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Glanbia to Create New €1.5 Billion Turnover Irish Dairy Business

Glanbia plc, the global nutrition group, has agreed to sell a 60% interest in its wholly-owned Dairy Ireland segment to Glanbia Co-op, Ireland’s largest and most valuable co-operative with 14,773 members, for €112 million. Dairy Ireland is comprised of two business units, Glanbia Consumer Foods Ireland and Glanbia Agribusiness.

Glanbia Consumer Foods Ireland is the leading supplier of branded consumer dairy products to the Irish market, as well as an exporter of long-life dairy products. Glanbia Agribusiness supplies inputs to the Irish agriculture sector and is the leading purchaser and processor of grain and the leading manufacturer of branded animal feed in Ireland. Dairy Ireland also has holdings in a number of associates involved in primary manufacture and distribution of farm inputs.  All of Dairy Ireland’s manufacturing operations are based in the Republic of Ireland.

In 2016, Glanbia’s Dairy Ireland segment delivered revenue of €616.2 million, EBITA of €30.7 million and an EBITA margin of 5.0%. Dairy Ireland accounted for 10.1% of Glanbia plc’s wholly owned EBITA in 2016.

Glanbia plc and Glanbia Co-op intend to form a new entity, ‘Glanbia Ireland’, which will encompass Glanbia Consumer Foods Ireland, Glanbia Agribusiness and Glanbia Ingredients Ireland, an existing joint venture between the two partners. The ‘Glanbia Ireland’ strategic joint venture will be 60% owned by Glanbia Co-op and 40% owned by Glanbia plc.

A 60:40 joint venture between Glanbia Co-operative Society and Glanbia plc, Glanbia Ingredients Ireland is the largest dairy processor in Ireland, processing a total of 2.2 billion litres of milk per year with approximately 700 employees and sales revenue of over €836 million in 2016. Its products, the large majority of which are exported to more than 60 countries, include milk powders, butter, cheese, whey protein, milk protein and casein. Its customers include many of the large global food and infant formula manufacturers as well as more regionally focused players across Europe, Middle East, Africa and Asia.

Siobhan Talbot, group managing director of Glanbia, comments: “The creation of Glanbia Ireland makes strategic sense for the shareholders of both Glanbia Co-op and Glanbia plc. It brings together in a single structure the ownership, operations and objectives of Glanbia’s Irish dairy and agri-businesses. With €1.5 billion of annual revenue and a 2.4 billion litre milk pool, it will be a large scale, efficient business with a high quality supply chain and the strength and diversity to face the future with confidence. Glanbia plc will continue to focus on its global nutrition strategy through the platforms of Glanbia Performance Nutrition (GPN), Glanbia Nutritionals (GN) and strategic joint ventures for the benefit of all shareholders.”

There are currently plans for a strategic investment programme in Glanbia Ireland of between €250 million to €300 million in the period between 2017 and 2020. This investment programme will increase capacity to support the stated growth ambitions of the Glanbia milk suppliers and optimise value adding opportunities. The financing of the investment will largely be sourced from dedicated bank facilities in Glanbia Ireland.

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New Geographical Indication From the United Kingdom

The European Commission has approved the addition of a new product from the United Kingdom to the quality register of Protected Geographical Indication (PGI). The ‘West Wales coracle-caught salmon’ is salmon which has been caught using the ancient Welsh traditional method of coracle fishing. Due to its wild nature, this salmon does not contain any artificial additives and/or colourings.

It is fished in the rivers Tywi, Taf and Teifi in West Wales. Both the Tywi and Teifi rivers have been classed as Special Areas of Conservation (SAC) under the European Habitats Directive. Coracle fishing is an old craft and skill, recorded in the 11th century, that has survived into the 21st century — ‘a living tradition’.

Although coracles were once used extensively throughout Wales, they are now exclusive to the Taf, Tywi and Teifi. These three rivers are the only places in Europe where coracle fishing is still practised. The new denomination will be added to the list of over 1,380 products already protected.

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Arla Foods Achieves Strong Branded Growth in a Volatile Market

Although group revenue declined by 6.8% to €9.57 billion, as a direct result of lower sales prices in the global dairy market, Arla Foods continued to improve the quality of its sales by moving more milk from bulk to brands, and managed to increase net profit grew by 20.7% to €356 million for its 2016 financial year. Indeed, Arla Foods delivered a solid business performance throughout 2016 and made a strong start to the delivery of its strategy, ‘Good Growth 2020’, despite highly volatile milk markets.

In the second half of the year Arla introduced increases in its prepaid milk price to farmers by nearly 30 per cent and expects annual revenue and performance price to improve in 2017.

In a year with extreme volatility in raw milk production and farm gate prices, Arla delivered financial results above its targets on most measures, with net profit at 3.6% of sales, a strategic branded volume driven revenue growth of 5.2% and a growth in brand share to 44.5%. Leverage was 2.4.

During the first eight months of 2016, the dairy industry was characterised by low global milk prices due to a period with an over-supply of milk, particularly in Europe. European milk supply then declined significantly in the second half of the year, supporting a significant milk price rally.

Peder Tuborgh, chief executive of Arla Foods.

In the last four months of 2016 Arla delivered four consecutive increases in the on-account milk price – representing close to a 30% increase. This is the most rapid increase in the prepaid milk price that Arla has ever recorded, and this very positive development has continued for the first months of 2017, delivering a total increase of over 40% in the milk price to Arla’s farmer owners.

“Our 2020 strategy has guided our business in 2016 as we sought to mitigate the impact of the extremely volatile market in Europe. We are more focused than ever on brand and category development as well as our geographic markets, and we succeeded in building our market shares in many of our strategic growth regions outside the EU,” says Peder Tuborgh, chief executive of Arla Foods.

He elaborates: “The year was very tough for our farmer-owners, as they were not immune to the sustained period of low milk prices in the global dairy industry for the last two and a half years. Consequently, the multiple increases we were able to deliver in Arla’s prepaid milk price during the last four months of the year were much-needed.”

Net profit of the Arla Group in 2016 grew 20.7% to €356 million, of which the profit share of Arla Foods amba is €347 million, corresponding to 3.6 per cent of group revenue.

The 2016 performance price decreased 8.3 per cent to 30.9 EUR-cent/kg, compared to 33.7 EUR-cent/kg in 2015. The performance price reflects the ability of the company in any given market situation to add value to its owners’ milk through innovation, brands, cost-saving programs, global growth, and other strategic and operational efforts.

The performance price is a key element in measuring Arla’s relative performance versus its peers, which is done consistently through a peer group index. The preliminary peer group index for 2016 is 105. The strategic ambition is to deliver a peer group index of 103 to 105 as stated in Arla’s strategy, Good Growth 2020.

Increasing Branded Sales Volumes

Despite lower overall milk supply in 2016, Arla managed to move more than 340 million kg of milk from trading into the more profitable retail and foodservice sales channel. Arla’s strategic brands all gained growth momentum in 2016 and delivered increased strategic branded volume driven revenue growth, which is defined as revenue growth associated with growth in volumes from strategic branded products while keeping prices constant:

* Arla® grew 4.5 per cent (up from 2.5 per cent in 2015)

* Lurpak® grew 7.7 per cent (6.1 per cent in 2015)

* Castello® grew 3.0 per cent (0.1 per cent in 2015)

* Puck® grew 10.6 per cent (9.9 per cent in 2015).

Expectations For 2017

In 2017, Arla expects group revenue to grow significantly due to a continued growth in the company’s branded business as well as higher prices in the market globally. Arla targets a net profit share for 2017 in the range of 2.8 to 3.2 as the company continues to focus on paying out the largest possible share of profit via the prepaid milk price to farmer-owners.

Arla expects 2017 to be another year of improvement in financial leverage within the stated long-term target range of 2.8 to 3.4.

“We are confident that the improved quality of our business as well as our Good Growth 2020 strategy put us in a favourable position and will ensure that we are ready to capture the full potential of the market as it continues to evolve and globalise in 2017. You will see Arla take an even stronger position in the market as an innovative dairy company that provides natural and healthy food to consumers and customers worldwide,” says Peder Tuborgh.

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Glanbia Delivers Seventh Year of Double-digit Earnings Growth

Glanbia, the global nutrition group, increased total group revenue (including its share of joint ventures and associates) by 0.8% to €3.697 billion (up 1.3% at constant currency) and total group EBITA by 12.6% to €349.8 million (up 12.8% at constant currency) for the financial year ended 31 December 2016. Total group EBITA margin was 9.5%, up 100 bps (constant currency and reported). Adjusted earnings per share for the year were 87.66 cent, up 11.2% at constant currency (+10.8% reported).

Glanbia’s Performance Nutrition (GPN) business increased EBITA by 20% at constant currency over the prior year to €162.6 million (up 19.9% reported). Glanbia Nutritionals (GN) achieved EBITA of €111.8 million, a 4.5% increase on prior year at constant currency and up 4.9% on a reported basis.

Capital expenditure during 2016 amounted to €89.5 million of which €57.1 million was strategic capital expenditure which was focused on GPN and GN. The majority of the capital spend related to enhancing the group’s innovation capabilities, finalising additions in its high-end cheese and whey facilities at Idaho in the US, and various systems implementations.

Siobhán Talbot (pictured above), group managing director, says: “I am pleased that Glanbia had a strong group-wide performance in 2016 delivering our seventh year of double-digit earnings growth coupled with strong cash conversion. It has been an exciting start to 2017 with a number of key strategic initiatives progressing which will shape the future direction of the group.”

Since the start of 2017, Glanbia Performance Nutrition has made two acquisitions within the plant based nutrition category and direct to consumer channel further expanding its channel and consumer reach. Glanbia is also in advanced discussions to form a new joint venture in the US to build a large scale cheese and whey facility. At home, Glanbia is planning to sell 60% of its Dairy Ireland segment to Glanbia Co-operative Society for €112 million.

“All of these initiatives demonstrate a desire to play to our strategic strengths and are aligned to our vision to be one of the world’s top performing nutrition companies,” she adds.

Looking ahead, Glanbia expects the adjusted EPS of the continuing group to grow between 7%-10% constant currency in 2017 on a pro-forma basis. The Dairy Ireland transaction is expected to be 5%-7% adjusted EPS dilutive in a full-year.

Growth in 2017 is expected to be more evenly balanced across Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN). GPN growth will be driven by organic brand development and innovation as well as a contribution from recent acquisitions. GPN expects like-for-like branded revenues to grow in the mid-single digit range with EBITA margins expected to be in the mid-teen range. GN expects EBITA growth in 2017 to be driven by continued growth in the value added portfolio of Nutritional Solutions.

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Kerry Group Sustains Business Margin Expansion

Kerry Group, the global taste & nutrition and consumer foods group, has reported a 0.4% increase in revenue to €6.1 billion for the year ended 31 December 2016 reflecting good volume growth offset by significant adverse currency movements and lower pricing, as group trading profit increased by 7.1% to €749.6 million and group trading margin increased by 70 basis points to 12.2%.

Kerry’s Taste & Nutrition business, which accounted for 79% of group revenue and 86% of group trading profit in 2016, reported a 3.5% increased in revenue to €4.9 billion with volumes up by 4.0% but product pricing decreased by 2.1%, and there was a negative transaction related currency impact of 0.1%. Trading profit grew by 8.1% to €716 million, reflecting a 60 basis points improvement in divisional trading margin to 14.7%.

Kerry’s Consumer Foods business reported a 9.7% decline in revenue to €1.33 billion due to adverse currency movements in 2016 and the disposal of non-core businesses net of acquisitions in 2015. Volumes grew by 2.1% and net pricing decreased by 2% in 2016. Business efficiency improvements and the improved quality of Kerry Foods’ portfolio contributed a 30 basis points increase in divisional trading margin to 8.8%. However, the underlying trading profit improvement was more than offset by the adverse currency movement and the business disposals resulting in a trading profit decrease of 6.7% to €117 million.

Kerry Group’s success has been built on a total commitment to ongoing technological innovation in all sectors of its business.

Kerry Group’s success has been built on a total commitment to ongoing technological innovation in all sectors of its business, providing integrated customer-focused product development. The group invests heavily in highly specialised research, development and application centres of excellence. This gives Kerry a ‘technological edge’ in its chosen sectors, allowing it to proactively meet customer and market needs.

Kerry Group’s recent investments in its global, regional and in-market Technology & Innovation Centre network and Commercial/Application facilities, coupled with a significant increase in RD&A expenditure in Taste & Nutrition to 5.1% of divisional revenue in 2016, contributed to increased customer engagement and innovation activity.

The 2016 performance was also assisted by businesses acquired in 2015 which provided a strong platform for international market development. During the year Kerry Group completed two bolt-on acquisitions – Jungjin Foods in South Korea and Vendin in Spain – so establishing manufacturing bases in two new geographies.

Stan McCarthy, chief executive of Kerry Group, says: “In 2016 Kerry delivered good volume growth and a strong financial performance including sustained business margin expansion, record free cash generation and 7.1% growth in adjusted earnings per share. The group remains confident of its ability to sustain profitable growth throughout global markets. In 2017 we expect to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share.”

Stan McCarthy (pictured above on right), who became chief executive of in January 2008, will retire from this position on 30 September 2017 and as a director of the group at year-end. He will be replaced as chief executive by Edmond Scanlon (pictured above on left), who is currently president and chief executive of Kerry Asia Pacific.

Edmond Scanlon joined Kerry’s Graduate Development Programme in 1996 and worked in Finance until his appointment as vice president Finance, Supply Chain and Operations of Kerry’s Global Flavours Division in 2004. In 2007, he was appointed vice president Mergers & Acquisitions, Kerry Americas region, before being appointed global president Kerry Functional Ingredients & Actives in late 2008. In 2012, he was appointed president of Kerry China, prior to being appointed to his current position as in November 2013.

