Opinion from global food and drink experts, Zenith Global


May 26th, 2009 | Posted by Richard Hall in Economic | Environmental - (0 Comments)

When Nestlé‘s Chairman speaks out, I try to listen and tend to agree. Recently, Peter Brabeck talked to the Financial Times and many of his remarks bear repeating.

Food prices – “Food prices will continue to increase because the demand, even during this crisis, will be in 2009 about 3 per cent to 4 per cent higher than last year.”

Biofuels – “It is absolutely unacceptable that we are using food for biofuels. We need 9,100 litres of water to produce one litre of pure diesel. This is not sustainable.”

Water scarcity – If we continue to treat water as “a commodity without any price … the world will run out of water long before we [run out] of oil.”

“93 per cent of all water consumption is in agriculture and, as water has no price, there is no economic incentive to improve the productivity.”

“60 per cent of fresh water … we are losing due to insufficient infrastructure.”

Recession – “If you look at state deficits being created just now, there is no short way out of this crisis.”

Inflation – “All macroeconomic decisions which are being taken will lead us to inflation.”

Coca-Cola/Huiyuan – “I’m not so sure Europe would have allowed this acquisition.”


May 21st, 2009 | Posted by Richard Hall in Health - (1 Comments)

But what do we drink ? A recent British Government study tells us in quite a lot of detail.

  • In 2008 our average daily liquid consumption was almost exactly 2 litres per person, the amount recommended and similar to 30 years ago.
  • Tap water accounted for around 1.3 litres of this, up from about 1.1 litres in 1978, much of it being used in hot drinks.
  • In the spring of 2008, tea was the most popular drink with a 33% share, followed by soft drinks on 26% and coffee on 22%. Coffee fell to 14% in the summer, while soft drinks rose to 29%.
  • Two thirds or more of tea (77%), fruit juice (74%), coffee (68%) and soft drinks (66%) were consumed at home. Work was the next most important place for many categories. 41% of alcohol was drunk in pubs and bars, compared with 48% at home.
  • Our drinks preferences vary markedly at different times of day. Mornings between 07.00 and 11.00 accounted for 44% of coffee, 38% of tea and 39% of fruit juice. Afternoons were responsible for 41% of fizzy drinks. 45% of alcohol and 32% of fizzy drinks were consumed in the early evening. 47% of hot milky drinks and 40% of alcohol were drunk after 21.00.
  • Our drinks repertoire is very wide. 86% of us drink tap water, 79% tea, 79% fruit juice, 70% coffee, 70% squash, 63% fizzy drinks, 59% milk, 58% beer/cider, 56% wine and 53% still bottled water.
  • 26% of us treat our tap water in some way. 18% use filters, 13% boil it first and 8% use sterilising tablets.

If you’d like to know more, my source was the 2008 National Tap Water Consumption Study prepared for the Drinking Water Inspectorate. The findings were drawn from adults in a sample of 1,000 households across 10 regions of England and Wales.


May 19th, 2009 | Posted by Richard Hall in Health - (0 Comments)

At last. From July 2010 there is to be a new European Union certified organic logo. Imaginatively, its design will be by open competition among art students.

It has always been a paradox to me that the legitimate concerns of the most ethical consumers should have some of the least ethical standards.

Wouldn’t it be great if there were also clearer standards for health, nutrition, environment and other social credentials? I know there are many projects under way, but some have already taken decades rather than years. Global standards would be even better.

It’s no wonder that UK recycling rates are not higher, when existing schemes are so lacking in common objectives or standards. Yet there are some really encouraging signs of progress.

At Zenith’s UK Soft Drinks Industry Conference last week, one of the speakers was Chris Dow, who came over from Australia after the Sydney Olympics to become Managing Director of Closed Loop Recycling, which has now opened the world’s first recycling operation that converts both PET and HDPE bottles into granules for reuse in new bottles. Then we visited the plant itself. I was greatly impressed. What did I learn ?

First, some remarkable statistics. In 2004 the UK recycled less than 40,000 tonnes of plastic bottles. In 2007 the amount had quadrupled to 182,000 tonnes. Figures are not finalised for 2008, but the expectation is around 230,000 tonnes. In 2007 the country’s total plastic bottle use was 550,000 tonnes (300 PET, 220 HDPE and 30 other), meaning we recycled 34%. Today the proportion could be above 40%.

Second, I discovered quite a bit about why we’re not doing better. And this is serious, because we could so easily achieve much more.

