hershey said the new “Candy Experience” included a set of circular displays located at the front of the store that madecandy shopping “more convenient and memorable.” Senior Director of Retail Evolution Frank Jimenez commented: “We

24 “Premier Foods refines ‘Invest for Growth’ programme,” ENP Newswire, 8 December 2014, via Factiva, © 2014 Electronic News Publishing; “Premier Foods vows to ‘simplify’ supplierpayments,” Financial Times, 7 December 2014, © 2014 The Financial Times Ltd.; “FURY AT PREMIER ‘PAY TO STAY’ MOVE,” Press Association National Newswire, 5 December 2014, viaFactiva, © 2014 The Press Association; “Premier is shot down for ’pointing gun’ at suppliers,” Independent Online, 5 December 2014, via Factiva, © 2014 Independent Print Ltd.25 “Unilever forges partnerships with local startups,” The Philippine Star, 1 December 2014, via Factiva, © 2014 Philstar Global Corporation; “Unilever launches Foundry in the Philippines,”Business Mirror, 24 November 2014, via Factiva, © 2014 Business Mirror.26 “UNILEVER: WE WANT OUR ONLINE ADS SEEN BY HUMANS; Marketer espouses more stringent viewability rules than the ones established by trade groups of which it is a part; move castsdoubt on viability of industry’s current standards,” Advertising Age, 17 November 2014, via Factiva, © 2014 Crain Communications, Inc.; “Unilever Wants To Pay Only For Online Ads PeopleActually See,” MediaPost.com, 11 November 2014, via Factiva, © 2014 MediaPost.com.27 “Mondelēz International Leverages Idomoo Personalized Video to Delight Cadbury Chocolate Consumers across the Globe,” PR Newswire (U.S.), 12 November 2014, via Factiva, © 2014 PRNewswire Association LLC.28 “Advertising watchdog takes on YouTube vloggers over paid-for videos,” Independent Online, 27 November 2014, via Factiva, © 2014 Independent Print Ltd.; “Comment: Mondelēz digitalstrategy suffers blow with UK ruling,” Just-Food, 28 November 2014, via Factiva, © 2014 Aroq Limited; “Vloggers ordered to stop disguising product placement,” The Times, 27 November2014, via Factiva, © 2014 Times Newspapers Limited 2014; “UK advertising watchdog raps YouTube stars over Oreo video,” Financial Times, 26 November 2014, © 2014 The Financial TimesLtd.29 “Nestlé apologizes for Tweet about missing Mexico students,” Reuters News, 10 November 2014, via Factiva, © 2014 Thomson Reuters; “Nestlé tweeted a joke about the 43 studentsmissing and presumed dead in Mexico: ‘They crunched’; It’s unclear how the tweet happened. But it is clear that brands should stop trying so hard to be quote-unquote friendly,”WashingtonPost.com, 11 November 2014, via Factiva, © 2014 The Washington Post Co.; “Nestlé apologises after tweet likens missing Mexican students to ‘crunchy’ chocolate bar,”Independent Online, 11 November 2014, via Factiva, © 2014 Independent Print Ltd.


anticipate it will be a game changer and we look forward to working with Winn-Dixie to roll it out at other stores andbeginning to ignite a change in how candy is displayed and sold across the grocery channel.”30

► US yogurt maker Chobani has announced the launch of a “food incubator” in New York City, including a commercial kitchen,office space and training programs to support “emerging food entrepreneurs.” The company said that it would select “upto” 10 companies to participate in its first six month program. Founder and CEO Hamdi Ulukaya said: “Today we’re openingour doors to entrepreneurs who share our vision for better food for tomorrow — food that’s natural and affordable.”31

Health and wellness

► Hershey has said that it is “exploring” the replacement of high fructose corn syrup with sugar in “some” of its products.Chief Research and Development Officer Will Papa said: “We take into account what consumers want. And consumers aretelling us between the two, they prefer sugar.” The company noted that work was “just underway” to replace high fructosecorn syrup and that it aimed to be “transparent” with its consumers about the ingredients used in its products.32

► Nestlé has said that it is looking to identify “natural substances” that can stimulate the enzyme AMPK which the companysaid acted as a “master switch” to regulate metabolism. Nestlé Institute of Health Sciences Head of Diabetes and CircadianRhythms Kei Sakamoto said the goal was to develop products that would “help promote and augment the effects ofexercise.”33

► US snack food company Corazonas Foods has announced the North American launch of a snack food product containing a“cholesterol lowering non-GMO plant sterol.” The company said the Heartbar Oatmeal squares contained the new functionalfood ingredient Protanica developed by sterol manufacturer Arboris. Corazonas VP of Marketing Michelle Canellopoulosnoted that the oatmeal squares provided consumers with “the continued benefit of proven heart-healthy foods extended toa non-GMO offering.”34

► Nestlé has announced that its new Gluten Free Corn Flakes product will be placed “next to traditional cereals” at UKretailers in what it described as “a breakthrough in the availability of gluten-free cereal products.” The company said thatthe gluten-free cereals market was “growing significantly” and that its new cereal, in traditional and honey varieties, had a“mainstream” price of GBP1.99 and GBP2.19. David Homer, CEO of Nestlé and General Mills joint venture Cereal PartnersWorldwide, commented: “We are extremely pleased that Nestlé Gluten Free Corn Flakes will be available in the mainstreamcereal aisle at a competitive price, which, for the first time, makes a gluten-free breakfast cereal accessible to everyone.”35

► Danone and General Mills have responded to a “formal complaint,” filed with the US Food and Drug Administration by USfood and farm policy research group The Cornucopia Institute, alleging that their products are “misleading” parents lookingfor “healthier” foods. The institute said that yogurt products were “loaded with sugar,” contained “questionably safeartificial sweeteners, colors and emulsifiers” and included ingredients that violated “the legal standard of identity forproducts labeled as yogurt.” General Mills said that it “routinely” recommended organic over alternatives and offered“organic choices” in many of its product categories while Danone commented: “We make a huge range of nutrient-densevarieties of yogurt to fulfill different needs and preferences.”36

Food safety and security

► Fonterra has responded to a new report from the New Zealand government inquiry into its 2013 recall of potentiallycontaminated whey protein concentrate. The report said that Fonterra had a “lack of adequate escalation procedures” toaddress food safety issues and described the company’s response as a “public relations disaster.” The report also notedthat Fonterra “did not effectively co-ordinate its actions with those of the Ministry, Danone and the Government during the

30 “The Hershey Company Unwraps Dramatically Different ‘Candy Experience’ at Winn-Dixie; Invests in the Future of the Candy Aisle Beyond Center Store,” Business Wire, 19 November 2014,via Factiva, © 2014 Business Wire.31 “Chobani Shakes Up Food Industry with Launch of Food Incubator,” PR Newswire (U.S.), 11 November 2014, via Factiva, © 2014 PR Newswire Association LLC.32 “Correction: Hershey-Sweetener story,” Associated Press Newswires, 4 December 2014, via Factiva, © 2014 The Associated Press; “Hershey mulling sugar switch,” Just-Food, 5 December2014, via Factiva, © 2014 Aroq Limited; “Hershey looks to swap corn syrup for sugar to satisfy buyers,” Reuters News, 2 December 2014, via Factiva, © 2014 Thomson Reuters.33 “Exercise in a Bottle Is Next Food Frontier for Nestlé,” Bloomberg, 19 November 2014, via Factiva, © 2014 BLOOMBERG L.P.; “Nestlé goes in search of the sip-yourself-slim drink,” TheIndependent, 21 November 2014, via Factiva, © 2014 Independent Print Ltd.34 “New Corazonas Heartbar Oatmeal Squares Become “Heart-Healthier” with Addition of Protanica Non-GMO Plant Sterols,” Business Wire, 4 December 2014, via Factiva, © 2014 BusinessWire.35 “Gluten-free Goes Mainstream With Breakthrough Cereal Launch by Nestlé,” PR Newswire (U.S.), 5 November 2014, via Factiva, © 2014 PR Newswire Association LLC.36 “Danone, General Mills, Chobani “misleading parents”,” Just-Food, 21 November 2014, via Factiva, © 2014 Aroq Limited; “How big brands turned yogurt into junk food,” Penton Insight, 21November 2014, via Factiva, © 2014 Penton Business Media.