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UK Food and Drink Exports Break £20 Billion Barrier in 2016

Total exports of British food and drink in 2016 grew by 10.5% to a record figure of more than £20 billion, as UK manufacturers responded to rapid growth in demand for quality produce, according to the Food and Drink Federation, the voice of the British food and drink manufacturing industry.

Exports of branded food and non-alcoholic drink led the way in 2016 with growth of 11.5% to £5.2 billion, the 16th year of consecutive growth. Excluding alcohol, the UK’s three top three export categories remain chocolate, salmon and cheese, with exports of salmon up 16.4%, driven by large increases to France up 32.2%, Ireland up 24.6% and Germany up 98.9%.

The USA is now the second largest export market for the UK and the largest outside Europe, with exports increasing by 13% to £2.2 billion in 2016. This now means the UK’s two largest export markets, Ireland and the USA together buy more than a quarter of all UK food and drink exports. Sales to non-EU markets continued to grow at a faster rate than to the EU, however 71.4% of food and drink excluding alcohol was sold to EU Member States.

Demand was up in every single one of the UK’s top 20 markets in 2016, with China the fastest growing market, up 51.1% on 2015 to £439.5 million. Highlighted as a priority export market in the joint Government-Industry International Action Plan for Food and Drink, China’s appetite for branded UK food and non-alcoholic drink has also risen by 50% in 2016 to £84.7 million.

While the fall in the price of the pound had helped to boost UK export competitiveness, it has also made essential imports more expensive and the UK’s food and drink trade deficit grew 5.7% to -£22.4 billion. The impact of weaker sterling on British exports is expected to be seen in H1 2017 as companies negotiate new sales agreements with overseas buyers.

Ian Wright, Director General of FDF, comments: “British food and drink exports have hit a record high yet there is still massive untapped potential. More specialist support for new and existing exporters, with fiscal incentives and financial assistance, would get more of the country’s 6,500+ food and drink producers exporting. Our target is to grow branded exports by a third by 2020 to more than £6 billion.

He adds: “Competing nations such as France, Germany and Italy offer greater support for training, help with start-up costs and showcasing opportunities at international tradeshow platforms to build their band of exporters. Building on the International Action Plan, we are working with Government and the Food & Drink Exporters Association to help businesses in this sector compete abroad and meet rising demand for British produce.”

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Restaurant Brands International Expands With $1.8 Billion Acquisition

Restaurant Brands International, one of the largest global quick service restaurant companies with two of the world’s most iconic QSR brands – Burger King and Tim Hortons – is expanding its US and global footprint with the acquisition of Popeyes for $1.8 billion. Popeyes is one of the world’s largest quick service restaurant chicken concepts with over 2,600 restaurants in the US and 25 other countries around the world.

The acquisition of Popeyes will add a successful, highly-regarded brand with strong customer loyalty to RBI, complement its existing portfolio of over 20,000 restaurants in more than 100 countries and US territories.

Following the closing of the transaction, Popeyes will continue to be managed independently in the US, while benefitting from the global scale and resources of RBI. Building on the momentum of recent years, RBI plans to continue developing the brand at an increasing pace in the US and international markets in the years to come.

Daniel Schwartz, chief executive of RBI, says: “With this transaction, RBI is adding a brand that has a distinctive position within a compelling segment and strong US and international prospects for growth. As Popeyes becomes part of the RBI family we believe we can deliver growth and opportunities for all of our stakeholders including our valued employees and franchisees. We look forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the US and around the world.”

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Tesco’s Organic Food Sales Grow By 15%

Organic foods in Britain are experiencing the strongest growth in customer demand for over a decade. In the last year alone, Tesco has seen organic sales rise by 15 per cent.

While fruit and vegetables continue to be the most popular choice for shoppers, over the last 12 months the retailer has seen increasing numbers of customers looking to buy organic fish, dairy produce and general grocery items.

The increase in demand is a direct result of the supermarket’s commitment to offering customers a wider range of quality organic foods in more of its stores and lower more stable pricing – making it a more accessible option for shoppers across the country.

Areas that have seen the strongest growth include:

* Fruit and vegetables including apples, bananas, carrots, salads and root vegetables – up by nearly 17 per cent.

* Grocery items such as olive oil, pasta and cooking sauces – up by nearly 16 per cent.

* Fresh meat including chicken, lamb chops, steak and eggs – up by 13 per cent.

* Chilled foods such as milk, houmous and cooked meats – up by nearly 13 per cent.

Tesco organic food spokesman Tina Moore says: “Due to our long-term partnerships with suppliers and producers across the UK, we’ve been able to improve the quality, range, availability and price of our organic products for customers. We are seeing that shoppers are increasingly looking to buy organic food but it needs to be affordable and consistently high quality all year round for it to be considered a viable option.”

She adds: “The popularity of organic food began with fruit and vegetables but we are now seeing customers exploring areas such as grocery, fish and dairy, so you can now use organic produce for the whole meal.”

Last Autumn Tesco teamed up with the Organic Trade Board on an initiative which helped customers discover the breadth of the range on offer in its stores. They provided boxes containing organic goodies so that shoppers could create their own organic meal at home. The Organic Unboxed initiative saw 7.5 million Tesco online customers receive a free ingredients box with a recipe card and information on how to cook a tasty organic meal specially designed by a food blogger.

Adrian Blackshaw, chair of the Organic Trade Board says: “Traditionally the two main challenges for customers buying organic, is the price and the availability. Over the last decade we have seen this improve across the industry and now the organic market is in a clear growth phase in the UK. But there is much more we can do – there’s a huge opportunity for Tesco to attract new organic consumers and in doing so, add value to their business.”

The Organic Trade Board recently won a share of £9 million EU funding to help promote organic food in Britain and Denmark and will be working with Tesco to try to further increase the organic market. They will be working with Tesco on making organic food more visible in stores and helping to communicate the reasons for choosing organic through a number of campaigns.

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Cloetta Acquires Candyking

Swedish confectionery group Cloetta has signed an agreement to acquire Candyking Holding – a leading concept supplier of pick and mix candy in the Nordic countries and the United Kingdom. The acquisition strengthens Cloetta’s position within pick & mix and creates substantial synergies. This is in line with the strategy to grow within the category since it is an important and in many countries growing part of the confectionery market.

The initial purchase price amounts to SEK325 million (€34 million) on a cash and debt free basis with a potential additional purchase price of maximum SEK225 million based on the result of Cloetta’s and Candyking’s combined sales volume of pick and mix in confectionary and natural snacks in the Nordic countries, the United Kingdom and Poland during 2018.

Founded in 1862, Cloetta manufactures sugar confectionery, chocolate products, pastilles and chewing gum and has established a strong presence in the Nordic region, The Netherlands, and Italy. In total, Cloetta products are sold in more than 50 markets worldwide.

“The acquisition of Candyking will significantly strengthen Cloetta’s position in Denmark, Norway and the United Kingdom. Cloetta will be able to develop the Candyking brand and product offering, in order to offer an attractive customer and consumer experience. The acquisition will also strengthen our position in natural snacks with the Parrot brand. In addition, there are substantial cost synergies that make the acquisition attractive,” says Danko Maras, chief finance offices and outgoing chief executive of Cloetta.

Candyking offers stores a complete concept in pick and mix candy including products, displays and accompanying store and logistic services. Candyking itself does not manufacture any products, instead it purchases products from different suppliers. The company currently supplies approx. 8,000 retail outlets in seven countries. Sweden, the United Kingdom, Norway and Denmark are the largest markets. Other markets are Finland, Ireland and Poland. In total Candyking have approx. 370 employees.

Candyking’s total sales (including Danish tax) amounted to approx. SEK 1.30 billion on a rolling twelve month basis per the third quarter of 2016. Underlying EBITDA was approx. SEK 70 million and underlying EBIT approx. SEK 30 million.

Candyking’s trademarks in confectionary are Candyking, Karamellkungen and Candyking Favourites. The company is also a leading pick and mix supplier within natural snacks in Sweden and Finland under the Parrot brand.

The acquisition is expected to create substantial synergies that will gradually be realized during the years 2017–2020.

The transaction is subject to approval from the Swedish Competition Authority.The acquisition will be financed by Cloetta using cash and its existing credit facilities.

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Barilla to Invest €50 Million to Expand Italian Pasta Sauces Plant

Currently celebrating its 140th anniversary, Barilla Group, the world’s largest pasta producer, is to invest €50 million to expand its pasta sauces plant at Rubbiano in Italy. The plant was only opened in 2012 at a cost of €40 million. When the expansion is completed in 2018, the Rubbiano plant will become the largest and most efficient production plant of pasta sauces in Europe, and one of the most sustainable in the world, in line with Barilla’s corporate ethos of ‘Good for You, Good for the Planet’.

About 75% of the facility’s output is destined for exports, especially to Europe. The plant is now running at near capacity and the expansion programme will increase production up to 122,000 tons/year.

“It will be a totally integrated factory, designed in-house and fully consistent with the ‘Good for You, Good for the Planet’ business strategy.” comments Carlo Carteri, head of Pasta and Sauce Production Plants in Europe at Barilla Group. “It will feature innovative technology with robotized and digitalized equipment in line with Industry 4.0 logics, capable of further boosting the levels of product quality and safety by combining efficiency and flexibility with a sophisticated traceability system.”

In addition to its global pre-eminence in pasta, the Italian family-owned company is also a leader in pasta sauce in continental Europe, bakery products in Italy, and crisp bread in Scandinavia.

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Morrisons Launches Search For the Local UK Foodmakers

British supermarket group Morrisons is starting a search for the best local food producers, as a new report calls for the UK to be more self-sufficient in food production and new consumer research shows a growing appetite from British shoppers for more local food.

‘The Nation’s Local Foodmakers’ will see Morrisons aim to recruit more than 200 new suppliers from across England, Scotland and Wales in the first year. Morrisons is inviting foodmakers to pitch for their place in its supermarkets via a series of 12 regional events starting in Yorkshire on 14th March.

The move comes as a new report published by leading experts on global food issues led by Professor Tim Benton, from the University of Leeds, says that only half (52%) of food eaten in the UK comes from British farmers.

In the British Food report, Professor Benton says that in light of uncertainties globally it makes increasing sense to build up a stronger local food sector here in the UK and calls on British retailers, producers and customers to recognise the wider benefits of supporting UK food making and production. The main conclusions of the independent report, which was commissioned by Morrisons, are:

* There are risks – climate change and trade wars – in ‘too much’ reliance on food produced elsewhere and these could increase over time. The rapid increase of global goods trading over the past three decades means the UK now exports £18 billion of food whilst importing £39 billion. Whilst global trade has a place and the UK can never be entirely self sufficient buying more food locally will increase our resilience to these risks.

* British customers have an appetite to buy more local food because they believe it to be more trustworthy, and that it supports their local communities. This is supported by new research from Morrisons which shows that British consumers are open to this shift with more than two thirds (67%) of UK shoppers stating in an omnibus survey of 2,000 adults a preference to buy British with the remainder expressing no preference.

* Supporting local foodmakers will have wider benefits for the nation and the British countryside. It will support the local economy, maintain a thriving agricultural sector, create greater diversity of farm types producing more diverse foods, benefiting the countryside. It will also potentially produce food more efficiently and transparently, increasing our trust in it.

* The UK used to grow a greater range of crops. The UK has seen a decline in the indigenous produce grown here with orchards, for example, now accounting for 25,100 hectares compared to 113,000 hectares 50 years go. The report also points to periods where production of cauliflower, broccoli, Brussels sprouts, peas, parsnips, cabbage, lettuce, tomatoes, cucumber, rhubarb and pears grown in the UK have decreased with French and runner beans down by as much as 49%.

The programme will see Morrisons buyers tour Great Britain in search of the best local producers to supply its 491 stores nationwide. The company has a priority of sourcing more local food and is keen to reduce the distance that food travels.

Morrisons will also be working with members of the Women’s Institutes in their communities around the UK, using their local knowledge and expertise to source and select the best suppliers in their area.

The search will result in more customers being able to buy more food in a British supermarket that was grown, made, picked or packaged within 30-60 miles of their local store.

Andy Higginson, Chairman of Morrisons, says: “Our customers tell us they want to see more food that is made just down the road from their own communities and that’s why we are looking for the next generation of British and local foodmakers to serve our 12 million customers. We want small UK food suppliers to become bigger ones – the Innocent Smoothies of tomorrow – and we also want to give our customers the option of more food that meets their local food tastes.”

He adds: “Morrisons is already British farming’s biggest single customer and the publication of the report from Professor Benton makes us more determined to produce more of our food and source more from local British suppliers.”

Suppliers will be asked to apply through a new website www.morrisons.com/local. Selected applicants will be invited to an event in their region where they will be able to showcase their food to customers, Morrisons staff and Women’s Institute members as well as Morrisons buyers, who will decide who is selected to take their place in Morrisons supermarkets.

Morrisons is in a unique position to support British foodmakers because as well as operating 491 supermarkets, Morrisons is the UK’s largest fresh food maker.

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Kraft Heinz Drops $143 Billion Takeover Bid For Unilever

Kraft Heinz Company has decided against proceeding with its takeover of Unilever after an initial offer of a mix of cash and shares, valuing Unilever at $143 billion (£115 billion), was rejected. The proposal represented a premium of 18% to Unilever’s share price as at the close of business on 16 February 2017. According to Unilever, this fundamentally undervalued the business. Kraft Heinz has subsequently amicably agreed to withdraw its proposal for a combination of the two companies.

Kraft Heinz Company is the fifth-largest food and beverage company in the world with a portfolio of iconic brands including Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

With a turnover of €52.7 billion in 2016 and employing 168,000 people, Unilever operates across four categories – Personal Care, Home Care, Foods and Refreshment. 57% of its business is in emerging markets and it has 13 brands with sales of more than €1 billion a year.