  • There are more than 150 different local authority schemes for waste collection in the UK today.
  • One in four Councils do not provide kerbside collection for plastic.
  • Most schemes require a high level of commitment from the public.

For instance, my local authority is only just about to change from three separate rubbish collection days and won’t take cartons.

Third, I heard about the art of co-mingling. At present, most households have to separate different types of material themselves – requiring thought, storage space and effort. As a result, many people don’t bother. Whereas, if collections took all forms of dry waste, then more of us would take the trouble. So co-mingling of different materials would ensure higher rates of collection, as more of the effort would be absorbed by the local authorities and waste management companies.

Fourth, I was fascinated how HDPE caps and PET bottles are separated. It’s done simply by using water. Caps made of HDPE float. PET sinks. Magic.

Fifth, apparently even a tiny amount of bioplastics can make a whole batch of recycled PET unfit for blow moulding back into new PET bottles.

Sixth, it seems that bottles containing up to 50% recycled PET can be recycled again and again, while 100% recycled PET has a more limited life.

Seventh, I was rather concerned about how much energy recycling uses. If you add up the rinsing out at home, the transport and separation, the recycling heat and energy, the residual waste, plus all the buildings, equipment, staff and their travel to work, it’s a very substantial cost. Then, it does mean earth’s limited natural resources are being used more than once and that has to be wiser than not.

Eighth and this may happen one day in Britain, in Mexico they are already sifting through landfill sites to reclaim plastic bottles and other materials for recycling.

Finally, I understand that, although it is behind much of the continent, the UK catching up fast and a lot more recycling capacity will become available in the next few years. Closed Loop Recycling can handle 35,000 tonnes at its first site and is already planning a second to handle over 50,000 tonnes.

Do come to one of our future conferences. You may learn a lot. I always do.

Eight months after I complained to the Press Complaints Commission, I am delighted to report that Which? magazine has accepted the need to publish an agreed correction to its August 2008 cover story on bottled water.

The correction is more symbolic than anything else. Which? never acknowledged, for instance, that it should seek any views from an industry on which it was about to pass critical judgement, despite its oft stated belief in fairness and balance. Nor does any Code of Practice require this.

However, the Editor did recognise that the correction “goes to the very heart” of my concerns. And I trust that Which? will take more care to check its facts in future. Even watchdogs have to be watched.

A brief summary will be available shortly on the Press Complaints Commission website, referring to “inaccurate data on the share, sources and environmental costs of bottled water”.

Let’s leave it at that.


May 8th, 2009 | Posted by Richard Hall in Soft drinks - (0 Comments)

So far I have yet to see a single commentator assess the international dimension of PepsiCo’s recent bid to bring in its bottlers Pepsi Bottling Group and PepsiAmericas. But this could be as big a deal as what happens in the United States.

Let’s look at some simple facts. Pepsi Bottling Group also operates in Russia and Spain as well as Canada and Mexico. PepsiAmericas has interests in the Czech Republic and Slovakia, Hungary, Poland, Romania and the Ukraine as well as the Caribbean.

So PepsiCo buys in a weak financial market. It reconfigures its West and East European bottling activities around Britvic in the UK and Ireland and two or three newly created regional groups. In a few years, these new groups plus American bottling are then spun off for twice the amount or more in much stronger financial markets.

Meanwhile, Pepsi can instil best practice management and standard systems throughout and put everything in vastly superior shape to what it inherits.

Makes sense to me.

Consolidation continues apace around the globe and across all food and drink sectors. In the past two months, I’ve noted 42 transactions excluding Pepsi bottler deals.

12 were in dairy, 11 were in alcohol of which 9 were beer, 10 were in soft drinks including 3 water and 2 juice, 3 were in hot drinks.

Japanese brewers were buying again, along with Coca Cola, Dean Foods, Emmi and SABMiller, while Anheuser-Busch InBev and Fonterra mainly divested, though there was traffic in both directions for some.

There seems to be no shortage of intent or activity whatever the market conditions.