crisis” and said that the Ministry for Primary Industries had “no single, coherent (or reviewed or rehearsed) crisis plan for afood incident that it could implement straight away.” Fonterra CEO Theo Spierings said that “food safety and quality” werethe company’s “number one priority” and commented: “The report reaffirms many of the findings of our own operationalreview and the board’s independent inquiry undertaken last year.”37

► China National Cereals, Oil and Foodstuffs (COFCO) has commented on its new agreement, which includes New Zealandgovernment food safety firm AsureQuality, to bring “best practice in food safety and quality” to China. COFCO ChairmanFrank Ning said: “As China’s biggest integrated food and agricultural products supplier, we have a responsibility to ensuretrust in China’s food safety and quality – and we have a strong platform on which to do just that.”38

Focus on genetically modified organisms

► The European Parliament’s Environmental Committee has approved a plan permitting EU nations to “ban” the cultivation ofcrops containing genetically modified organisms (GMOs). EU member states reportedly have the opportunity for “furtherdiscussions” on the plan before it returns to European Parliament for approval. The committee also said that European FoodSafety Authority risk assessments should “take account of the direct, indirect, immediate, delayed and cumulative effects ofGMOs on human health and the environment, and always take account of the precautionary principle.” Marco Contiero, EUAgriculture Policy Director for Environmental campaign group Greenpeace, commented: “Today’s vote would give Europeancountries a legally solid right to ban GMO cultivation in their territory, making it difficult for the biotech industry tochallenge such bans in court.” Beat Spath, Director for Agricultural Biotechnology at EuropaBio, the European Associationfor Bioindustries, said that ”rejecting modern technologies on non-scientific grounds” set a “dangerous precedent for theinternal market” and sent a “negative signal for innovative industries worldwide considering whether or not to invest andoperate in Europe,” noting: “European farmers have lost their freedom to choose.”39

► The US Grocery Manufacturer’s Association (GMA) has commented on the “defeat” of proposals in the US states ofColorado and Oregon that would have required the labeling of foods made with genetically modified ingredients. GMA VP ofGovernment Affairs Michael Gruber said the GMA was “very pleased,” while noting that the “victories” were “a bit hollow”and commenting: “To be drawn in to these ballot initiatives is unpleasant and draws criticism.” Gruber also noted the“tremendous cost” to the food industry.40

► A US federal court judge has reportedly delayed implementation of a measure passed by voters in Maui County, Hawaii, inNovember 2014 until arguments are considered regarding a lawsuit against the measure which would have “temporarily”banned GMO crop cultivation. This followed a lawsuit filed by businesses including US agribusiness group Monsanto.Monsanto Hawaii VP of Business and Technology John Purcell said: “This local referendum interferes with and conflicts withlong established state and federal laws that support both the safety and lawful cultivation of GMO plants.”41

Litigation and regulation

► Unilever has confirmed that it has filed a lawsuit against the advertising used by US food company Hampton Creek Foods forits Just Mayo product, which is made with yellow peas and does not contain eggs. A Unilever spokesperson said the JustMayo name was “blatantly” misleading to consumers and commented: “In fact, the product is Just NOT Mayo as it does notcontain one of mayonnaise’s key ingredients — eggs — in violation of the federal regulations that are in place to protectconsumers.” Unilever said that the product’s “literally–false name” and “unsubstantiated superiority claims” had led to“consumer deception and serious, irreparable harm to Unilever and to the product category.” Hampton Creek Founder andCEO Josh Tetrick commented that the lawsuit provided “the opportunity to talk about the things that matter,” noting that

37 “Report: Fonterra lacked plan,” The New Zealand Herald, 10 December 2014, via Factiva, © 2014 The New Zealand Herald; “Fonterra slammed in final botulism report,” Just-Food, 11December 2014, via Factiva, © 2014 Aroq Limited; “REPORT SAYS FONTERRA AT FAULT,” The Press (Christchurch), 10 December 2014, via Factiva, © 2014 Fairfax New Zealand Limited.38 “New agreement aims to improve food safety in China,” Fuseworks Media, 9 November 2014, via Factiva, © 2014 Fuseworks Limited; “New Zealand to help Chinese food giant in safety,”Xinhua News Agency, 10 November 2014, via Factiva, © 2014 Xinhua News Agency.39 “New EU GMO food rules get European Parliament nod,” Agence France Presse, 11 November 2014, via Factiva, © 2014 Agence France Presse; “European Parliament Panel Backs FlexibilityFor EU Nations To Ban GMO Crops,” RTT News, 11 November 2014, via Factiva, © 2014 NoticiasFinancieras; “EU moves step closer to law on national GMO crop bans,” Reuters News, 11November 2014, via Factiva, © 2014 Thomson Reuters; “EUROPABIO -Non Cultivation Agreement on Genetically Modified Crops Undermines Innovation and the Single Market,” ENP Newswire,5 December 2014, via Factiva, © 2014 Electronic News Publishing.40 “Food Industry Wins Round in GMO-Labeling Fight; Ballot Measures to Require Labeling Were Defeated in Colorado, Oregon,” The Wall Street Journal Online, 5 November 2014, via Factiva, ©2014 Dow Jones & Company, Inc.; “Food Industry Wins Two GMO Labeling Battles, But The Consumer Perception War Stretches Ahead,” MediaPost.com, 6 November 2014, via Factiva, ©2014 MediaPost.com; “Industry stakeholders react to election results,” Supermarket News, 5 November 2014, via Factiva, © 2014 Penton Business Media.41 “Maui votes to ban genetically modified organisms,” Associated Press Newswires, 5 November 2014, via Factiva, © 2014 The Associated Press; “Judge blocks Maui County fromimplementing GMO law,” St. Louis Post-Dispatch, 16 November 2014, via Factiva, © 2014 St. Louis Post-Dispatch; “Monsanto files suit in effort to block Maui’s GMO moratorium,”Honolulu Star-Advertiser, 13 November 2014, via Factiva, © 2014 Honolulu Star-Advertiser; “Allies to apply to courts to strike Maui GMO ban,” Honolulu Star-Advertiser, 6 November 2014, viaFactiva, © 2014 Honolulu Star-Advertiser.