A combination of Kraft Heinz and Unilever would have created the world’s second largest consumer goods group by sales after Nestlé and represented the third-biggest takeover in history.

Kraft Heinz is 50% owned by veteran investor Warren Buffett’s Berkshire Hathaway and 3G Capital, the private equity firm. In the recent past, 3G Capital was involved in Anheuser-Busch InBev’s acquisition of SABMiller and the merger of Kraft and Heinz.

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Wessanen Continues to Make Good Progress

Wessanen, a leader in the European market for healthy and sustainable food, has reported a 9% increase in revenue to €570.0 million for 2016 compared to the previous year. Autonomous growth was €32.7 million, or 6.0%. The acquisitions of Piramide, Ineobio, Mrs Crimble’s and Biogran in 2016 added 4.9% and a weakening of the British pound exchange rate adversely impacted revenue by 2.2%.

EBITE rose by 18.7% to €41.2 million in 2016 and EBITE as percentage of revenue improved by 60 bps versus last year to 7.2%, despite moderately increased marketing investments.

Christophe Barnouin, chief executive of Wessanen, comments: “In 2016, we continued to make good progress on the transformation to a focused, fast growing, sustainable and profitable business. Our own brands performed ahead of a healthy market and grew 8.5%. Given that we reduced our private label and distribution business, total autonomous growth was 6.0%, in-line with our long term guidance range of 5-7%. Our operating margin went up; EBITE as percent of revenue increased 60 bps to 7.2%.”

Christophe Barnouin, chief executive of Wessanen.

He continues: “We have landed four strategically important acquisitions in 2016. These will provide us with a further strengthened platform for profitable growth across core categories and geographies for the future. The market for healthy & sustainable, especially organic food continues to reflect the trend in consumer behaviour. Our strategy execution is on track and we are playing a leading role in helping consumers across Europe to change to Healthier Food for Healthier People and Planet.”

Total reported growth in 2017 is expected to be low double digit, with continued strong growth of own brands and the effect of 2016 acquisitions being partly offset by lower private label and distribution brand sales. Wessanen expects EBITE as a percent of revenue to be above 8% for the full year.

Overall, the European market for healthy and sustainable food continues to grow significantly albeit at different rates between countries and channels. The French and Spanish markets have grown at double digit rates, while Germany was held back by more moderate growth of the health food store channel. All in all, the European Organic market grew at the upper end of our guidance range of 5-7% and is now approximately €30 billion in size.

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IGD Reveals Top Five Food-to-go Trends

With food-to-go taking a bigger bite of grocery markets around the world, Gavin Rothwell, Senior Retail Insight Manager at grocery research organisation IGD, identifies the top five trends he believes will shape this sector in the future.

  1. The rise and rise of health and wellness

Gavin Rothwell says: “Shoppers are increasingly aware of health and wellness, and food-to-go operators are expanding the variety of flavours and products available to meet this demand. Foods that support active lifestyles and tick the box for dietary needs are performing well, while wearable technology and apps are helping shoppers to better understand the nutritional and calorific value of what they consume.

“UK food-to-go shoppers are especially interested in products that suit particular diets, with 34% looking for a larger range of vegetarian products, 25% more dairy-free products and 23% seeking more vegan or gluten-free options*.”

  1. Targeting new locations

“Many food-to-go specialists are now expanding to reach new types of shopper. For example, both Tossed and Pret are now present in motorway services, while Subway and Greggs are expanding across petrol forecourts, to target the on-the-go shopper.

“Other operators, such as Leon and Tortilla, are also opening stores outside London for the first time, to meet growing appetite for food-to-go outside the capital.”

  1. An increased focus on ‘alternative missions’

“By ‘alternative missions’, we mean food-to-go occasions beyond the classic options of coffee or lunch. Although many retailers and specialists are focusing their efforts on breakfast, this is a relatively small market and spend per trip can be quite modest. We’re therefore expecting to see a broader focus on alternative missions at different times of day – some of this might be for evening meals, but there may also be opportunities at other times of day, for example a post-work snack or post-gym energy boost.

“Snacking provides a great opportunity for food-to-go operators. Almost half (45%) of UK adults have bought a snack on-the-go in the last month**, so the size of the prize is huge.”

  1. Further integration of technology

“Almost all shoppers (92%) think speed and efficiency of service is an important driver of deciding where to shop for food and drink***, so we expect technology to play an even bigger role in food-to-go in the future. Outlets such as San Francisco’s Eatsa and London’s Inamo have completely transferred customers’ entire ordering experience to in-store tablets, and last year Starbucks introduced a remote ordering app – a technology we also expect to really grow in popularity. US salad specialist Sweetgreen is going one step further, converting most of its stores to be cashless.

  1. More fusion between retail and food-to-go concepts

“Grocery retailers across the world are looking at how they can better cater for the food-to-go opportunity. For the likes of Whole Foods Market and Wegmans in the US, it’s already a core part of their offer. However, other super and hypermarket retailers, such as Carrefour with its Bon App shop-in-shop format, are also focusing more on this area.

“For smaller retail formats, Irish retailers are setting a great example in this field. For example, Musgrave’s Centra has been extremely progressive in how it delivers a compelling food-to-go offer, a convenience store and an enticing eat-in area in one single space. We expect more of this to follow in 2017 and beyond, as more retailers look to capture a share of the growing food-to-go opportunity.”

References:

*IGD ShopperVista, Q3 2016, 1,124 GB food-to-go shoppers

**IGD ShopperVista, May 2016, 2,000 UK shoppers

***IGD ShopperVista, Q3 2016, 1,124 GB good-to-go shoppers

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The Coca-Cola Company Announces 55th Consecutive Annual Dividend Increase

The board of directors of The Coca-Cola Company has approved the company’s 55th consecutive annual dividend increase, raising the quarterly dividend 6 percent from 35 cents to 37 cents per common share. This is equivalent to an annual dividend of $1.48 per share, up from $1.40 per share in 2016. The first quarterly dividend is payable April 3, 2017, to shareowners of record as of March 15, 2017.

The increase reflects the board’s confidence in the company’s long-term cash flow. The world’s largest beverage company returned $6 billion in dividends to shareowners in 2016, bringing to $35 billion the total amount given back to shareowners through dividends since January 1, 2010.

Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the company’s portfolio features 20 billion-dollar brands, 18 of which are available in reduced-, low- or no-calorie options. The billion-dollar brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, vitaminwater, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold Peak.

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Hain Celestial Makes Strategic Acquisition

The Hain Celestial Group, the US-based organic and natural products company with operations in North America, Europe and India, has announced that one of its wholly-owned subsidiaries has entered into a definitive agreement to purchase Yorkshire Provender. Founded in 2007, Yorkshire Provender is based in North Yorkshire, England, and produces premium branded soup and its products are sold in leading retailers, on-the-go food outlets and food service providers in the UK.

“Yorkshire Provender has a premium brand positioning that complements our New Covent Garden Soup Co and Cully & Sully brands in theUnited Kingdom,” says Irwin D Simon, founder, president and chief executive of Hain Celestial.

Yorkshire Provender will continue to operate from its Yorkshire location. In 2016, Yorkshire Provender had approximately £6 million in net sales and is expected to be accretive to Hain Celestial’s earnings in fiscal year 2018.

The deal is subject to formal clearance from the Competition and Markets Authority in the United Kingdom.

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PepsiCo Reports on a Successful Year

Reflecting unfavourable currency factors, PepsiCo’s net revenue for 2016 declined by 0.4% to $63.056 billion but organic revenue, which excludes the impacts of foreign exchange translation, structural changes and the 53rd reporting week, grew by 3.7%. Reported operating profit at the global drinks and snacks group increased by 17% to $8.353 billion and core constant currency operating profit rose by 7%.

“We concluded 2016 with another strong quarter of operating performance, capping off a successful year. We met or exceeded every financial goal we set for 2016, while delivering a good balance between revenue performance and productivity,” says Indra Nooyi, chairman and chief executive of PepsiCo. “Looking ahead to 2017, we expect solid financial performance despite anticipated continued macroeconomic challenges. Further, reflecting our commitment to providing attractive cash returns to shareholders, we are increasing our dividend per share for the 45th consecutive year, beginning with our June 2017 payment.”

Indra Nooyi, chairman and chief executive of PepsiCo.

She adds: “We had notably good operating performance across our operating segments for the year. Our two largest divisions, Frito-Lay North America and North American Beverages, each had strong well-balanced performance with volume gains, net price realization and margin expansion driving high-single-digit core constant currency operating profit growth.”

Despite volatility and weak currencies in many key overseas markets which impacted reported results, PepsiCo’s international divisions delivered solid organic revenue growth led by high-single-digit growth in developing and emerging market businesses as a group with particularly strong performance in Mexico, China and Egypt, which grew organic revenue in the double-digits.

PepsiCo’s Europe Sub-Saharan Africa (ESSA) region was positively impacted by productivity gains, partially offset by higher raw material costs (in local currency terms, driven by a strong US dollar), operating cost inflation, higher advertising and marketing expenses and adverse foreign exchange translation. Incremental investments reduced reported operating profit growth by 2 percentage points.

Indra Nooyi elaborates: “Our results reflect our commitment to plan and manage our business in a way that is self-sustaining and balances delivery of attractive short-term financial results with long-term shareholder value creation. We achieve this by executing a virtuous circle model that combines top-line growth, productivity and significant reinvestment in the business.”

PepsiCo is continuing to make progress in transforming its portfolio. The once dominant Pepsi-Cola trademark accounted for only 12% of net revenue in 2016 and ‘everyday nutrition products’, which include positive nutrients like grains, fruits and vegetables or protein, plus those that are naturally nutritious like water and unsweetened tea, generated approximately 25% of portfolio net revenue.

Looking ahead, PepsiCo expects 2017 organic revenue growth of at least 3% and core earnings per share of $5.09.

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Best and Worst UK Supermarkets Revealed

Waitrose and Iceland have been rated as the best UK supermarkets for in-store and online experience respectively, while Marks and Spencer has topped the first ever Which? convenience store satisfaction survey with its Simply Food stores.

In a Which? survey of more than 7,000 shoppers, Waitrose secured the in-store accolade just ahead of closest competitor Marks and Spencer, with both earning plaudits for their store appearance and quality of own-label and fresh products.Shoppers were asked to rate stores based on drivers such as store appearance, ease of finding products and overall quality of fresh products. When it came to the online ranking, shoppers were asked about relevance of substitutions for products, value for money and delivery driver’s service.The Which? supermarket and convenience store ratings show:

  • Aldi and Lidl share third place and are the only two supermarkets in the survey to be awarded top marks for value for money.
  • Morrisons is the biggest climber from last year’s survey, moving up from eighth to fifth.
  • Asda came last below Tesco (8th) and Sainsbury’s (7th), who were ranked lower due to many of customers’ favourite products not being in stock, difficulty finding items and low scores on value for money.
  • In the online category, Iceland Online came top for the second consecutive year, with customers particularly happy with convenient delivery slots and friendly drivers.
  • Ocado took second spot ahead of other online competitors including Morrisons, Tesco, Asda, Sainsbury’s and Waitrose.
  • Despite finishing runners up in the in-store category, M&S had reason to cheer as its Simply Food convenience stores came top in the first ever Which? convenience store satisfaction survey.
  • Budgens, Nisa and Spar occupied the three bottom places of the convenience store survey

Each overall score is based on a combination of customer satisfaction and the likelihood of recommending the supermarket to a friend.

Richard Headland, Which? magazine editor, says: “With concerns over rising prices the competition among supermarkets is fiercer than ever. While value for money remains a top priority, in-store appearance and the availability of quality and fresh products can also go a long way to satisfying shoppers’ needs.”

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Heineken Expects Further Organic Revenue and Profit Growth in 2017

Heineken has reported a 1.4% increase in revenue to €20.792 billion with net profit (beia) up by €50 million to €2.098 billion, an organic increase of 8.5%, for its 2016 financial year. Currency developments had a negative impact of 5.6% (€1.150 billion) on revenue, largely driven by the depreciation of the Mexican Peso, the Nigerian Naira and the British pound. Revenue increased 4.8% organically, with a 2.6% increase in total volume and a 2.2% increase in revenue per hectolitre.

Operating profit (beia) was €3.540 billion, up 9.9% organically, with a €216 million negative foreign currency impact and €40 million increase from consolidation changes. Operating margin improved by 54 bps to 17.0%. Higher revenue and the benefit of realised cost savings and efficiencies were only partially offset by higher marketing and selling expenses.

After a strong first half, operating profit (beia) growth slowed in the second half reflecting tougher comparatives, increased currency headwinds as well as further challenging economic conditions in some developing markets. In the full year, strong performance in Americas, Europe and Asia Pacific more than offset weaker performance in Africa, Middle East & Eastern Europe where both the difficult economic backdrop and currency pressure adversely impacted results.

Heineken is continuing to invest in key developing markets and in 2016 entered new countries including Ivory Coast and the Philippines, and expanded production capacity in China, Vietnam, Ethiopia and Cambodia.

Jean-François van Boxmeer, chief executive and chairman of Heineken.

Jean-François van Boxmeer, chairman and chief executive of Heineken, comments: “We delivered strong results in 2016, with clear outperformance of our premium brand portfolio led by Heineken®, and sustained momentum from our innovation agenda. Our unique diversified footprint was again a competitive advantage, enabling us to deliver more than 50 basis points margin expansion, despite more challenging economic conditions in some developing markets and significant currency pressures.”

He adds: “Performance in key European markets was good and results in Vietnam and Mexico were strong. In Africa, Middle East & Eastern Europe market conditions remained tough, most notably in Nigeria, DRC and Russia.”

Economic conditions are likely to remain volatile in 2017 with a negative impact from currency comparable to 2016. However, the global brewer expects further organic revenue and profit growth in 2017.