Feb 09 Dairy   Lactalis Nestlé buys production plant from Nestlé Spain    
Mar 09 Dairy   China’s Beijing Sanyuan buys Sanlu   $90m
  Flavours   Frutarom from Israel to buy American Company Flavors Specialties in US   $17m
  Sugar   Nordzucker of Germany completes purchase of Danisco Sugar based in Denmark   DKK6.8 billion
  Coffee   US Farmer Bros buys foodservice business from Sara Lee   $45m
  Water   Turkey’s Coca-Cola Icecek completes purchase of Sandras   €13m
  Dairy   Arla from Sweden to buy Friesland Foods Fresh Nijkerk in Netherlands from Royal FrieslandCampina   €215m sales in 2007
  Beer   SABMiller and China Resources Enterprise to buy Shandong Hupo Brewery in China   $42m
  Soft drinks   US Coca-Cola Bottling Co Consolidated buys Bazza high-Energy Tea trademark from Cooper Tea    
  Beer   US KPS Capital Partners completes purchase of Labatt USA from Anheuser-Busch InBev    
  Food   US Heathrow to buy Natural Harmony Foods    
  Food   Ireland’s Kerry to buy Breeo Foods   €140m
  Beer   SABMiller and Vietnam Dairy Products to buy 50% of SABMiller Vietnam JV from Vinamilk of Vietnam   $32m
  Dairy   France’s Coralis buys UHT milk business from Bongrain    
  Juice   Canada’s Lassonde to buy Apple Valley from Dominion Citrus    
  Iced tea   US Nestlé Waters invests in Sweet Leaf Tea   $16m
  Hot drinks   Tata Tea from India and EBRD to buy 51% of Grand in Russia    
  Dairy   Yoplait from France buys remaining

49% of joint venture with UK Dairy Crest

  Soft drinks   Anheuser-Busch InBev buys Bebidas in Bolivia from SABMiller   $27m
  Dairy   Warrnambool from Australia to buy 50% of new Australian Cheese Company in joint venture with National Foods   A$105m
Apr 09 Soft drinks   Asahi from Japan completes purchase of Schweppes Australia from Cadbury   A$1185m
  Juice   Coca-Cola buys up to 20% of UK Innocent   £30m
  Water   US Vermont Pure buys Blue Hills    
  Beer   Carlsberg from Denmark forms Nordic JV with Nordmann of Germany     €400m sales
  Tea   Tata Tea from India integrates Premium Foods in Poland    
  Dairy   US Dean Foods buys two plants from Foremost Farms    
  Spirits   Campari from Italy buys Wild Turkey in US   $575m
  Dairy   Emmi from Switzerland increases stake in Kaiku of Spain from 23% to 43%    
  Dairy   Switzerland’s Emmi to buy 60% of Nutrifrais from LRG    
  Dairy   US Dean Foods to buy Santee from Stater Bros    
  Bakery   India’s Wadia to buy remaining 25% of Britannia from Danone    
  Water   Russia’s IDS Group to buy Saint Springs from Nestlé Waters    
  Snacks   PepsiCo buys Karinto in Peru    
  Beer   Carlsberg of Denmark to sell Arendal in Norway    
  Soft drinks   US PepsiCo seeks to buy remaining 67% of Pepsi Bottling Group and 57% of PepsiAmericas   $6bn
  Beer   Carlsberg from Denmark increases stake in Wusu of China to 63%    
  Beer   Kirin from Japan to buy remaining 54% of Lion Nathan in Australia   A$3.5bn
  Beer   Kirin from Japan increases stake in San Miguel of Philippines from 43% to 48%   $142m
  Alcohol   CEDC from Poland to buy increasing stake in Russian Alcohol from Lion Capital   $532m
  Beer   KKR from US to buy Oriental Brewery in South Korea from Anheuser-Busch InBev    
  Dairy   New Zealand’s Britannia to buy remaining 49% of joint venture with Fonterra    
  Dairy   Nestlé and Australia’s Bulla to buy ice cream business from Fonterra    

Innocent is simply the best new brand and business I’ve come across in the past decade. The products, the people, the ethos and the performance have all been extraordinary. I’ve known the founders from quite early on and have admired how they adapted to rapid growth, while staying true to their core values.

Even this past year, faced with a massive onslaught from Tropicana smoothies and a UK market downturn, Innocent has remained a strong leader and has recovered market share.

It is well advanced in its development strategy of diversifying into new products and expanding into new territories. So many other companies have faltered at this stage. Trying to do it themselves without adequate resources or expertise. Picking the wrong partners with divergent perspectives.

Very few potential alliances offer a genuine international reach. In Europe even Coca-Cola lacks chilled distribution, smoothie production facilities and short shelf life experience. But that’s not the point.

So long as Coke provides the right support, then Innocent can benefit from the funding and market access that it needs.

In some ways, I wish Innocent had stayed independent, but we must allow Innocent to spread its message rather than be overtaken by imitators. So on today’s evidence, I find Innocent not guilty and Coke innocent.