“change” was needed in “food production generally” and commenting: “We’ve got to figure out a way to solve the bigproblems like food’s impact on environment and health.”42

► General Mills has reportedly settled a US consumer lawsuit over the labeling of some of its Nature Valley products as “100%Natural.” According to US consumer advocacy group Center for Science in the Public Interest, General Mills has agreed notto use the “100% Natural” claim on products that contain processed ingredients such as high maltose corn syrup, dextrosemonohydrate, maltodextrin and soy protein isolate. According to The Wall Street Journal, a General Mills spokesperson saidthe company had “agreed to the settlement to avoid further litigation” and had “no plans to change its current labels.”43

► The Singapore High Court has dismissed a lawsuit brought by Nestlé against local food company Petra Foods for allegedtrademark infringement of its Kit Kat chocolate bars, ruling in favor of Petra’s counter lawsuit to invalidate Nestlé’strademark registration for the chocolate bar’s shape. Judge Chan Seng Onn said: “Imitation is no less a valid businessstrategy than innovation. There is nothing unconscionable about competition. Even if the defendants did copy, it is notwrong unless such copying impinges the plaintiff’s legal rights.” Onn also commented that trademark law “should not bemisused to unjustifiably set up additional barriers of entry and impede the freedom of competition.” A Nestlé spokespersonsaid that the company was “disappointed” in the decision and would “in all likelihood appeal it.”44

► The European Commission is reportedly creating a database of EU and national labeling rules which is expected to becompleted prior to December 2016, when new rules on the labeling of nutritional value of food products become effective.A commission official noted that the system would also help small-and-medium-sized enterprises to “cope with the burdenof calculating the required nutritional values.”45

Focus on emerging markets

► Danone and PepsiCo have responded to a statement by Russian Agriculture Minister Nikolai Fyodorov that dairy productsfrom Danone’s Unimilk and PepsiCo’s Wimm-Bill-Dann contain “only 10%-20%” milk. Fyodorov reportedly commented: “Inthese products a maximum of 20% comes from real milk — the rest is a processed milk mixture with coconut, palm oil andother additives.” Danone said: “We are not only outraged by such statements from an official but view them as a directslander, causing harm to our reputation both in Russia and in the whole world.” The company also noted: “Danone Russiasets the quality and safety standards for the entire sector, as has been demonstrated again and again during inspections byRospotrebnadzor and other regulatory bodies.” Meanwhile, PepsiCo stated: “Our products and practices fully comply withRussian legislation and we use cow’s milk.” CCI France Russie, the Franco-Russian Chamber of Commerce, said thatFyodorov’s comments were his “personal opinion” and stated: “The Franco-Russian business community is confident thatthe personal points of view expressed during the visit to Omsk does not in any way reflect the official position of the Russiangovernment, which is the guarantor of stability in the country's business climate.”46

► FrieslandCampina has commented on the impact of Russian restrictions on EU food products. The company is reportedlyselling cheese intended for Russia to “industrial” customers and noted that the price of cheese sold to manufacturers hadfallen by 20%–25%. Export Managing Director Cees Ruijgrok said: “It’s not a market we are aiming for. We sell good-qualitynatural cheeses in most markets and all of a sudden you are pushed into the unbranded commodity sector.”47

► Unilever is reportedly planning to invest US$120m over six years to expand and upgrade the processing, filling andpackaging operations of its food, personal care and home care manufacturing facilities in the Philippines. According to localreports, US$90m of the planned investment will be used for new equipment to increase the company’s 100,000 ton annualproduction capacity by 30% by 2020.48

42 “Vegan mayonnaise maker sued by food giant Unilever,” latimes.com, 10 November 2014, via Factiva, © 2014 Los Angeles Times Communications LLC; “Big Food’s weird war over themeaning of mayonnaise, America’s top condiment,” Washington Post.com, 10 November 2014, via Factiva, © 2014 The Washington Post Co.; “Unilever, Hampton Creek set for court over“false” mayo,” Just-Food, 12 November 2014, via Factiva, © 2014 Aroq Limited; “Unilever wants startup to hold the mayo claim,” St. Paul Pioneer Press, 11 November 2014, via Factiva, ©2014 NewsBank; “Unilever takes on food start-up Hampton Creek in court,” Financial Times, 10 November 2014, © 2014 The Financial Times Ltd.43 “General Mills Settles Lawsuit Over ‘100% Natural’ Claim,” RTT News, 18 November 2014, via Factiva, © 2014 NoticiasFinancieras; “General Mills in Settlement Over ‘100% Natural’ Claim;Concession Comes Amid Battle Over How to Define Natural Foods,” The Wall Street Journal Online, 18 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.44 “Sweet victory for Petra Foods,” Business Times Singapore, 29 November 2014, via Factiva, © 2014 Singapore Press Holdings Limited; “Singapore’s food-maker wins chocolate bar disputewith Nestlé – Business Times,” Reuters News, 29 November 2014, via Factiva, © 2014 Thomson Reuters; “Nestlé loses Petra Kit-Kat copycat case in Singapore,” Just-Food, 4 December 2014,via Factiva, © 2014 Aroq Limited.45 “EU prepares database on new food information rules,” Just-Food, 11 December 2014, via Factiva, © 2014 Aroq Limited.46 “Danone and PepsiCo targeted in Russia crackdown,” Financial Times, 30 November 2014, © 2014 Financial Times Ltd.; “Danone offended by Russian agriculture minister’s statement,”Interfax: Russia & CIS General Newswire, 30 November 2014, via Factiva, © 2014 Interfax Information Services, B.V.; “Danone says ‘insulted’ by Russian minister’s adulterated milk claim,”Agence France Presse, 30 November 2014, via Factiva, © 2014 Agence France-Presse; “PepsiCo, Danone rebuff Russian dairy quality attack,” Just-Food, 3 December 2014, via Factiva, ©2014 Aroq Limited; “French chamber of commerce: Russian minister’s criticism of Danone ‘personal opinion’,” Interfax: Russia & CIS General Newswire, 2 December 2014, via Factiva, © 2014Interfax Information Services, B.V.47 “SIAL 2014: FrieslandCampina navigates challenging year for dairy,” Just-Food, 14 November 2014, via Factiva, © 2014 Aroq Limited.48 “Unilever to invest $120M to upgrade Philippine manufacturing facilities,” Business Mirror, 16 November 2014, via Factiva, © 2014 Business Mirror; “Unilever sets $120-M expansion in PH,”Manila Bulletin, 17 November 2014, via Factiva, © 2014 Manila Bulletin Publishing Corp.


► H. J. Heinz has announced the opening of a new, 80,000 square meter infant cereal factory in Foshan City, GuangdongProvince in China that it described as the “largest infant cereal production plant in the world.” The company said the facilitywould “significantly increase” its production in China and included “advanced” technologies that would “enhance productionspeed” and ensure “stringent quality controls.” CEO Bernardo Hees said Heinz planned to increase its investment in thecountry and would introduce “more products,” noting: “Chinese parents are more willing to spend on baby food. It has laid asolid foundation for us to expand production capacity in China.”49

► ConAgra Foods has said that its Lamb Weston foodservice businesses’ “dual sourcing” model, which provides frozen potatoproducts from both North America and Europe, means that it is “well positioned to meet customers’ emerging marketgrowth.” ConAgra Private Brands and Commercial Foods President Paul Maass noted that local sourcing and productionwould “play an important role” for countries such as China where ConAgra said it expected “the most growth.”50

► Australia-based Hope Dairies, majority owned by Australian mineral exploration and development firm Hancock Prospecting,has announced a AUD500m deal to export “up to” 30,000 metric tons of infant formula per year to China through anagreement with the Queensland Government. The company said that it planned to acquire 5,000 hectares of farmland inQueensland and produce infant formula and ultra-high temperature milk for export by 2016. Hancock majority owner GinaRinehart commented: “Australia has some of the finest agricultural products in the world and we need to position ourselvesto meet the demands of our region.” Hope Dairies’ Chinese partner in the venture is reportedly state-owned China NationalMachinery Industry Corporation, which has interests in farming machinery.51