Excluding major unforeseen macro economic and political developments as well as the impact of the proposed acquisitions of Brasil Kirin from Kirin Holdings of Japan for €664 million in Brazil, and Punch, the leased pub company for £403 million, in the UK, Heineken expects continued margin expansion in 2017 in line with the medium term margin guidance of a year-on-year improvement in operating profit (beia) margin of around 40 bps.

Capital expenditure related to property, plant and equipment should be slightly below €2 billion compared with €1.8 billion in 2016.

Europe

In Europe, Heineken increased beer volume by 0.7% driven by strong growth in the premium portfolio, led by the Heineken brand. France, Serbia, Spain, Italy and Poland contributed positively and more than offset the decline in Romania. Beer volume in the fourth quarter declined 2.5%, largely due to a deliberate reduction in promotions and private label volume in some markets as well as a strong comparative in December 2015.

European revenue at €10.11 billion increased by 1.9% organically, with revenue per hectolitre up 1.4%. Deflationary pressure and off trade pricing pressure continued to impact the region.

Operating profit (beia) at €1.26 billion was up 7.1% organically due to successful revenue management, continued focus on premiumisation and innovation, as well as disciplined cost management. Operating profit (beia) margin rose 80 bps to 12.5%.

In the UK, beer volume declined slightly, although premium beer and cider volume increased strongly, led by the Heineken brand. Cider innovations were successful and value enhancing. The pubs business continued to perform well.

In France, volume grew mid single digit, with growth led by premium brands including Heineken, Desperados and Affligem. However, the pricing environment continues to remain challenging.

In Spain, beer volume was up low single digit, with double digit premium segment growth supported by continued improvement in the underlying economic environment and good on trade performance.

In the Netherlands, volume grew low single digit, led by Heineken and supported by strong performance of Brand and Affligem in the premium segment.

In Poland, beer volume increased low single digit. The underlying market continued to be adversely impacted by channel mix and competitive pricing strategy.

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Nestlé Benefits From its Diversified Portfolio

Nestlé has posted a 0.8% increase in sales to SFr89.5 billion (€84 billion) for 2016, with a foreign exchange impact of -1.6% and acquisitions net of divestitures reducing sales by 0.8%. Organic growth was 3.2%, as real internal growth reached a three-year high of 2.4%. Pricing was limited at 0.8%, with some improvement in the second half of the year. Pricing is expected to improve further for the full year 2017. Organic and real internal growth were broad-based, highlighting the strength and resilience of Nestlé’s diversified portfolio.

Trading operating profit was SAFr13.7 billion with the margin improving by 20 bps to 15.3%, on a reported basis and up 30 bps in constant currency. The improvement was achieved while investment increased in brand support, digital marketing, research and development, and in the new nutrition and health platforms. Consumer-facing marketing spend increased by 6.3% in constant currency.

Restructuring costs doubled to SFr300 million in 2016 to support structural cost-saving initiatives.


Mark Schneider (pictured above), who became chief executive of Nestlé at the start of 2017, comments: “Our 2016 organic growth was at the high end of the industry but at the lower end of our expectations. We saw a solid trading operating profit margin improvement and our cash flow grew significantly. Based on these results, our board of directors is pleased to propose the 22nd consecutive dividend increase, underlining our commitment to continuity.”

He adds “In 2017, we expect organic growth between 2% and 4%. In order to drive future profitability, we plan to increase restructuring costs considerably in 2017. As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase.”

Nestlé is continuing to invest in future growth and operating efficiency, targeting mid-single digit organic growth and significant structural cost savings by 2020.

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Danone Enters New Transformation Phase

Danone has reported a 4.5% increase in recurring operating income to €3.02 billion on sales down 2.1% to €21.944 billion for 2016, adversely impacted by negative currency trends in the Argentine peso, the Mexican peso, and the Russian ruble. On a like-for-like basis, sales and recurring operating income rose by 2.9% and 8.4% respectively. The robust sales and margin performance have resulted in strong recurring EPS growth of 9.3%.

The Fresh Dairy Products division achieved like-for-like sales growth of 2% in 2016, after a 0.6% growth in 2015. This performance reflects accelerated growth in the CIS and North America region, in line with expectations.

The Waters division reported sales up 2.9% like-for-like. Excluding China, the division’s overall performance was at mid- to high single-digit, supported by strong category dynamics related to consumers’ switch to healthier hydration options and a constant focus on brand innovation and activation.

Early Life Nutrition sales rose by 3.5% in 2016, on a like-for-like basis. This performance includes a decline in ‘indirect’ sales to China. Excluding these, division growth remained strong at mid-single digit growth.

Medical Nutrition growth was very strong at 7.4% in 2016, on a like-for-like basis, and was balanced evenly across the division’s geographical areas.

As part of its 2020 transformation plan, Danone continued to focus in 2016 on building a more resilient and balanced model through disciplined resource allocation, efficiency gains and cost optimisation.

Since 2014, Danone has been transforming its business. It has adopted a new way of managing its strategic resources as cycles, rolled out its ‘One Danone’ organisational change and replaced its annual budget with an ongoing quarterly reallocation process (‘Beyond Budget’ project).

Danone is now entering into a new chapter of its journey towards its 2020 ambition as it adapts to the rapidly changing global trading environment and prepares to integrate the $12.5 billion acquisition of WhiteWave Foods Company, the US-based organic foods giant.

Emmanuel Faber, chief executive of Danone, explains: “With the upcoming addition of WhiteWave, we will soon start a whole new and exciting chapter of our alimentation revolution journey. While we delivered a robust performance leading to a very strong recurring EPS growth in 2016, the challenges we faced, including a slower turnaround of dairy in Europe and major market volatility, are a clear case to step up in our ability to seize consumer opportunities and improve our efficiency.”

Emmanuel Faber, chief executive of Danone.

Danone has decided to adapt the company’s organisation to become more agile at managing fast-moving trends and markets and to bring relevant decision-making closer to local markets and consumers. The development of a new organisational structure to create the best conditions for growth and efficiency will also entail the launch of a €1 billion efficiency programme.

Emmanuel Faber elaborates: “On one hand, I have decided to address our efficiency agenda in a radically new way, and to launch a comprehensive, company-wide program allowing us to spend better and more sustainably and to work more efficiently. On the other hand, fuelled by resources generated from higher efficiency, our new integrated growth and innovation process will gradually bring our brands into an entirely new level of relevance with their communities of consumers, which is the core of the alimentation revolution.”

Danone is aiming to secure consistent recurring EPS growth above 5%, on a like-for-like basis, for 2017, excluding any element related to the WhiteWave transaction.

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IGD Reveals Top UK Grocery Shopper Saving Tactics

New research from IGD reveals food prices top the list of factors UK shoppers think will have the most impact on their financial circumstances in the coming year, with two thirds (65%) saying this will have an impact. Meanwhile, energy bills (58%), petrol prices (53%), not having a wage increase (31%) and interest rates (28%) make up the remaining top five factors shoppers say will have an impact in the year ahead.

IGD’s research also highlights the top tactics being used by savvy shoppers to save money on groceries. Overall, cooking from scratch or with leftovers tops the list of things shoppers do to save money, with 83% claiming they do this. Some 65% have visited two or more stores on the same shopping trip and 63% have made packed lunches.

Meanwhile, 37% of shoppers have taken products out of their grocery basket, in-store and online, before they get to the till to save money. A further 28% have grown their own fruit or veg and over one in five (19%) have skipped a meal to save.

Highlighting savvy shopping habits to bag a bargain in the grocery aisles, over a third (33%) of UK shoppers have shopped at a specific time of the day to benefit from ‘reduced to clear’ reductions and over one in ten (13%) have asked a member of staff to reduce the price of a grocery products that was damaged or at the end of its shelf life. Those in London are the most likely to ask for a reduction, with 18% of shoppers in the region claiming they have done this, compared to just 10% in the Midlands, which is the least likely region to do so.

Vanessa Henry, Shopper Insight Manager at IGD, says: “UK shoppers are really switched on where personal and wider economic circumstances are concerned. It’s therefore no surprise that we’re seeing such a proactive and creative approach to grocery shopping. With food and drink prices continuing to show year-on-year price deflation for the time being it’s encouraging to see that consumers are ahead of the curve by adopting such savvy tactics to save money. Savvy shopping behaviour has become ingrained in the shopper mindset and our research highlights that even when a grocery bargain is not on offer, consumers are not afraid to ask for it. While the reduced shelf may not have been first point of call previously, today’s shoppers are not only actively using it, but timing their shopping around it.”

Furthermore, it seems coupon culture is also playing a part in UK shopping habits as 77% of shoppers claim to have used a coupon to reduce their overall bill and 31% to have collected a coupon or receipt from someone else to benefit from a loyalty scheme or special offer in the past six months. Furthermore, one in five (18%) claim to have paid for shopping at the checkout in two parts in order to benefit from a loyalty scheme or special offer.

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Irish Grocery Growth Dips Following Bumper Christmas

The latest supermarket share figures from Kantar Worldpanel in Ireland, for the 12 weeks ending 29 January 2017, reveal that retailers have not sustained the same level of strong growth achieved over the Christmas period. Grocery sales growth fell to 3.0%, down from 4.6% last month.

David Berry, director at Kantar Worldpanel, explains: “Dunnes Stores has returned to first place, capturing 22.7% share – only the second time it has managed to reach the top, having first held this position in November last year. This will be welcome news for the retailer but there should be some concern that its sales growth has dipped to 3.6% – the lowest level seen in more than a year.

David Berry, director at Kantar Worldpanel.

“The slowdown in overall market growth has led to even stronger competition between the major supermarkets and it’s tight at the top of the market share table – only 0.3 percentage points separate Dunnes Stores, SuperValu and Tesco. This points to a good year for consumers as the retailers battle each other fiercely for their all-important grocery spend, keeping price inflation low. Grocery prices are only 0.7% higher than they were this time last year – which for the average shopper only amounts to an extra 17 cents per trip.”

The supply issues affecting fresh produce in the last few weeks have contributed to the dampening of the overall market. David Berry comments: “Southern Europe might be suffering from continuing rainfall but it’s having a substantial impact on Irish shopping baskets. Courgettes, cauliflower and spinach have all seen volume sales drop by at least 20% while a host of other categories including lettuce and cabbages have been affected to a lesser degree.”

Elsewhere, Aldi continues to set the pace as the fastest growing retailer. Shoppers are now visiting the retailer 8.7 times every 12 weeks, compared to 8.1 times for the same period last year, and this has helped to increase sales by 6.3%. Aldi now captures 10.6% of the grocery market, ahead of the 10.3% from last year.

Meanwhile, almost three quarters of Irish shoppers visited a Lidl store in the past 12 weeks; having encouraged another 26,000 new consumers through its doors the retailer has posted positive sales growth of 2.8%.

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Major Transition at Aryzta

ARYZTA, the Zurich-based global food business with a leadership position in speciality bakery, has announced changes to its capital structure along with a strategic review of its investment in joint ventures and major changes to its senior management.

ARYZTA has increased the covenant headroom under its senior revolving credit facility, thereby providing the Group with enhanced financial flexibility. While ARYZTA is operating within its existing covenant of 3.5 times Net debt to EBITDA, it has agreed to increase the covenant to 4.0 times Net Debt to EBITDA. The covenant amendment applies to the three tests at 31 July 2017, 31 January 2018 and 31 July 2018.

There are no incremental financing costs associated with the amendment, while ARYZTA remains at its existing covenant of 3.5 times Net Debt to EBITDA. In the event of ARYZTA moving into the range of 3.5 to 4 times Net Debt to EBITDA, financing costs would increase by 40 – 50 bps. ARYZTA has a highly cash generative business and, following a period of investment, is now in a period of strong free cash generation, with a focus on net debt reduction.

With operations in North America, South America, Europe, Asia, Australia and New Zealand, ARYZTA has a primary listing on the SIX Swiss Exchange and a secondary listing on the ISE Irish Exchange.

ARYTZA is currently engaged in a review of its investment strategy in joint ventures. As part of that review, ARYZTA has commenced a process with Lion Capital to evaluate investment alternatives for the Picard business. Picard is a highly attractive specialist food retailer, which has a unique proposition that is singularly relevant for modern consumers.

ARYZTA’s interest in Picard is a 49% equity stake, together with a call option on the remaining 51% stake. Net proceeds of any transaction which may monetize ARYZTA’s interest in Picard would be used to strengthen the ARYZTA Group’s balance sheet.

Meanwhile, ARYZTA’s board and executive management are working together on a transition to a new leadership team. Owen Killian, CEO; Patrick McEniff, CFO/COO; and John Yamin, CEO Americas, all members of ARYZTA Executive Management, have tendered their resignations and intend to step down from their respective roles at the end of the current financial year. ARYZTA’s board will engage a leading international recruitment firm to identify the highest caliber candidates for these important roles.

To support an orderly transition, provide stability for the business and management continuity for staff, customers and suppliers, the board has appointed three new members to ARYZTA Executive Management with immediate effect. The new appointments are Dermot Murphy, COO Europe; Ronan Minahan, COO Americas; and Robert O’Boyle, COO APMEA. Collectively these executives have combined experience of more than 40 years with ARYZTA and each brings deep knowledge of the business and industry.

Gary McGann, ARYZTA Chairman, comments: “On behalf of the Board, I would like to express our gratitude to Owen, Patrick and John for their contribution in building a unique infrastructure with a very strong franchise in the speciality baking industry. The newly constituted Executive Management team, together with an improved capital structure, provides stability with an objective to deliver, in time, both performance and growth.”

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Heineken to Become Second Biggest Beer Business in Brazil

Heineken has agreed to acquire Brasil Kirin, one of the largest beer and soft drinks producers in Brazil, from Kirin Holdings of Japan for €664 million. The transaction will transform Heineken’s existing business across Brazil by extending its footprint, increasing scale and further strengthening its brand portfolio. On closing, Heineken will become the second largest beer company in Brazil, with a stronger commercial platform from which to capture future profitable growth in an exciting beer market.

Brazil is the fifth largest country in the world with over 200 million people. Beer volume in 2015 was 139 million hectolitres, making it the third largest market globally. Whilst the macroeconomic environment has been challenging over the last few years, the longer term fundamentals of the Brazilian beer market are highly attractive supported by a growing population and a positive GDP outlook. In addition, the premium segment of the beer market, which has outperformed the broader beer market in recent years, has a relatively low share compared to many other markets, providing a compelling and attractive opportunity for future growth.

Jean-François van Boxmeer, chief executive and chairman of Heineken.

Brasil Kirin is a large beer producer in Brazil, operating 12 production facilities with its own distribution network. It has a particularly strong presence in the North and North East, where Heineken currently has less exposure. It owns an extensive portfolio of beer brands and its share of the Brazilian beer market in 2015 was c.9%. The portfolio includes Schin, one of Brazil’s largest brands covering the mainstream and value segments, as well as the Devassa brand. Furthermore, it owns the speciality brands Baden Baden and Eisenbahn, which will complement Heineken’s existing premium portfolio.

Brasil Kirin also has a soft drinks business comprised of carbonated drinks, bottled water and other beverages. The soft drinks portfolio, which has around 2%1 market share, includes the iconic Itubaína brand.

Jean-Francois van Boxmeer, chairman and chief executive of Heineken, comments: “This transaction marks a step-change in scale in an exciting beer market, building on our success to date in the premium segment and strengthening our platform for future growth. It reiterates our commitment to the Brazilian market and confidence in our ability to generate attractive returns over the long-term across all segments of the market.”

Heineken expects to deliver significant cost synergies from the acquisition through production efficiencies, including logistics and brewery optimisation, and through optimising selling, general and administrative expenses. However, the transaction is likely to be dilutive to Heineken’s margin in 2017.

Completion of the acquisition is subject to customary regulatory approvals and is expected in the first half of 2017.

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Mead Johnson Sold in $17.9 Billion Deal

Reckitt Benckiser Group, the world’s leading consumer health and hygiene company, is acquiring Mead Johnson Nutrition Company, a global leader in infant and children’s nutrition, for $16.6 billion. Total value of the transaction is $17.9 billion including Mead Johnson’s net debt.

The Mead Johnson name has been associated with science-based infant and children’s nutrition products for over 100 years. The company’s Enfa family of brands, including Enfamil infant formula, is the world’s leading franchise in infant and children’s nutrition. Mead Johnson supplies more than 70 products in over 50 markets worldwide.

In the year ended 31 December 2016, Mead Johnson reported net sales of $3.74 billion, of which 50% were generated in Asia, 17% in Latin America and 33% in North America/Europe. On a US GAAP basis, Mead Johnson reported earnings before interest and income taxes of $819 million, earnings before income taxes of $713 million and net earnings attributable to shareholders of $545 million. On a non-US GAAP basis, Mead Johnson reported earnings before interest and income taxes of $927 million and EBITDA of $1.03 billion.

Reckitt Benckiser has operations in over 60 countries, with headquarters in London, Dubai and Amsterdam, and sales in most countries across the globe. The company employs approximately 37,000 people worldwide. Mead Johnson’s infant and children’s nutrition business increases RB’s revenues in consumer health by approximately 90%, while its global Enfa franchise becomes RB’s largest Powerbrand.

Rakesh Kapoor, chief executive of Reckitt Benckiser, comments: “The acquisition of Mead Johnson is a significant step forward in RB’s journey as a leader in consumer health. With the Enfa family of brands, the world’s leading franchise in infant and children’s nutrition, we will provide families with vital nutritional support. This is a natural extension to RB’s consumer health portfolio of Powerbrands which are already trusted by millions of mothers, reinforcing the importance of health and hygiene for their families.”

He adds: “Mead Johnson’s geographic footprint significantly strengthens our position in developing markets, which will account for approximately 40% of the combined group’s sales, with China becoming our second largest Powermarket.”

The integration of RB’s and Mead Johnson’s businesses is expected to deliver cost savings of £200 million per annum by the end of the third full year following completion. These arise principally from removing duplication in back office functions and leveraging the enhanced scale of the combined business in the procurement of raw and packaging materials, advertising and promotional expenditure and other spend. One-off costs to achieve the savings are expected to be approximately £450 million. The acquisition is expected to be accretive to adjusted diluted earnings per share in the first full year following completion and double-digit accretive by year 3.

James Cornelius, chairman of Mead Johnson, says: “First and foremost, this transaction provides tremendous value to Mead Johnson Nutrition stockholders. Additionally, relative to the future growth and development of the Mead Johnson business, Reckitt Benckiser – with its strong financial base, broad global footprint, consumer branding expertise and dynamic business model – is an ideal partner. I have been part of the journey of Mead Johnson Nutrition from its days as an operating division of Bristol-Myers Squibb through the past eight years as an independent public company and now into this powerful new business combination. I fully expect Mead Johnson to flourish as an important new part of the RB organisation.”

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€214 Million Investment in Food Union Group

Food Union Group, an international group of dairy and ice cream producing companies with a strong market share in Northern Europe and Latvia, has received a combined €214 million (US$225 million) investment from PAG, one of Asia’s largest private equity firms, and Meridian Capital, an existing investor.

Food Union’s businesses include milk processing as well as ice cream manufacturing in Northern Europe. PAG and Meridian Capital’s investment will support the expansion of Food Union with a specific focus in China, where Food Union is near completion on two modern dairy plants. In addition to capital, PAG will provide Food Union with deep country-specific knowledge and significant operational experience in support of the management team. PAG will invest €161.6 million and Meridian Capital will invest a further €52.4 million into Food Union.

“Food Union has had a tremendous year in 2016. In Europe, we have solidified our position in our home markets and have acquired two ice cream producers in Norway and Romania,” says Andrey Beskhmelnitsky, global chief executive and founder of Food Union Group. “In China, we broke ground on two modern dairy plants which are expected to bring high-end dairy products to Chinese consumers by the beginning of 2018. PAG’s investment and Meridian’s follow-on investment are an endorsement of Food Union’s strategy and we look forward to working with PAG to build a strong business of dairy products in China.”

“We are delighted to have the opportunity to partner with Food Union and Meridian Capital to help build a business to bring the best dairy products to China. There is a great demand among increasingly affluent and discerning Chinese consumers for high quality protein foods such as those Food Union produces. With its technology, knowhow and capabilities, Food Union is uniquely positioned to deliver what the Chinese market needs,” says Weijian Shan, chairman and chief executive of PAG.

Entry into China, which has one of the largest and fastest growing consumer markets in the world, is a significant step for Food Union,” remarks Askar Alshinbayev, managing partner of Meridian Capital. “We are confident that working alongside with PAG, we can deliver on our strategy to manufacture European quality dairy products which demanding Chinese consumers can enjoy and trust.”

In Europe, Food Union Group will continue focusing on high added value product development and production in dairy and ice cream segments and strengthening its market positions in the Baltics, Nordics, Central Eastern Europe and CIS countries, as well as expanding its export prospects in Middle East and China.

Currently employing more than 2,500 people, Food Union Group incorporates dairy and ice cream producing companies operating in nine countries. The group unites major dairy and ice cream companies and sales offices in Northern and Central Eastern Europe: “Rīgas piena kombināts”, “Valmieras piens”, and “Rīgas Piensaimnieks” in Latvia, “Premia” in Estonia and Lithuania, “Premier Is” in Denmark, “Isbjorn Is” in Norway, “Alpin57Lux” in Romania, “Hladokombinat No.1” in Russia, “Ingman Ice Cream” in Belarus, and two dairy production facilities currently under construction in China. Currently Food Union Group is the leading milk processing company in Latvia and the largest ice cream manufacturer in the Baltics and Denmark.

Food Union Group exports to 25+ countries all over the world, with the main markets being Latvia, Lithuania, Estonia, Poland, the Netherlands, Great Britain, Azerbaijan, Russia and China.

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Scotch Whisky Association and Scottish Craft Distillers Association Launch Partnership

The Scotch Whisky Association (SWA) and the Scottish Craft Distillers Association (SCDA) have made a commitment to work in partnership to support the continued success of the entire Scotch whisky industry and its supply chain. The agreement recognises the record expansion of the Scotch whisky industry with 14 distilleries starting production since 2013 and a further 8 set to open this year. There are currently up to 40 new distilleries at various stages of planning and development across Scotland.

Industry trade body, the SWA, and the SCDA, an association representing only newer, smaller producers, have signed a Memorandum of Understanding (MoU).

Scotch whisky is vital to the Scottish and UK economies, adding £5 billion in value each year, supporting more than 40,000 jobs and exporting £4 billion of Scotch annually to almost 200 markets.

The SWA and SCDA will support each other, while remaining distinct organisations with their own memberships, to build on Scotch whisky’s long-term, global reputation for provenance and high quality products. The agreement, signed at the new Glasgow Distillery in Hillington, recognises that Scotch Whisky is: “a significant Scottish and British cultural asset based on authentic and unvarying local methods of production, with distilleries and brands supporting the communities with which they work; creating jobs and boosting growth.”

The MoU makes it easier for well-established Scotch whisky companies to share their experience of building brands and opening up overseas markets with newer entrants to the industry. Newer companies can, in turn, offer fresh approaches and ideas to drive continued vitality across the industry.

The main commitments of the MoU are to:

* work together to grow understanding of the rules surrounding Scotch Whisky, its production, handling and marketing within the industry and through the supply chain, recognising shared interest in the public good of the Scotch Whisky industry;

* encourage shared approaches to stakeholder engagement, including around raising awareness of best practice on responsible marketing and promotion of Scotch Whisky;

* work together to ensure the Scotch Whisky workforce is appropriately skilled;

* improve industry information;

* collaborate amongst existing memberships.

There are currently 119 distilleries producing Scotch whisky. The Scotch whisky distilleries opened since 2013 are: Annandale, Arbikie, Ardnamurchan, Ballindalloch, Dalmunach, Eden Mill, Glasgow, Isle of Harris, Kingsbarns, Inchdairnie, Strathearn, Torabhaig (Skye), and Wolfburn.

Distilleries understood to be set to open in 2017 – Bladnoch (re-opening), Borders (Hawick), Clydeside, Dornoch, Drimnin, Isle of Raasay, Lindores Abbey, Toulvaddie and Lone Wolf (Ellon).

CAPTION:

Picture shows (left to right): Cabinet Secretary for the Rural Economy and Connectivity, Fergus Ewing; SWA head of communications, Rosemary Gallagher; Alan Wolstenholme, Scottish Craft Distillers Association chairman.

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Bord Bia’s New Warsaw Office Provides Gateway to 11 Central European Markets

Bord Bia (Irish Food Board) has opened its new office in Warsaw, Poland, from which it aims to drive exports of Irish food and drink to eleven targeted Central European markets. Bord Bia’s presence in the region will assist Irish exporters in building enduring business relationships at a time when Ireland’s food and drink industry is seeking new premium markets for food and drink in order to meet the targets of its FoodWise 2025 development strategy.

Poland is Ireland’s eighth largest EU market for food and drink with exports reaching an estimated €185 million in 2016, an increase of 15% on the previous year. Bord Bia Chief Executive Tara McCarthy (pictured) says the decision to establish an office in Poland followed considerable research into potential growth in Poland itself and its location as a gateway to Central Europe.

“This office opens at a time when many Irish companies are looking to new opportunities while still holding their positions in traditional markets. The value of trade to Poland has almost trebled over the last five years with dairy, beverages and prepared foods, all showing strong growth in 2016.” She continues: “The potential for further growth here and in emerging EU markets will increase their attractiveness to exporters and the increasing awareness of Origin Green will offer important assurances to buyers on sustainable sourcing. Bord Bia Warsaw will provide exporters with the resources, consumer insight and market intelligence necessary to help them maximise opportunities in these markets.”

Central and Eastern Europe accounts for over a quarter of a billion euro of Irish food and drink exports. The three largest markets, Poland, Czech Republic and Latvia, account for almost 85% of this trade which has doubled in value in the past five years.

The key sectors driving growth of Irish exports in the region are prepared foods (driven by fat filled milk powders in Poland), meat (driven by beef and pigmeat in Poland) and beverages (driven by Latvia and Czech Republic).

The 11 target countries are: Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.

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Sales and Profits Fall at The Coca-Cola Company

The Coca-Cola Company has reported a 5% fall in net revenue to $41.86 billion for 2016 with net income declining by 11% to $6.5 billion. Total unit case volume grew 1% for the full year as the soft drinks giant’s developed markets grew by low single digits while its emerging and developing markets were even. Operating margin for 2016 expanded more than 90 basis points.

During the year, The Coca-Cola Company advanced its strategy to grow revenues and profits from its sparkling beverage portfolio while at the same time helping consumers reduce consumption of added sugars. In Western Europe, Coca-Cola Zero Sugar once again grew unit case volume double digits in the fourth quarter, boosted by expansion into France, Belgium, Netherlands, and Ireland. These recent moves extend the product beyond its initial launch market of Great Britain. Further expansion is planned in early 2017 for other European markets, Australia, and South Africa, among others.

In addition to these moves in its sparkling portfolio, The Coca-Cola Company continued the global expansion of smartwater, one of its premium water brands. While smartwater achieved double-digit unit case volume growth during the year in its home market of North America, it also helped drive full year high single-digit unit case volume growth in the still water category for its Western Europe business unit.