► Hershey has said that it expects its business in China to generate “over” US$1b in sales by 2020. President and CEO J. P.Bilbrey said: “In 2015 — sooner than we thought — China is our second–largest country in the world and continues to be oneof our fastest growing markets.” Separately, the company said that it expected chocolate growth in China to come from the“high–end” segment. International President Humberto Alfonso commented: “Though there is intense competition fromseveral local brands in the Chinese market, we are confident of sustained growth as we believe that more Chineseconsumers will purchase high–quality and high–priced products from premium global brands.” Hershey noted that itmanufactured its products for China locally and had added “more local tastes and flavor.”52

► Hershey President and CEO J. P. Bilbrey has commented on his appointment to the US President’s Advisory Council onDoing Business in Africa. Bilbrey said it was “a great honor” to have been selected to the 15 member council, which Hersheysaid was focused on “strengthening” US commercial relationships in Africa, and commented: “Africa is home to some of thefastest growing economies and represents an exciting opportunity for our government and US businesses.”53

► Mars’ Saudi Arabian subsidiary has announced the opening of a new US$80m chocolate factory in King Abdullah EconomicCity, Rabigh, to manufacture its Galaxy brand. The company said that it also planned to invest an additional US$150m toexpand the facility’s annual capacity from 15,000 to 100,000 tons over the next ten years. Mars Middle East, Turkey andAfrica President Sami Darouni commented: “This factory reaffirms our long term commitment to this market, and we arepleased to have the opportunity to invest in the development of local talent.”54

► Mars has said that it plans to invest US$60m to expand its Dubai plant in the United Arab Emirates, adding a Snickersproduction line to increase production at the Jebel Ali Free Zone facility from 60,000 to 100,000 tons per year.55

► BRF has announced the opening of a US$160m processed food plant in Abu Dhabi, United Arab Emirates. According to localreports, the new 162,000 square meter facility, which is reportedly BRF’s first in the Middle East, will support 1,400employees and produce 70,000 tons of product annually, including breaded items, pizzas and burgers. Chairman AbilioDiniz said the new plant represented “one of the key foundations of BRF’s strategy of commitment and investment to theMiddle East region, a fast growing market that is most strategically placed for the internationalization process of BRFproducts.”56

► Nestlé’s Indian subsidiary has said that it will “continue to invest” in the country. Nestlé India Managing Director and Head ofSouth Asia Region Etienne Benet said that “nutrition, health and wellness” was its “core driver for the future” in India and

49 “Heinz Opens State-of-the-Art Infant Cereal Factory in China,” Business Wire, 2 December 2014, via Factiva, © 2014 Business Wire; “Heinz to step up investment in infant products,” ChinaDaily, 4 December 2014, via Factiva, © 2014 China Daily Information Company.50 “ConAgra Foods’ European Joint Venture to Expand Potato Processing Operations in Netherlands,” Business Wire, 4 December 2014, via Factiva, © 2014 Business Wire.51 “QLD:Rinehart finalizes $500M Chinese milk deal,” Australian Associated Press General News, 15 November 2014, via Factiva, © 2014 Australian Associated Press Pty Ltd.; “China’s HungryInfants Sought in Rinehart Formula Switch,” Bloomberg, 14 November 2014, via Factiva, © 2014 BLOOMBERG L.P.; “Rinehart’s Formula For Success: Feed the Babies,” Barron’s Online, 16November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.; “Australian tycoon to build giant dairy farm for exports to China,” Reuters News, 15 November 2014, via Factiva, © 2014Thomson Reuters.52 “Hershey hits sweet spot in China market,” China Daily–US Edition, 10 November 2014, via Factiva, © 2014 China Daily Information Company; “Sweet times lie ahead for Hershey’s,” ChinaDaily, 21 November 2014, via Factiva, © 2014 China Daily Information Company.53 “Hershey CEO J.P. Bilbrey Appointed to President Obama’s Advisory Council on Advancing Business Priorities in Africa,” Business Wire, 7 November 2014, via Factiva, © 2014 BusinessWire.54 “Mars Launches State Of The Art Manufacturing Facility In Saudi Arabia; A manufacturing facility built to LEED Gold standards promises to develop and nurture Saudi talent,” ENP Newswire,8 December 2014, via Factiva, © 2014 Electronic News Publishing; “US Mars to increase investments in Saudi,” Middle East North Africa Financial Network (MENAFN), 4 December 2014, viaFactiva, © 2014 Middle East North Africa Financial Network, Inc.55 “Mars to invest USD60m in expanding Dubai factory,” Middle East North Africa Financial Network (MENAFN), 8 December 2014, via Factiva, © 2014 Middle East North Africa FinancialNetwork, Inc.56 “BRF opens new food processing factory in Abu Dhabi,” TradeArabia, 27 November 2014, via Factiva, © 2014 Al Hilal Publishing & Marketing Group; “FOOD: BRF opens first factory in theMiddle East,” Investimentos e Notícias (Real Time), 1 December 2014, via Factiva, © 2014 Investimentos e Notícias.


commented: “We as a company have recognized the value of nutrition, health and wellness and are working towardsbecoming a credible player in this segment, both globally as well as in India.”57

Focus on mature markets

► Mondelēz has announced plans to spend US$50m in 2015 to add two new Tassimo coffee capsule production lines at itsBanbury, UK factory, as part of the company’s “multi–year” US$1.5b investment in European manufacturing. The companysaid the capsules would be distributed in the UK and exported to France and Spain. Paul Sinclair, Head of Manufacturing atthe Banbury site, said the UK continued to be “a prime location for large scale manufacturing” while Mondelēz Europe SVP,Integrated Supply Chain Phil Hodges commented: “The proposed investment is part of our vision to manufacture ourproducts on state–of–the–art lines that will enable us to meet growing demand while increasing our competitiveness.”58

► ConAgra Foods has said that its joint venture with Netherlands-based Meijer Frozen Food will invest US$150m to expand afrozen potato plant in Bergen op Zoom, Netherlands to increase capacity for french fries and premium frozen potatoproducts. The company said the new Lamb Weston/Meijer line would be operational in “mid-2016” and supportedConAgra’s strategy to “grow” its international business.59

► Unilever has reported that it has completed a 250,000 square foot expansion of its US spreads manufacturing plant in NewCentury, Kansas, as part of an earlier announced US$152.5m investment, and said that it was “halfway” through itsinvestment in new equipment and technology at the facility. Unilever Foods North America VP Mike Flaherty noted that anew “cool blending” technology enabled Unilever to blend ingredients at low temperatures to make spreads that tasted“absolutely amazing, without any of the artificial stuff.”60

► General Mills has announced the US re-launch of French Toast Crunch, a cereal discontinued in 2006, after receiving“thousands” of online petitions from consumers requesting its return. The company, which said the cereal would beavailable at “select” retailers from mid-December 2014 and across the US by mid-January 2015, reportedly confirmed thatit had reduced sugar content and increased whole grains content while retaining the “same taste” and “nearly the samepackaging.” Marketing Manager Waylon Good commented: “All of the conversations, requests and passion from the fansreally got our attention.” Good also reportedly noted: “Nostalgia is powerful, particularly among millennials.”61

Sustainability and social responsibility

► Campbell Soup has commented on the 2013 establishment of its Plum Organics US organic baby food subsidiary as a“Benefit Corporation,” a legal status that the company said balanced “the economic interests of shareholders” and the“public benefit.” Campbell spokesperson Carla Burigatto noted that Campbell and Plum were “consumer-centric” companieswith “deep social responsibility commitments” and commented: “Campbell was supportive of Plum reincorporating as aPublic Benefit Corporation, as their mission-driven business is one of the many attributes that we liked and that we believemade Plum a great match with Campbell.”62