Muhtar Kent, chairman and chief executive of The Coca-Cola Company, comments: “We are pleased to report that we ended 2016 with fourth quarter top- and bottom-line growth within our expectations. Strong price/mix stemming from our continued focus on driving revenue and solid performance in our developed markets helped offset persistent macroeconomic pressures in our emerging and developing markets. Our flagship market of North America grew net revenues 8% for the quarter and 4% for the year, outperforming total retail value growth for both the North America non-alcoholic ready-to-drink beverage industry and US consumer packaged goods companies.”

James Quincey and Muhtar Kent.

He elaborates: “In addition to delivering our profit target for the full year, I am encouraged by the strategic actions taken during 2016 to strengthen our global bottling system. In the fourth quarter, we reached a definitive agreement to refranchise all company-owned bottling operations in China, and we took important steps to further the evolution of Coca-Cola Beverages Africa. During the year, we successfully completed the creation of Coca-Cola European Partners, and we supported the ongoing transformation of the franchise bottling system in Japan. And last, we remain on track to complete the refranchising of company-owned bottling operations in the United States by the end of 2017. In total, half of our global system revenue has been in motion through our recent actions to strengthen the system. The progress demonstrated by these actions is foundational in positioning our system for prosperity long into the future.”

The Coca-Cola Company is changing its leadership with James Quincey, currently chief operating officer, due to take over as chief executive on May 1. “Looking forward to 2017, we expect another year of volatility around the world. I don’t need to tell you about the rapid change that’s taking place on the geopolitical level,” says James Quincey. “Net-net we see the overall environment to be similar to what it did in 2016.”

The Coca-Cola Company is projecting 3% growth in currency-neutral revenue for 2017 with a 1% to 4% decline in full year earnings per share compared to the $1.91 per share achieved in 2016.

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Unsatisfactory Performance By HKScan Group

Nordic meat group HKScan has reported a fall in both net sales and profits for the year ended 31 December 2016 compared to 2015. Net sales declined from €1.917 billion to €1.873 billion during the period, with all the group’s market areas behind the previous year, and comparable EBIT fell from €21.5 million to €13.2 million. The biggest decline in EBIT was in market area Sweden, due to weak sales performance, especially in the processed category. Performance in Sweden was also impacted by the higher purchase prices and the scarcity of beef on the market. In Finland, full-year EBIT remained behind the previous year due to the weak first half of the year. The Baltics showed a slight improvement. Market area Denmark continued performing well on the domestic retail market, but challenges in exports continued.

Jari Latvanen, president and chief executive of HKScan Group.

Jari Latvanen, who took over as HKScan Group’s new president and chief executive on 31 October 2016, comments: “HKScan’s full-year performance in 2016 was weak. The group’s smallest market, the Baltics, was the only area that was ultimately able to improve its comparable operating profit from the previous year, despite the severe internal turbulence it faced at the end of the year. Sweden was a particular disappointment, having lost market share and falling clearly behind its previous year’s result. Finland recorded slight growth in net sales for the whole year, and its operating profit improved year-on-year both in the third and the fourth quarter.”

He continues: “Given the poor performance, we will undertake multiple simultaneous measures to correct the negative trend. While we continue to invest in strengthening our innovation capability and offering development to delight consumers and win the loyalty of our customers. We will also focus on improving our operational efficiency.”

HKScan has consequently renewed its group leadership team and is about to initiate a review of the group’s operating model. As part of this review, HKScan plans to embark on a partial re-organisation of its operations. The goal of the review is to renew HKScan’s offering with a sharper focus on consumers and customers, to improve the efficiency and transparency of the meat value chain, and to upgrade the productivity of its internal processes. The strategic aim of these changes is to improve the company’s profitability and competitiveness and to seek profitable growth on its home and export markets. Job losses from the planned changes are not expected to exceed 150.

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Carlow Brewing Company Acquires Craigies Cider

Carlow Brewing Company, Ireland’s leading craft beer producer, has announced the acquisition of Craigies Cider, and will add the Irish craft cider brand to its own growing portfolio of brands which includes O’Hara’s Irish craft beers, and Falling Apple Irish craft cider. The sale includes Craigies cider production equipment, which will enable Carlow Brewing Company to bring all cider production in-house to its Bagenalstown-based microbrewery this year, and facilitate support of local apple growers and producers.

Seamus O’Hara, chief executive of Carlow Brewing Company, comments: “The brewery is celebrating its 21st anniversary this year, and we are delighted to start 2017 with this expansion. We value all of the hard work and effort that has gone into the Craigies brand thus far, which has resulted in it becoming one of the most popular and highest quality Irish craft ciders in the country. We intend to continue this tradition, as well as learning from the members of the Craigies team who will continue to be involved in the brand.”

CAPTION:

Seamus O’Hara, co-founder and chief executive of Carlow Brewing Company; and Simon Tyrrell, co-founder of Craigies Cider.

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Carlsberg Group Reports a Year of Progress

Carlsberg Group has reported net revenue of DKr62.6 billion (€8.4 billion), up 2% on an organic basis, for the financial year ended 31 December 2016, as the brewer continues to make steady progress against its key priorities. Group operating profit increased organically by 5% with all three regions – Western Europe, Eastern Europe and Asia – delivering growth. Reported operating profit was DKr8.245 billion with the decline of 3% due to a translation impact of -6% and a net acquisition impact of -2%. The operating margin improved by 30bp in reported terms to 13.2% with improvement in all three regions.

Carlsberg Group made good progress on achieving its key priorities for 2016 – executing Funding the Journey; announcing and embedding the group’s new strategy, SAIL’22; improving margins in Western Europe; continuing the growth trajectory in Asia; and mitigating the negative earnings impact from the currency weakness and market decline in Eastern Europe. During 2016, Funding the Journey delivered approximately DKr0.5 billion of the anticipated benefits of DKr1.5-2.0 billion by 2018.

Cees ‘t Hart, chief executive of Carlsberg Group.

Carlsberg Group also achieved its three regional priorities for 2016. In Western Europe, the operating margin improved by 50bp to 14.2%, mainly as a result of value management focusing on delivering price/mix and GPaL margin improvement. Its Asia region continued to deliver solid organic revenue growth (+4%) as a result of a strong 6% price/mix and despite a negative volume development in China. Organic operating profit growth was 6%. The Eastern Europe business achieved 12% organic operating profit growth and a 60bp improvement in reported operating margin in spite of challenging market conditions and currency headwind.

Cees ‘t Hart, chief executive of Carlsberg Group, comments: “2016 was a good year for the Carlsberg Group. We’re satisfied with our performance and the delivery of 5% organic growth in operating profit, a solid price/mix, strong cash flow and a further reduction in financial leverage. During the year, we took significant steps to become a more successful company. We launched our new strategy – SAIL’22 – and its priorities are now well integrated in our plans for 2017. In addition, Funding the Journey delivered benefits faster than anticipated for the year.”

He adds: “In 2017, we’re determined to achieve a substantial proportion of the remaining Funding the Journey benefits, allowing us to grow earnings organically and invest in SAIL’22-related activities to support the future growth of the company.”

At regional level, Carlsberg Group plans to improve margins and operating profit in Western Europe; continuing top-line and earnings growth in Asia; and grow operating profit organically in Eastern Europe. Based on these priorities, for 2017 Carlsberg Group expects to deliver mid-single-digit percentage organic operating profit growth and financial leverage reduction.

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Clearance For Acquisition of Two Cargill Oilseed Processing Facilities by Bunge

The European Commission has approved under the EU Merger Regulation the acquisition of two Cargill oilseed processing facilities by Bunge of the Netherlands. The two Cargill oilseed facilities are an oilseed crushing and seed oil refining facilities located in Amsterdam, the Netherlands and an oilseed crushing and storage facilities located in Brest, France.

Bunge is a global agribusiness and food company, notably active in the production of vegetable oils and oilseed meals. Bunge and the Cargill assets sell soybean meal and soybean oil primarily to animal feed, food industry and biodiesel customers.

The Commission concluded that the proposed acquisition would raise no competition concerns because of the presence of several alternative competitors in the soybean meal and oil markets, including importers. The operation was examined under the normal merger review procedure.

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Mondelēz International Remains Confident of Achieving Long-term Growth

Mondelēz International, the US-based global snacking giant, has reported a 12.5% decrease in net revenue to $25.923 billion for 2016, driven by the coffee business transactions, deconsolidation of the company’s Venezuelan operations and currency headwinds. However, organic net revenue increased 1.3%. Reported operating income decreased by 71.1% to $2.569 billion but adjusted operating income rose by 13.3% to $3.953 billion.

Mondelēz International is a world leader in biscuits, chocolate, gum, candy and powdered beverages, featuring global ‘Power Brands’ such as Oreo and belVita biscuits; Cadbury Dairy Milk and Milka chocolate; and Trident gum.

Operating income margin was 9.9%, down 20.1 percentage points, driven by the prior-year gain on the coffee business transactions, partially offset by the prior year loss on the Venezuela deconsolidation. Adjusted operating income margin expanded 230 basis points to 15.3%. These results reflect continued reductions in overhead costs and supply chain productivity savings.

The company returned $3.7 billion of capital to shareholders through share repurchases and dividends during the year.

“We continue to make solid progress toward our near-term margin targets, while investing for long-term growth,” says Irene Rosenfeld, chairman and chief executive of Mondelēz International. “Despite significant economic disruptions, political uncertainties and slower global category growth, we remain confident in and committed to our balanced strategy for both top- and bottom-line growth. Throughout the year, we continued to sharpen the focus of our portfolio, increase Power Brand investments and modernize our supply chain. These actions, together with our excellent cost discipline, position us well to deliver strong operating leverage that will drive sustainable value creation for our shareholders.”

Mondelēz International expects organic net revenue to increase at least 1% in 2017 and adjusted operating income margin in the mid-16 percent range. The company also expects double-digit adjusted EPS growth on a constant-currency basis. The company estimates currency translation would reduce net revenue growth by approximately 1% and adjusted EPS by approximately $0.03.

The company remains committed to its 2018 adjusted operating income margin target of 17% to 18%.

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Aldi Becomes UK’s Fifth Largest Grocer

The latest UK grocery market share figures from Kantar Worldpanel, published for the 12 weeks ending 29 January 2017, show Aldi is now Britain’s fifth largest supermarket. With sales up 12.4% year on year, the retailer increased its market share by 0.6 percentage points to clinch fifth place for the first time.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Just a decade ago Aldi was the UK’s tenth largest food retailer, accounting for less than 2% of the grocery market. Since then the grocer has grown rapidly, climbing the rankings by an impressive five places to hold a 6.2% market share. Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year.

“Despite being overtaken by Aldi, Co-op’s 2% sales increase was well ahead of the market, continuing a run of growth stretching back to July 2015. A significant own label sales increase of 7% was behind the strong performance, with healthier ranges successfully catering to consumers’ good intentions for the new year.

“Not all shoppers were convinced by the health message though: while overall sales of healthy own label lines increased by 3%, a dry January was certainly not on the cards for many of us – sales of beer increased by 4% over the past 12 weeks, with wine up by 1% over the same period.”

The market continues to grow faster than it did in 2016, with supermarket sales up 1.7% on last year: eight of the nine major retailers saw positive sales growth during the past 12 weeks. Although not significant enough to dampen the market, well-publicised supply issues over the past few weeks have affected sales in fresh produce. Fraser McKevitt comments: “11 million households buy courgettes annually, but supply issues contributed to 759,000 fewer shoppers buying them this January – that’s a 31% drop in spending compared with the same month last year. Sales of spinach also fell by 12%, in a clear sign that the poor weather in southern Europe has had a tangible impact on British shopping baskets.”

“Meanwhile rising prices – which we saw at Christmas for the first time since 2014 – have continued into the new year, with like-for-like inflation on a basket of everyday groceries climbing to 0.7%. If prices continue to rise at the same rate for the rest of 2017, shoppers will find themselves around £27 worse off.”

Morrisons was the fastest-growing retailer within the big four, increasing its market share for the first time since June 2015 with a sales uplift of 1.9% year on year. Although growth came from across the store, premium own label was a real bright spot – sales were up by 35%, while its revamped The Best range made its way into 14% of Morrisons baskets.

Growing for the fifth period in a row – albeit at a slower rate than previously – Tesco’s sales were up 0.3% year on year as its market share fell to 28.1%. Sainsbury’s sales remained flat, while its share fell by 0.3 percentage points to stand at 16.5%.
Meanwhile Asda’s 1.9% fall in sales signalled a decline which continues to slow. Although its share dropped by 0.6 percentage points over the quarter, the retailer did manage to increase the number of shoppers visiting its stores compared to the same period last year.

Elsewhere, Waitrose, Lidl and Iceland all continued to grow. Boosting sales by 3.4%, Waitrose increased its share of the grocery market to 5.3%, while Iceland – up 8.6% year on year – saw sales growth for the tenth consecutive period. A 9.4% year on year sales increase for Lidl buoyed the retailer’s market share by 0.3 percentage points, leaving the discounter holding 4.5% of the UK grocery market.

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Fundamental Changes Ahead For Global Wine Industry

Following a bump in the road, China is once more expected to drive global grape wine consumption between now and 2020, according to the IWSR Vinexpo Report 2017, the most comprehensive survey of the global wine market. Asia-Pacific will thus supplant the Americas as the main engine for wine growth over the coming period. At current rates, China will overtake the UK to become the second most-valuable still wine market by the end of the forecast period.

For 2017, premium wines (above $10.00) are forecast to grow the most. Winemakers in Australia, France and Italy will perform particularly well on the international stage. Each is expected to see an additional 1m nine-litre cases this year alone. New Zealand’s rise will continue, particularly in North West Europe. However, by virtue of their expansive and developing home market, premium US winemakers will enjoy the most volume gains.

Premium, pale dry rosé may have dominated the headlines in recent years, but rosé’s main driver remains offdry varieties. According to IWSR analyst Giles Gough, this is where the category is expected to continue to see the most gains over the coming period. “Emerging wine markets will be a key driver – especially South Africa – where ‘natural sweet’ rosé has captured the imagination of emerging middle-class drinkers,” says Gough. “Even in developed markets, the sweeter rosé style has an important role to play in talking to younger drinkers, who otherwise may defer entry to the category, or not at all.”

The biggest innovation remains low-alcohol and flavoured wines. These products have been one of the major success stories in the UK, while Germany has led the way in flavoured low-alcohol and/or alcohol-free sparkling wines. Elsewhere in Europe, low-alcohol and flavoured wines are gaining traction, in part to fight category blur – the tendency among consumers to switch between beers, ciders and wines – and in part in response to evergrowing levels of health awareness. Prosecco’s boom is set to continue worldwide as the trend spreads geographically. In 2010 prosecco was 10% the size of Champagne in the UK; by 2020 it is forecast to be three times bigger.

The report comprises a global summary with detailed market and consumer insights for an additional 20 key countries, forecasts for 2016 to 2020, and historical data from 2010. It offers breakdowns by market, volume, colour, value and price point. Additional data on international trade, production and area under vine is also supplied. The final section places wine in the context of the global alcohol market and examines how it is affected by category blur, thereby assessing potential growth threats and opportunities across three key global regions.

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Sumitomo’s Acquisition of Fyffes Approved

The European Commission has approved, under the EU Merger Regulation, the €751.4 million acquisition of Fyffes, a leading international grower, importer and distributor of fresh produce, by Sumitomo of Japan.

With annual turnover in excess of €1.2 billion, Fyffes is headquartered in Dublin, Ireland with operations in Europe, the US, Canada, Central America and South America and Asia. Fyffes activities include the production, procurement, shipping, ripening, distribution and marketing of bananas, pineapples, melons and mushrooms. It markets its produce under a variety of very well-known brands including Fyffes®, Sol®, Turbana®, Hoya®, Highline® and All Seasons® and employs in excess of 17,000 people worldwide.

With 109 locations in 66 countries, Sumitomo Corporation consists of over 800 companies and has a market capitalisation of about US$15 billion with US$8 billion in cash on balance sheet as at its year end on 31 March 2016. Sumitomo has been active in the banana industry since the 1960s and is the market leader in Asia with a fully integrated business model with interests ranging from plantation operations in the Philippines to retail distribution across the Asian region. Currently, the Sumitomo Group imports approximately 30% of the bananas into the Japanese market.

The European Commission concluded that the proposed acquisition would raise no competition concerns because the companies’ activities do not overlap in the European Economic Area.

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Arla Food Invests a Further £37.5 Million in its UK Sites and Logistics

Arla Foods UK, the farmer-owned dairy company, plans to invest approximately £37.5 million (€44 million) in its UK sites and logistics in 2017, an increase of 51% from 2016.

Tomas Pietrangeli, managing director of Arla Foods UK, comments: “Last year, I unveiled the most ambitious UK business strategy to date to make Arla a household brand by 2020 and grow its revenue by nearly a third. This ambition is part of the company’s global strategy for growth and will position Arla as the champion of British dairy. By continually investing and improving our sites, we can ensure we grow capacity, maintain high quality of our products and ultimately return the best possible price to our farmer owners.”

The UK figure is part of the £285 million (€335 million) investment parent group Arla Foods expects to make at its sites around the world. It will support its global Strategy 2020 by moving more milk from bulk into branded, own label and foodservice sales. The overall investment forecast is nearly a 50 per cent increase compared to last year (£192m/€227m in 2016) and one of the highest ever single-year supply chain investment in the company’s history.

Tomas Pietrangeli, managing director of Arla Foods UK.

The £37.5 million will be spread across all its thirteen UK production, packing and distribution sites as well its logistics operation. The projects include:

* Taw Valley creamery, in Devon, will see £5m to further develop capacity and harnessing latest technologies and process to support product quality for its award winning hard cheeses such as Cheddar, Red Leicester and Double Gloucester.

* £5m at Stourton dairy, in Leeds, will see a number of projects that will include a new packing facility that will allow it to increase production of own-label flavoured milk.

* A significant proportion of the £3.5m at Arla’s state of the art fresh milk processing site in Aylesbury will go on new processing equipment for Arla B.O.B. The investment will allow the site to begin production of the successful and award-winning fat-free skimmed milk that tastes as good as semi-skimmed. It was one of the Arla innovations in added value milk launched in 2016, alongside Cravendale 250ml, Arla Organic and Arla Farmers Milk.

* The Westbury operation in Wiltshire, home to Anchor butter, will see £3m spent on supporting facilities to ensure continuous product production during planned essential maintenance.

The global investment figure will be focused on production upgrades at core markets such as Germany, UK, Denmark and Sweden as well as on production sites that supply high-quality dairy products to Arla’s emerging markets outside the EU.

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UK Retailers Lose Over £2 Million in Courgette Sales During January

Data released by IRI, the provider of big data and predictive analytics for FMCG manufacturers and retailers, shows that the recent courgette shortage has seriously impacted sales of the vegetable in January. The figures from IRI Retail Advantage* show a steep decline throughout the month, with sales down 58% for the week ending 28 January 2017 – compared to the same week last year.

This is the biggest drop to date and impacted UK retailers to the tune of £715,000 in one week alone. During the previous week (w/e 21 January 2017) IRI saw a similar 51% fall in value sales, worth £655,000.

Overall in January, retailers lost a total of £2+ million in sales for courgettes, due to a shortage of stocks resulting from floods, snow and storms in southern Spain, where many of the UK’s vegetables are sourced during the winter.

Martin Wood, Head of Strategic Insight, Retail at IRI, comments: “We know there have been production problems in southern Europe and it’s starting to impact sales quite dramatically at the leading grocery multiples. It remains to be seen if this downward trend continues. In the meantime, retailers are having to react quickly to the shortage and look to alternative suppliers to plug the gaps and keep customers happy.”

*All figures quoted are from IRI Retail Advantage (Top 9 retailers: Tesco, Sainsbury’s, Asda, Morrisons, Waitrose, Co-Op Food, M&S Food, Iceland and Ocado)

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Irish Whiskey Association Meets Scotch Whisky Association

Representatives from the Irish Whiskey Association and the Scotch Whisky Association have held their annual meeting to discuss products, new opportunities and the challenges posed by Brexit. Irish whiskey exports now represent more than a third of all drinks exports and were valued at €505 million in 2016. The industry has experienced huge growth over the last 10 years and recently saw plans for two new distilleries in Derry and Dublin move another step closer, bringing the total number of distilleries to 16 in production and a further 14 in planning with many other projects at other stages of development.

With 118 distilleries in operation in Scotland and exports of Scotch whisky valued at £4 billion a year, the sector is considerably bigger than the Irish whiskey sector.

Miriam Mooney, head of the Irish Whiskey Association, says: “Whilst Irish whiskey is the fastest growing premium spirit in the world, the Scotch whisky industry is more established and is the largest net contributor to the UK’s balance of trade in goods, creating £5 billion annually for the economy. As the Irish whiskey sector continues to prosper we only have to look at Scotland to see what’s possible for the industry in terms of growth and potential. The sector is a significant contributor to rural employment, supporting often fragile local economies including 7,000 jobs in rural Scotland alone.”
She adds: “Irish whiskey is undergoing a renaissance which is being driven by both existing and new players alike and global recognition for high quality Irish whiskey has never been higher. We look forward to working together with our counterparts in Scotland to promote further growth and to discuss the challenges facing both sectors including the uncertainty around Brexit.”

Irish Whiskey vs Scotch Whisky League Table

Irish Whiskey Scotch Whisky
Employees (direct and indirect) 5,000 40,000
Number of distilleries 16 in production and 14 in planning 118
Number of Markets sold in world 135 200
Export value €505m £4bn

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Nestlé Opens Innovative Pet Food Factory in Brazil

Nestlé has opened a pet food factory in Brazil. The new Purina site in Ribeirão Preto will make wet food for cats and dogs from the Friskies, Cat Chow, Pro Plan and Dog Chow ranges. It uses exclusive technology to produce more natural and nutritious meals, by preserving the original meat characteristics.

Nestlé’s SFr85 million (€80 million) investment will generate around 80 new direct jobs and a further 400 indirect jobs, and meet expected rising demand for pet food in Brazil and the region.

The facility also minimises impact in line with Nestlé’s commitment to environmental sustainability. It will send zero solid waste to landfills, uses sunlight and LED lamps, and a thermal energy recovery system.

According to Laurent Freixe, Nestlé Executive Vice President and Head of the Zone Americas, the new factory underlines Nestlé’s confidence in Brazil and in Latin America.

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Glanbia Announces Two Strategic Acquisitions

Glanbia, the global nutrition group, is investing approximately €181 million to acquire two companies, Amazing Grass in the United States and Body & Fit in the Netherlands. Both businesses have a strong strategic fit with Glanbia’s Performance Nutrition (GPN) division and will extend its reach to new consumers and channels.

Amazing Grass has a portfolio of organic and non GMO brands in the plant based nutrition, ‘Greens’ and ‘Super Food’ categories. The brand portfolio offers plant based organic, GMO free products to lifestyle consumers in the natural, online, food, drug and mass channels in North America. The brand is complementary to the current portfolio and positions GPN well in the plant based nutrition market.

Body & Fit is a leading direct to consumer (DTC) online branded business focused on performance nutrition. Body & Fit’s consumer base is largely in Germany and the BeNeLux region within Europe. This acquisition enables GPN to have a direct presence in the rapidly growing DTC channel.  GPN will invest in Body & Fit to expand its reach across Europe. The transaction is subject to Dutch competition clearance and is expected to close in the first half of 2017.

Siobhan Talbot (pictured), group managing director of Glanbia, comments: “Both businesses have a strong strategic fit with Glanbia Performance Nutrition extending its reach to new consumers and channels. Amazing Grass produces a range of natural plant based nutrition products while Body & Fit is a successful direct to consumer online brand. Both businesses have a track record of strong growth and we will continue to invest in their future development.”

Both of the existing management teams will remain with the respective businesses and integration will largely be related to installing Glanbia supporting systems. The investment of approximately €181 million is inclusive of contingent consideration and will be funded by debt from existing facilities.  The 2016 full year combined net revenues of Amazing Grass and Body & Fit was approximately €99 million and the acquisitions will be marginally earnings accretive in 2017.

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Gruppo Campari Acquires Super-premium Gin Brand

Gruppo Campari is acquiring most of the assets of BULLDOG London Dry Gin, an independently owned brand, for US$55 million plus the assumed liabilities and working capital for approximately US$3.4 million. The deal leaves cash-on-hand and other assets on BULLDOG’s balance sheet, resulting in approximate proceeds of $70 million at closing to BULLDOG’s shareholders, a multiple of 5.7x BULLDOG’s full-year 2016 revenue. Additionally, BULLDOG may receive an earn-out, payable upon the achievement of certain targets through 2021, potentially significantly increasing the total consideration.

BULLDOG Gin was created in 2007 by entrepreneur and former JP Morgan investment banker, Anshuman Vohra. Launched in the USA in 2007 and subsequently in Europe, BULLDOG Gin has experienced a meteoric rise and is the #4 premium (and above) gin in the world (IWSR) and also the fastest growing premium gin in the world by annual growth rate. With its iconic bottle and distinctive citrus forward flavour profile, BULLDOG is available in 95 countries, with a strong concentration in Europe. Spain, Benelux, Germany, the UK, Global Travel Retail, and the USA are currently the brand’s largest markets. BULLDOG Gin shipped 150,000 9L cases and achieved net sales of US$12+ million in 2016, increases of 24% and 22% year-over-year, respectively.

Gruppo Campari has distributed BULLDOG Gin since 2014 through its own distribution network, including the Global Travel Retail channel, by virtue of an exclusive five-year agreement with an attached call option to acquire ownership of the brand in 2020. Following a renegotiation of the deal terms, Gruppo Campari accelerated its purchase of the brand. The new deal structure enables Gruppo Campari to achieve a financially attractive proposition, allowing it to fully exploit the brand’s growth potential going forward by taking full control of the marketing strategy as well as the brand building initiatives.

Founded in 1860, Gruppo Campari is now the sixth-largest player worldwide in the premium spirits industry. It has a global distribution reach, trading in over 190 nations around the world with leading positions in Europe and the Americas. The group’s growth strategy aims to combine organic growth through strong brand building and external growth via selective acquisitions of brands and businesses.

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Public Consultation on Future of Common Agricultural Policy

The European Commission has launched the first phase of the modernisation and simplification of the Common Agricultural Policy (CAP) with the opening of a three-month public consultation. The contributions received will support the Commission’s work to define the agricultural policy priorities for the future. A modernised and simplified Common Agricultural Policy would address the key challenges that agriculture and rural areas are facing while at the same time contributing to the Commission’s policy priorities (notably jobs and growth), to sustainable development, a budget focused on results, simplification and subsidiarity.

EU Agriculture and Rural Development Commissioner Phil Hogan comments: “The Common Agricultural Policy is already delivering major benefits for every European citizen, in terms of food security, the vitality of rural areas, the rural environment and the contribution to the climate change challenge. By designing a roadmap for the future, I am confident it can deliver even more. But we must refine it, and revitalise it, and – of course – we must adequately fund it.”

The public consultation will run for 12 weeks and will give farmers, citizens, organisations and any other interested parties the chance to have their say on the future of the Common Agricultural Policy. The input from the consultation will be used by the Commission to help draft a Communication, due by the end of 2017 that will include conclusions on the current performance of the Common Agricultural Policy and potential policy options for the future based on reliable evidence.

The results of the public consultation will be published online and presented at a conference in Brussels in July 2017.