► Mondelēz has announced “steps” to evaluate the impact of its Coffee Made Happy sustainability program. The company saidthat it was partnering with the global consortium Committee on Sustainability Assessment to create a framework with an“outcome–based” approach, including annual reporting and final impact assessments, and had created an independentadvisory board to guide the reporting and program investment. Coffee President Roland Weening commented: “Ourevaluation framework drives impactful investment, unprecedented levels of transparency and — because we source from theprojects where we invest — ensures accountability to our partners and our consumers.”63

► Nestlé’s Kenyan subsidiary and Kenyan agribusiness service provider Coffee Management Services have reportedly saidthat the nine farmer cooperative groups in Kenya’s Kiambu, Murang’a, Kirinyaga, Nyeri, Embu and Meru counties that have

57 “Nestlé to strengthen India presence,” Press Trust of India, 5 November 2014, via Factiva, © 2014 The Press Trust of India Limited; “’Nestlé India looking to expand footprint in health,wellness and nutrition segments’,” Business Standard, 5 November 2014, via Factiva, © 2014 Business Standard Ltd.58 “Mondelēz International Announces $50 Million Investment Opportunity for UK Coffee Site,” PR Newswire (U.S.), 7 November 2014, via Factiva, © 2014 PR Newswire Association LLC.59 “ConAgra Foods’ European Joint Venture to Expand Potato Processing Operations in Netherlands,” Business Wire, 4 December 2014, via Factiva, © 2014 Business Wire.60 “Unilever’s $153M investment in Kansas will spread nationwide,” Kansas City Business Journal Online, 18 November 2014, via Factiva, © 2014 American City Business Journals, Inc.61 “French Toast Crunch Cereal Makes Slammin’ Return,” PR Newswire (U.S.), 8 December 2014, via Factiva, © 2014 PR Newswire Association LLC; “French Toast Crunch returns as cerealsales slide,” Associated Press Newswires, 8 December 2014, via Factiva, © 2014 The Associated Press.62 “Campbell Soup; takes legal risk; to try to do good,” The San Francisco Chronicle, 10 November 2014, via Factiva, © 2014 Hearst Communications, Inc.63 “Mondelēz International Pledges Unprecedented Transparency by Inviting Third-Party to Report Impact of its Coffee Made Happy Program,” PR Newswire (U.S.), 13 November 2014, viaFactiva, © 2014 PR Newswire Association LLC.


participated in their program to improve coffee yields reported a 70%–400% increase in coffee production for the periodfrom 2011 to June 2014.64

► Unilever has said that all palm oil “directly sourced” for its European foods business will be “100% traceable and certifiedsustainable” by the end of 2014, noting that 58% of the company’s global palm oil supply was now “traceable.” VPProcurement Biswaranjan Sen said that the initiative had been a “much more difficult task” than initially anticipated andcommented: “We are getting there, but it takes time.” Reportedly commenting on the decision to initially focus on Europe,Sen noted: “European consumers are definitely more discerning and there is more pull from the market.” Meanwhile, ChiefSupply Chain Officer Pier Luigi Sigismondi said: “We want to continue to meet our consumers’ every day needs in decadesto come and this means sourcing in a fully sustainable way to future proof our supply chains. Halting deforestation is ourend goal and this is what we work towards.”65

► General Mills has announced a new water policy, to include “General Mills’ supply chain as well as its suppliers,” and said ithad committed to “factor water risk considerations” into business decisions such as the location of new facilities. Thecompany also confirmed that it had signed the UN public-private initiative The CEO Water Mandate. Chairman and CEO KenPowell said: “These initiatives put us on the record as doing our part. They also help us learn and collaborate, yielding abigger impact than we could ever have alone.”66

► Nestlé has said that its Rolo confectionery factory in Fawdon, UK has been using waste from the plant in “anaerobicdigestion” for “nearly a year” to generate 200kW of electricity, or 8% of the power needed to run the plant annually. Thecompany said the biogas unit, designed by UK renewable energy company Clearfleau, would reduce its annual electricitycosts by GBP100,000. Nestlé Head of Sustainability Inder Poonaji commented: “We chose an innovative British bio-energytechnology provider because we wanted a partner with experience who would design a plant to meet our specific needs. On-site treatment of production residues will help us reduce the wider environmental impact of our business and meet oursustainability goals.”67

► Unilever and Campbell Soup have commented on their “perfect” scores on the 2015 Corporate Equality Index, awarded byUS civil rights organization Human Rights Campaign, and recognition as two of the “best places to work” in the US for theseventh and sixth consecutive year, respectively. Unilever North America VP of Sustainability and CommunicationsJonathan Atwood said: “Through the work of PRIDE, providing benefits for domestic partners and spouses and LGBTadvocacy amongst our brands — Unilever is showing our commitment to celebrating diversity and respecting everyone forwho they are and what they bring.” Meanwhile, Campbell Soup VP Global Diversity & Inclusion Kim Ryan said: “We believethat creating a supportive workplace where employees can truly be themselves enables us to be a stronger, high-performingorganization and reflects the consumer base we want to serve today and tomorrow.”68

► Hindustan Unilever (HUL), General Mills and Cargill have responded to being ranked third, fourth and twenty third,respectively, on Aon Hewitt’s global 2014 Top Companies for Leaders survey which ranks companies on their leadershipand talent management practices. HUL CEO and Managing Director Sanjiv Mehta said that it was “extremely satisfying to berecognized as No. 1 in India and No. 3 globally among other esteemed organizations” while General Mills VP and ChiefLearning Officer Kevin Wilde commented: “Great talent, innovative thinkers, and individuals who are willing to lean intotheir jobs are and will continue to be at the center of our success as company.” Cargill CEO Dave MacLennan noted: “Thisrecognition confirms we’re on the right track, and inspires us to do even better in developing the skills it takes to besuccessful at Cargill.”69

► The US-based National Conference on Citizenship, US volunteer organization Points of Light and Bloomberg have includedfood companies ConAgra Foods, General Mills and Hershey to their third annual Civic 50 ranking of S&P 500 companies that“incorporate socially responsible practices and community leadership into their culture.” ConAgra VP, Corporate AffairsChris Kircher said: “Supporting the communities in which we live and work is one of the key planks of our citizenshipplatform and this recognition is an important measure of how we are delivering on our ongoing commitment to being a goodcorporate citizen.” Hershey SVP and Chief Growth & Marketing Officer Mike Wege commented: “Making a difference is aHershey core value and we are motivated when our business expertise and financial resources are able to make measurable,

64 “Nestlé Deal to Improve Coffee Yield,” All Africa, 13 November 2014, via Factiva, © 2014 AllAfrica; “Coffee farmers to earn more, says report,” Daily Nation, 12 November 2014, viaFactiva, © 2014 Nation Media Group.65 “Unilever to Use Only Sustainable Palm Oil in European Foods by End of Year,” Dow Jones Institutional News, 19 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.;“Unilever’s European food business reaches 100% traceable, certified sustainable palm oil,” ENP Newswire, 21 November 2014, via Factiva, © 2014 Electronic News Publishing.66 “General Mills CEO Says Water is Critical to Business and Engagement is Key,” PR Newswire (U.S.) 20 November 2014, via Factiva, © 2014 PR Newswire Association LLC.67 “Nestlé Is Using Chocolate to Power a Factory,” NJ Daily Extra, 24 November 2014, via Factiva, © 2014 National Journal Group, Inc.; “AD plants helps Rolo factory turn production wasteinto energy,” ClickGreen, 18 November 2014, via Factiva, © 2014 ClickGreen Media Limited.68 “Unilever Named Best Place to Work by Human Rights Campaign for Seventh Year,” Business Wire, 19 November 2014, via Factiva, © 2014 Business Wire; “Campbell Soup Company EarnsDistinction of “Best Places to Work for LGBT Equality”,” Business Wire, 19 November 2014, via Factiva, © 2014 Business Wire.69 “Aon Hewitt Announces the 2014 Global Aon Hewitt Top Companies for Leaders,” PR Newswire (U.S.), 12 November 2014, via Factiva, © 2014 PR Newswire Association LLC; “HUL rankedNo.3 globally among Top Companies for Leaders,” Indiainfoline News Service, 15 November 2014, via Factiva, © 2014 Indiainfoline Ltd.; “General Mills named one of the 2014 Aon Hewitt topcompanies for leaders,” ENP Newswire, 17 November 2014, via Factiva, © 2014 Electronic News Publishing; “Cargill is Named One of the 2014 Global Aon Hewitt Top Companies for Leaders,”PR Newswire (U.S.), 12 November 2014, via Factiva, © 2014 PR Newswire Association LLC.


positive change.” Meanwhile, General Mills SVP of External Relations Kim Nelson noted: “It is a true honor to be recognizedamong the most community-minded companies in the US.”70

► Mars has responded to being awarded the first “Global Shared Value Award” by US non-profit university-business allianceCumberlandCenter’s Global Action Platform, for its goal of creating “mutuality” for “all” of its stakeholders. Mars BoardMember Stephen Badger said: “Our ambition is to achieve mutuality among our Associates, all stakeholders whom wetouch, as well as for the planet. Our behavior demonstrates principled leadership and builds stakeholder trust.”71

► Unilever has announced plans to launch a new campaign to highlight “young people who have new visions for a brighterfuture,” as part of its Project Sunlight sustainability initiative. The company said its “Bright Future Speeches” campaign,which includes eight films on sustainable living from eight “young people” in five countries, would feature on television,YouTube, Facebook and Twitter. Chief Marketing and Communications Officer Keith Weed commented: “We want the voicesof the new generation to be heard – to motivate us all to take action. Together, we can help the millions of children who donot have access to basic sanitation, hygiene, nutrition and clean water.”72

► Cargill, Mars UK, Nestlé UK & Ireland and PepsiCo UK & Ireland have reportedly partnered with the Food and DrinkFederation (FDF) and UK youth skills initiative MyKindaCrowd to “encourage young women” to pursue a science,technology, engineering, or math career by providing “site visits” and “practical challenges” to students. FDF Director ofEmployment & Skills Angela Coleshill said: “The skills agenda is a top priority for our industry and we are proud that ourmembers continue to support careers initiatives such as the MyKindaCrowd engineering visits to ensure a solid successionplan for employment in our sector and give these students a real insight into the industry.”73

Financial news/performance

► Mondelēz has reported financial results for its third quarter. Reported sales for the three months to 30 September 2014decreased by 1.8% to US$8.3b and net earnings decreased by 11.2% to US$899m, compared with the prior year. Thecompany said that organic sales rose by 2.7% in the period, with pricing up 5.8 percentage points, while volume and mixdeclined by 3.1% due to “a slow response by competitors to higher input costs and continued significant price-relatedcustomer disruptions, primarily in France.” Mondelēz noted that organic sales rose by 9.0% in emerging markets and fell by1.3% in developed markets, while organic sales of its Power Brands increased by 5.1%. Chairman and CEO Irene Rosenfelddescribed the operating environment as “challenging” and said the company had a “strong” quarter performance. Rosenfeldnoted: “We delivered this by successfully executing our productivity and supply-chain initiatives and through early winsfrom our zero-based budgeting program.” Mondelēz raised its adjusted earnings per share guidance for fiscal 2014 fromUS$1.73-US$1.78 to US$1.82-US$1.87 due to expected operating gains and favorable tax and interest. Separately, thecompany confirmed a quarterly dividend of US$0.15 per share, payable on 15 January 2015.74

► Campbell Soup has announced financial results for its first quarter. Net sales for the three months to 2 November 2014increased by 4% to US$2.3b, with volume and mix up 6% and promotional spending down 1%. Net earnings increased by 37%to US$234m, compared with the same period a year earlier. The company said there had been “stronger seasonal sell-in” inUS Soup, “better customer execution and innovation” in Australian biscuits and “continued positive momentum” in theBolthouse Farms, Plum and Kelsen businesses. President and CEO Denise Morrison commented: “Although our year is off toa solid start, we are facing some challenges. Our gross margin performance did not meet our expectations due largely tohigher than anticipated commodity costs and supply chain costs.” Campbell lowered its guidance for fiscal 2015 salesgrowth from 1%-2% to 0%-2% and reduced its adjusted earnings per share guidance from US$2.45–US$2.50 to US$2.42–US$2.50, citing currency “headwinds.” Separately, Campbell announced a quarterly dividend of US$0.312 per share,payable on 2 February 2015.75

► H. J. Heinz has filed financial results for its third quarter. Sales for the three months to 28 September 2014 decreased by2.0% to US$2.59b while net income was US$171.6m, compared with a net loss of US$11.7m in same period a year earlier.The company said the results included “restructuring” costs of US$80.9m and noted that costs of goods sold had decreased

70 “ConAgra Foods Recognized for its Commitment to Community by Bloomberg LP and Points of Light,” ENP Newswire, 9 December 2014, via Factiva, © 2014 Electronic News Publishing;“Hershey Once Again Named One of Top 50 Most Civically Minded U.S. Companies,” ENP Newswire, 9 December 2014, via Factiva, © 2014 Electronic News Publishing; “General Millsrecognized for commitment to community by Bloomberg LP and Points of Light,” ENP Newswire, 9 December 2014, via Factiva, © 2014 Electronic News Publishing.71 “Mars Receives First Ever ‘Shared Value’ Award At Third Annual Global Action Summit; Stephen Badger of the Mars board presented with the inaugural award in recognition of Mars’ workaround Mutuality,” ENP Newswire, 21 November 2014, via Factiva, © 2014 Electronic News Publishing.72 “Unilever Project Sunlight Gives New Leaders a Voice,” PR Newswire (U.S.), 10 November 2014, via Factiva, © 2014 PR Newswire Association LLC.73 “Leading food manufacturers host students to inspire engineering careers,” ENP Newswire, 1 December 2014, via Factiva, © 2014 Electronic News Publishing.74 “Correct: Press Release: Mondelēz International Report Q3 Results,” Dow Jones Institutional News, 5 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc,; “Mondelēz sharesjump on outlook, earnings,” Chicago Tribune Online, 5 November 2014, via Factiva, © 2014 Chicago Tribune; “Mondelēz International Declares Regular Quarterly Dividend of $0.15 PerShare,” PR Newswire (U.S.), 4 December 2014, via Factiva, © 2014 PR Newswire Association LLC; “Q3 2014 Mondelēz International Inc Earnings Call – Final,” CQ FD Disclosure, 5 November2014, via Factiva, © 2014 CQ-Roll Call, Inc.75 “Campbell Reports First-Quarter Results,” Business Wire, 25 November 2014, via Factiva, © 2014 Business Wire; “Campbell Soup Q1 Results Top Estimates, Trims 2015 Outlook,” RTTNews, 25 November 2014, via Factiva, © 2014 NoticiasFinancieras; “Campbell Declares Quarterly Dividend,” Business Wire, 19 November 2014, via Factiva, © 2014 Business Wire.


by 16% in the quarter. SVP of Corporate and Government Affairs Mike Mullen said that Heinz was “on track” to meet its2014 goals and commented: “Continued efficiencies allow the company to increase investment in our brands and accelerateinnovation, while discontinuing unprofitable sales and cultivating the most focused global team.”76

► General Mills has said that it has lowered its 2015 fiscal year guidance due to “continued weak food industry trends in theUS and slowing growth in key emerging markets.” The company said that it now expected “low single–digit” constantcurrency net sales growth and a “low single–digit” decline in operating profit, compared to its earlier forecast of “midsingle–digit” growth. General Mills also confirmed that it expected adjusted diluted earnings per share to increase at a “lowsingle–digit” rate, compared with its earlier “high single–digit” constant currency guidance.77

► PepsiCo has announced a 15% increase in its quarterly dividend to US$0.655, compared with a year earlier, payable on 7January 2015.78

► ConAgra Foods has announced a dividend of US$0.25 per share of common stock, payable on 3 March 2015.79

Analyst and rating agency views

► Analysts have commented on Unilever’s decision to separate its spreads unit. Sanford Bernstein’s Andrew Wood described itas a “forerunner to a spin-off or sale” and said: “Even if management did not want to spin/sell it, I think the pressure frominvestors will eventually convince them.” Berenberg’s Fintan Ryan said that it was “definitely the start of a sales process”while Morningstar’s Philip Gorham noted: “They are saying they won’t spin it off, but clearly look at this business as non-core now, so this could be the first step to doing just that.” Meanwhile, Ash Park Capital’s Jamie Isenwater commented: “Ingeneral we believe it is better to try and turn round a struggling business than to sell it because selling the lowest-growthbusiness can lead to a vicious circle which ends up diluting shareholder returns.”80

► Kepler Cheuvreux has described Talenti Gelato & Sorbetto as a “small” and “interesting” acquisition for Unilever in thepremium US ice cream segment. Analyst Richard Withagen noted: “Talenti’s premium offering fits Unilever’s strategy ofmoving its portfolio among others in personal care and premium products. Talenti’s pricing is above Ben & Jerry’s and wellabove mainstream brands like Breyers and Klondike.”81

► Zuercher Kantonalbank has commented on Nestlé’s announcement that it is “exploring different options” for its Davigelbusiness. Analyst Patrik Schwendimann said the unit’s profit margin was 4%, compared to “nearly” 19% for the overallcompany, and noted; “People will see it as a positive because it shows that Nestlé is still going ahead with its portfolioreview.”82

► Analysts have responded to the sale of Dairy Crest’s dairy operations to Müller. Investec’s Nicola Mallard said the dairybusiness had “always been the ‘poor relative’ in the group” while Jefferies analysts said the deal would “reduce net debt andunshackle the high-quality foods business from a resource drain.” Charles Hall at Peel Hunt said that regulators should be“pragmatic” and recognize that the transaction made “sense for all parties,” and commented: “It shouldn’t be againstconsumer interest because the combined business will be able to be more cost-effective than the two parties.” Hall said thatthe deal should benefit farmers, “creating a stronger player, rather than having an industry that has been losing money,”and noted that the acquisition “should ensure” that Müller was “an effective competitor to Arla and result in a healthy UKdairy industry.”83

► Analysts have commented on JBS’ acquisitions of Primo Group and Big Frango Group. Deutsche Bank’s Jose Yordancommented: “Considering Primo’s product mix - 80% processed and 20% in natura - and geography, we believe it comparesquite favorably with the current multiple of comparable companies like Hormel Foods (12x) and the recent sector averagefor M&A (12.9x), not to mention the multiples paid by Tyson for Hillshire (greater than 16x pre synergies and 13-14x post

76 “Heinz swings to a profit in 3Q,” Pittsburgh Business Times Online, 7 November 2014, via Factiva, © 2014 American City Business Journals, Inc.; “HEINZ SEES PROFIT IN THIRD QUARTER,”Pittsburgh Post-Gazette, 8 November 2014, via Factiva, © 2014 Post Gazette Publishing Company.77 “General Mills Updates Targets For Fiscal 2015 Growth And Multi-Year Cost Savings Initiatives,” PR Newswire (U.S.), 7 November 2014, via Factiva, © 2014 PR Newswire Association LLC.78 “PepsiCo Declares Quarterly Dividend,” PR Newswire (U.S.), 20 November 2014, via Factiva, © 2014 PR Newswire Association LLC.79 “ConAgra Foods Announces Dividend Payment,” Business Wire, 2 December 2014, via Factiva, © 2014 Business Wire.80 “Unilever to run spreads business as separate unit,” Financial Times, 4 December 2014, © 2014 The Financial Times Ltd.; “UPDATE 2-Unilever says to form standalone spreads businessunit,” Reuters News, 4 December 2014, via Factiva, © 2014 Thomson Reuters; “Unilever to Separate Spreads Division — 2nd Update,” Dow Jones Institutional News, 4 December 2014, viaFactiva, © 2014 Dow Jones & Company, Inc.81 “Analysts describe Talenti acquisition as small for Unilever,” SeeNews Netherlands, 3 December 2014, via Factiva, © 2014 SeeNews; “Deal or no deal: How restructuring at Unilever couldlead to more portfolio adjustments,” Just-Food, 6 December 2014, via Factiva, © 2014 Aroq Limited.82 “Nestlé Explores Sale of Frozen Food Unit Davigel,” Dow Jones Institutional News, 14 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.83 “MULLER EXPANDS UK DAIRY OPERATIONS,” Press Association National Newswire, 6 November 2014, via Factiva, © 2014 The Press Association; “UPDATE 2-Dairy Crest to unload milkbusiness, focus on cheese,” Reuters News, 6 November 2014, via Factiva, © 2014 Thomson Reuters; “UPDATE: Muller: Dairy Crest deal benefits whole supply chain,” Just-Food, 8 November2014, via Factiva, © 2014 Aroq Limited.


synergies).” Meanwhile, Leme Investimentos’ João Pedro Brugger noted: “This company is growing a lot, but this strategymakes its management more complex and difficult, especially because it is now present on several continents.”84

► Analysts have commented on Mondelēz’s third quarter financial results. Morningstar’s Erin Lash said the brokerage was“encouraged” by the company’s improved margins, noting that “efforts to reduce overhead costs and improve efficiencies”appeared to be “gaining traction,” while Sanford Bernstein’s Alexia Howard described full year guidance as “reachable.”85

► Analysts have responded to General Mills’ lowered guidance for fiscal 2015. Goldman Sachs said the announcement was“not surprising,” noting the company’s “weak” first quarter results and initial “aspirational” profit guidance. Analyst JasonEnglish said: “The demand backdrop in US center–store categories is just too challenging, in our view, and there is little endin sight.” RBC Capital Markets, which reduced its rating from “outperform” to “sector perform” and lowered its share pricetarget from US$58 to US$54, also reportedly noted “disappointing” cost reduction progress and a “less–than–expected”decrease in planned promotional spending. Meanwhile, Wells Fargo commented that if the cut was “driven by more capacitycutbacks,” it reinforced “the depth of center–store struggles.”86

► Bank of America has raised its share price target on Kraft Foods from US$64 to US$66, while maintaining its “buy” rating,stating that it expected “improved earnings quality” in the fourth quarter. The brokerage also noted “potential” for Kraft to“announce value enhancing changes to its strategy” in “early” 2015. The brokerage said that Kraft was “in the early stagesof a multiyear cycle of productivity gains that should enable it to both increase its marketing spend and simultaneously dropenough to the bottom line to drive consistent mid-single-digit operating profit growth and grow dividends.”87

► Vontobel’s Jean-Philippe Bertschy has said that he expects the division between food and pharmaceuticals to “narrow in thecoming years,” noting: “Companies with a diversified, healthy food portfolio will emerge as the winners.”88

► Rabobank has commented on the prospects for Australian infant formula exports to China. Analyst Michael Harvey saidthere was “enormous opportunity” for Australian processors and noted: “Overseas markets for infant formula are growingrapidly and China is the standout because of the size of the population and the birthrate they have.”89

Management moves

► PepsiCo has announced the appointments of PepsiCo Europe CEO Enderson Guimaraes as EVP, Global Categories andOperations for PepsiCo and PepsiCo Europe President, Developing & Emerging Markets Ramon Laguarta as PepsiCo EuropePresident. The company also noted that Guimaraes would assume the responsibilities of President Zein Abdalla who plannedto retire from the company, effective from 31 December 2014. Chairman and CEO Indra Nooyi commented: “Enderson andRamon are highly skilled operators who have built impressive performance track records throughout their careers.”90

► Archer Daniels Midland (ADM) has announced that President and COO Juan Luciano has been named CEO, to succeedPatricia Woertz with effect from 1 January 2015, and has been elected to ADM’s Board of Directors, effective immediately.The company said that Woertz would continue in her role as Chairman and was expected to retire in May 2016. Woertzdescribed Luciano as “exceptionally smart and capable, with global perspective and a proven track record of deliveringresults,” and commented: “The board and I are confident that Juan — supported by ADM’s experienced and dedicated team— is absolutely the right leader to continue ADM’s success.”91

► General Mills has confirmed the election of David Cordani, President and CEO of global health insurance and health servicescompany Cigna, to its Board of Directors with effect from 3 November 2014. The company also confirmed that Cordaniwould serve on its Audit and Compensation Committees.92

► Mondelēz has said that it will add Joseph Neubauer, Chairman of professional services firm Aramark, to its Board ofDirectors. Chairman and CEO Irene Rosenfeld described Neubauer as an “outstanding addition” and commented: “He brings

84 “Meat Producer JBS Continues Expansion,” Dow Jones Institutional News, 21 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.; “Focus: JBS sees big opportunity from PrimoSmallgoods,” Just-Food, 23 November 2014, via Factiva, © 2014 Aroq Limited.85 “On the money: Cost-cutting regime paying off for Mondelēz,” Just-Food, 9 November 2014, via Factiva, © 2014 Aroq Limited.86 “General Mills cuts outlook on soft sales // The foodmaker expects profit to decline in the current quarter as it slashed prices on products,” Star-Tribune, 8 November 2014, via Factiva, ©2014 The Star Tribune Company; “What Kind of Cost Cuts Will General Mills Make? – Market Talk,” Dow Jones Institutional News, 7 November 2014, via Factiva, © 2014 Dow Jones &Company, Inc.; “General Mills downgraded at RBC Capital,” Theflyonthewall.com, 10 November 2014, via Factiva, © 2014 Theflyonthewall.com.87 “Bank Of America Raises Kraft Foods Price Target,” Benzinga.com, 3 December 2014, via Factiva, © 2014 Benzinga.com.88 “Exercise in a Bottle Is Next Food Frontier for Nestlé,” Bloomberg, 19 November 2014, via Factiva, © 2014 BLOOMBERG L.P.89 “China’s Hungry Infants Sought in Rinehart Formula Switch,” Bloomberg, 14 November 2014, via Factiva, © 2014 BLOOMBERG L.P.90 “PepsiCo Announces Leadership Appointments,” PR Newswire (U.S.), 1 December 2014, via Factiva, © 2014 PR Newswire Association LLC: “PepsiCo Files 8K – Changes Exec Mgmt>PEP,”Dow Jones Institutional News, 6 November 2014, via Factiva, © 2014 Dow Jones & Company, Inc.91 “ADM Names Juan Luciano Next CEO; Pat Woertz Remains Chairman,” Business Wire, 6 November 2014, via Factiva, © 2014 Business Wire.92 “General Mills Elects David Cordani to Its Board of Directors,” ENP Newswire, 4 November 2014, via Factiva, © 2014 Electronic News Publishing; “FORM 8-K: GENERAL MILLS FILESCURRENT REPORT,” US Fed News, 4 November 2014, via Factiva, © 2014 HT Media Limited.


tremendous financial acumen, a global perspective and a wealth of experience driving operational excellence in complexorganizations.”93

► Mondelēz’s Bulgarian unit has reportedly announced the appointment of Eastern Europe, Middle East and Africa CategorySales Director Svetla Lesova as Mondelēz Bulgaria General Manager, effective from 1 February 2015. According to a localreport, Lesova succeeds Ivaylo Naydenov who is to move to a “regional managerial position” based in Bucharest.94

► Mondelēz’s Nigerian business has announced the appointment of Roy Naaman. General Manager of global distributioncompany Diplomat Group, as its Managing Director with effect from 1 January 2015. Cadbury Nigeria said that Naamansucceeded Emil Moskofian who is reportedly leaving to “explore opportunities outside Mondelēz International.”95

► Unilever’s Indonesian business has reportedly appointed Hindustan Unilever Executive Director, Home & Personal Care,Hemant Bakshi as President of Unilever Indonesia, to succeed Maurits Lalisang.96

► Mars has reportedly named Mars Latin America Chocolate Regional President Blas Maquivar as UK Chocolate and GlobalRetail President, effective from January 2015. According to an unconfirmed report, Maquivar will be responsible for Mars’UK chocolate business along with its global M&M’s World Stores and the International Travel Retail division.97

► Mars has said that it has appointed Mars Chocolate General Manager for UK Ice Cream & Biscuits Tony Lorman as Directorof European Confections for The Wrigley Company, succeeding Matthew Austin who is reportedly taking on the role of MarsFood General Manager. UK General Manager Mark Andrews noted that Lorman had “great business tenacity and a strongrecord of inspiring teams and developing associates to reach their full potential.”98

► Mexican dairy Grupo Lala has announced the appointment of Mars VP Finance Gabriel Fernandez as CFO, succeedingAntonio Zamora who the company said planned to leave the company on 1 January 2015 to “pursue another professionalopportunity.” Chairman Eduardo Tricio commented: “Gabriel brings the right experience from leading branded CPGs intothe Finance role as we continue to strengthen our strategy to accelerate future growth.”99

93 “Mondelēz International names Joseph Neubauer to Board of Directors,” PR Newswire (U.S.), 24 November 2014, via Factiva, © 2014 PR Newswire Association LLC.94 “Mondelēz Bulgaria appoints new general manager as of Feb 1,” SeeNews – The Corporate Wire, 13 November 2014, via Factiva, © 2014 SeeNews.95 “Cadbury appoints new MD,” Kuwait News Agency (Kuna), 4 December 2014, via Factiva, © 2014 All Kuna Rights are Reserved.96 “Unilever Indonesia: Shareholders appoint president from Indian arm,” Nikkei Report, 28 November 2014, via Factiva, © 2014 Nihon Keizai Shimbun, Inc.97 “Blas Maquivar to run Mars UK chocolate and global retail,” The Grocer, 8 November 2014, via Factiva, © 2014 William Reed Business Media Ltd.98 “Tony Lorman moves from Mars to take up Wrigley director role,” The Grocer, 29 November 2014, via Factiva, © 2014 William Reed Business Media Ltd.99 “Grupo LALA Announces A Change In Executive Team,” PR Newswire (U.S.), 12 November 2014, via Factiva, © 2014 PR Newswire Association LLC.

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Documents

Talking Food - Building a better working world - EY - …File/EY-talking-food-12-dec-2014.pdf4 November-11 December 2014 EY Talking Food 4 Ronald Kers commented: “The dynamics of