First launched in 1962, the Common Agricultural Policy is one of the EU’s longest-standing policies and has evolved over the years to meet the changing challenges of agricultural markets. Although the most recent reforms date from 2013, there have been several fundamental developments since then to which the Common Agricultural Policy needs to respond more effectively, such as increased market uncertainty and falling prices, new international commitments on climate change and sustainable development.

Faced with these and other challenges, the Common Agricultural Policy needs to be modernised, simplified to reduce even further the administrative burden and made even more coherent with other EU policies to maximise its contribution to the 10 political priorities of the Commission, the Sustainable Development Goals and the Paris climate change agreement.

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Double Appointment Strengthens 2 Sisters’ UK Poultry Team

2 Sisters Food Group, the UK’s biggest poultry producer, has made two key appointments as it continues on its transformation plan. Peter Judge and Frank Robinson joined the 2 Sisters Food Group poultry division in January.

Peter Judge joins as operations director and will be responsible for aligning individual site performance with the 2 Sisters business objectives. The former chief operating officer of Karro Food Group and Tulip, he has a strong background in business leadership and operational improvement after 30 years’ in food manufacturing and retail.

Peter Judge says: “2 Sisters is a strong business and I’m delighted to join the team at this exciting time. I’ve already met some fantastic people and I think we’ve got a great opportunity to continue to build on the Better Before Bigger strategy.”

Frank Robinson re-joins former Tulip colleague Peter Judge, as commercial director at 2 Sisters and will be responsible for the commercial team and developing effective relationships with all customers. Frank Robinson has 25 years’ experience in the food industry and has held a variety of senior sales and business development roles for some of the UK’s leading food manufacturers.

Frank Robinson remarks: “I’m excited by the opportunity to lead the sales team and work with some old colleagues. The recent investment in Scunthorpe and our Added Value sites will provide us with the platform to drive forward sales with pace and innovation.”

Ranjit Singh, chief executive of 2 Sisters Food Group, says: “Peter and Frank both bring a great depth of food industry experience which will enable us to build on our foundations and push to the next level.”

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Diageo to Develop a Guinness Brewery in the US

Diageo intends to build a US version of Dublin’s popular Guinness Open Gate Brewery in Baltimore County, Maryland. As currently planned, the company would build a mid-sized Guinness brewery and a Guinness visitor experience with an innovation microbrewery at the company’s existing Relay, Maryland site. This new brewing capability and consumer experience, combined with a packaging and warehousing operation, would bring the company’s investment in Relay to approximately $50 million.

The new brewery would be a home for new Guinness beers created for the US market, while the iconic Guinness stouts will continue to be brewed at St James’s Gate in Dublin, Ireland. Visitors would be able to tour the working brewery, sample experimental beers brewed on-site at the taproom, and purchase Guinness merchandise at the retail store. While finalization of these plans is still contingent on reaching agreement on several considerations, the project would represent a significant investment in Maryland in terms of economic development, job creation and tourism.

“Opening a Guinness brewery and visitor center in the US will enable us to collaborate with fellow brewers and interact with the vibrant community of beer drinkers,” states Tom Day, President, Diageo Beer Company, USA. “Given the success of our Open Gate Brewery in Dublin and the popularity of beer tourism in the US, we are confident that Americans will welcome the opportunity to come experience Guinness brewing in Baltimore County. We appreciate the support we have received so far from state and local officials and look forward to continuing to contribute to the local community.”

The project would re-establish a Guinness brewery in the US after 63 years of absence. The new brewery and visitor experience would become part of Diageo’s production facility in Relay, site of the historic Calvert Distillery which opened in 1933. Relay was chosen as the preferred location for this project for several reasons, including the site’s proximity to major East Coast tourist and population hubs, availability of skilled employees, and space to build and adapt existing structures on the property. While many specifics are still being evaluated, it is estimated that this project could generate approximately 40 jobs in brewing, warehousing and an agile packaging operation, which may include canning, bottling and kegging. In addition, the Guinness visitor experience part of the project could create approximately 30 jobs. A significant number of construction jobs would likely also be created during the building phase, and the company would endeavor to hire as many local firms as possible to conduct this work.

Diageo hopes to receive approvals and to begin construction this spring with the goal of opening the brewery this Autumn to mark the 200th anniversary of Guinness being first imported into the US. As reported in Diageo’s half-yearly financial results, Diageo Beer Company USA organic net sales increased 3%.

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Green Light For New Derry Whiskey Distillery

Planning permission has been granted for a new £12 million whiskey distillery and visitor centre in the historic Ebrington square in Derry town, Northern Ireland. The new distillery will be run by a local Derry company, Niche Drinks, which is aiming to have first distillations by early next year.

Niche Drinks has been manufacturing and exporting Irish cream liqueurs from its site on Rossdowney Road since 1983 and this will continue alongside the new distillery development. The company currently employs 65 people and uses 25% of all milk produced in the North West in the production of its Irish creams.


Commenting on this exciting new development, Miriam Mooney, head of the Irish Whiskey Association, says: “This is fantastic news and is further evidence that the renaissance of Irish whiskeys is occurring throughout the island of Ireland, creating jobs and supporting local economies.  Irish whiskey is now the fastest growing premium spirit category in the world, with exports valued at €505 million last year, an increase of more than 300% in the last 10 years.”

She adds: “In 2013, there were only four distilleries operating in Ireland, now there are 16 distilleries in production and a further 14 in planning. We are really ambitious for our sector, there is huge potential for growth for both small and large entrants to the category. Last year we launched the Irish Whiskey Tourism Strategy which is an all island strategy that proposes the development of an Irish whiskey trail across the island. We believe that given the right government supports and collaboration of state agencies north and south of the border, Irish whiskey tourism will increase from 650,000 a year to 1.9 million by 2025 across the island.”

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Dawn Farms Signs €850 Million Contract With Subway

Irish company Dawn Farms has signed a new agreement with an export value of up to €850 million to supply cooked sandwich meats to more than 4000 SUBWAY® restaurants across Europe, including the UK. The contract will run for seven years to 2024 and continues a long relationship between the SUBWAY® organisation and Dawn Farms.

With manufacturing operations in Ireland and the UK, Dawn Farms is one of the leading suppliers of cooked and fermented meat for pizza, sandwich, ready meals and snacks, to international foodservice chains and food manufacturers. The company was a founding member of Bord Bia’s Origin Green sustainability programme and is the current Irish Exporters Association Food and Drink Exporter of the Year.

Mike Attwood, Purchasing and Supply Chain Director of EIPC (the Franchisee owned procurement organisation for Subway restaurants in Europe, says that the Subway organisation and EIPC were delighted to continue the very successful relationship with Dawn Farms and with Ireland since 1993.

Larry Murrin, chief executive of Dawn Farms, comments: “In our negotiations with the Subway organisation, they have recognised Dawn Farms’ continued investment in product innovation, our strengths in supply chain consistency and food security, and our vigilance in relation to competitiveness. The Subway organisation has ambitious growth plans for new restaurant openings in Ireland, the UK, and across Europe and with this strategic supply agreement these can translate into significant additional export sales.”

The Subway brand is the world’s largest submarine sandwich franchise, with more than 44,000 locations in more than 111 countries.

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Heineken Renews UEFA Champions League Sponsorship

Global brewer Heineken has extended its current agreement with UEFA to sponsor the UEFA Champions League for a further three years. The new agreement will see Heineken®, the world’s leading international premium beer brand, continue as an official partner of the world’s most prestigious club football competition until the end of the 2021 competition. The partnership also includes the UEFA Super Cup 2018, 2019 and 2020. The partnership plays an important role in supporting the Heineken® brand’s business growth objectives across the world.

The brewer’s relationship with UEFA dates back to 1994, making it one of UEFA’s longest standing partners. The contract renewal encompasses LED Pitch boarding exposure as well as the rights to exclusive UEFA Champions League content, such as Back Stadium Tour and UEFA Champions League Trophy Tour, presented by Heineken®.

Hans Erik Tuijt, Global Sponsorship Director at Heineken, says: “Heineken has enjoyed a long and successful partnership with UEFA for more than 20 years, and we look forward to continuing this. UEFA Champions League in an integral part of Heineken®’s marketing activities, from Sao Paolo to Shanghai. Our global ‘Champion the Match’ integrated campaign is live in over 100 markets this season. Through this, as well as our acclaimed UEFA Champions League Trophy Tour, we create engaging fan experiences that go beyond the 90 minutes of the match. This activity compliments our other long-standing partnership platforms; Formula One, Rugby World Cup and James Bond.”

Guy-Laurent Epstein, UEFA Events SA Marketing Director, says: “Having such an experienced partner is invaluable to UEFA, and reinforces our efforts to continuously improve and promote our club competitions on a global level. The fact that Heineken renewed at an early stage in the process illustrates the continued strength of UEFA’s sponsorship platforms.”

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Arla Foods Steps Up Investments to Boost Profitability

In 2017, Arla Foods expects to invest €335 million in its production sites around the world to support its Strategy 2020 by moving more milk from bulk into branded retail sales and foodservice. The investment is nearly a 50% increase compared to last year’s plan and one of the highest ever single-year supply chain investment forecasts in the company’s history.

Most of the investments focus on production upgrades that will increase profitability of products sold on core markets like Germany, UK, Denmark, Sweden, the Netherlands and Finland as well as on production sites that supply high-quality dairy products to Arla’s emerging markets outside the EU.

“With these investments we continue our relentless pursuit of the goals in our Strategy 2020 to move more milk from bulk into brands and improve the profitability for our farmer-owners. You will see Arla take an even stronger position in the market as the innovative farmer-owned dairy company, providing great-tasting, natural dairy products that help people make good food choices. That is the main focus of these investments,” explains Peder Tuborgh, chief executive of Arla Foods.

Towards 2020, Arla expects 50 per cent of its growth to come from Europe with the other 50 per cent come from emerging markets outside Europe, where Arla’s strategic focus is especially on the regions Middle East and North Africa, China and Southeast Asia, Sub-Saharan Africa, and the US.

An important bet in Arla’s ‘Good Growth 2020’ strategy is to grow foodservice sales significantly by 2020. Consequently, around €18 million of this year’s investments will go into expanding and developing Arla’s production for foodservice customers.

One such investment is €13 million for Rødkærsbro dairy in Denmark, which is one of the leading mozzarella sites in the world. By investing in new world-class technology, Arla will be able to take the product quality to new heights as well as expand the site’s production of mozzarella for the international pizza industry.

A World Leader in Whey Protein and Lactose

The Denmark Protein site near Videbæk in Denmark which produces protein, lactose and other highly value-added whey-based ingredients for the global food industry, is the Arla site to receive the biggest total investment amount in 2017 with about €30.6 million to be spent on general upgrade and expansion of production facilities, including improvements of the sites protein and lactose processing.

“One of the ambitions in our Strategy 2020 is to be a global leader in natural whey ingredients for food producers in a range of categories – from bakery, beverages, dairy and ice cream to medical, infant and sports nutrition. The investment in our Denmark Protein site is key to meeting that ambition and it will help us build on an already strong and profitable part of Arla’s business,” says vice-CEO and executive vice president of Arla’s supply chain, Povl Krogsgaard.

Spreadable cheese and cream cheese is a product category of high strategic priority for Arla. The company aims to build on its already strong market positions in this category in Northern Europe, Middle East and the US. and is now ready to invest over €12 million in its key cream cheese dairy site in Holstebro in Denmark to introduce new, innovative packaging designs that will give products an edge on the supermarket shelf.

Investing in Better Energy Efficiency

Across all sites, €22 million will be spent on continued rationalization of production as part of Arla’s ongoing commitment to keeping operational cost low.

“Arla already runs one of the most efficient supply chains in our industry, and every year we find new ways to make our production sites even more efficient as we work to establish one European milk pool to ensure a more holistic use of our milk across the Arla group. Overall, we have set an ambitious cost improvement target of €400 million to be reached by the end of 2019. This is done to secure the highest value for our farmers’ milk while creating opportunities for their growth,” says Povl Krogsgaard.

The 2017 investment forecast also includes 150 projects at a total investment of about €5 million aimed at improving Arla’s energy efficiency.

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JDE to Acquire Brazilian Coffee Brands

JDE, the Netherlands-based global coffee and tea group serving consumers in more than 100 countries across Europe, Latin America and Australia, is to acquire a portfolio of local Brazilian brands, including Pelé, Graníssimo and Tropical, from Cacique Company. Subject to formal approval by Brazilian regulatory authorities, the acquisition will complement JDE Brazil’s existing coffee portfolio and strengthen its leadership in core regions across the country.

It represents an important step for JDE as it continues to evolve to meet the preferences of the Brazilian consumers.

Cacique Company is the largest Brazilian exporter of instant coffee with over 50 years of experience. Its products are exported to more than 70 countries worldwide. The disposal will allow Cacique to focus on its core businesses.

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The Passing of Supermarket Legend Sir Ken Morrison CBE

British supermarket group Morrisons has announced the very sad news of the passing of Life President, and former Chairman, Sir Ken Morrison CBE. Sir Ken was an inspirational retailer who led Morrisons for more than half a century, transforming the company from a small family business into the UK’s fourth largest food retailer. At his retirement in 2008, Morrisons had 375 stores, serving over nine million customers a week.

Sir Ken will be greatly missed by many thousands of his current and former colleagues, a large number of whom became close personal friends over the years.

Sir Ken was Morrisons Chairman until 2008. He was awarded the CBE in 1990 and knighted in theMillennium New Year’s Honours list for his services to the food retailing industry.

Widely considered one of Britain’s finest retailers, Sir Ken developed the culture, values and clear direction for the business which remain the bedrock of the firm today. His legacy includes many enduring innovations, such as Market Street and Morrisons unique vertical integration model.

Andrew Higginson, the current Chairman of Morrisons, said: “I know that I speak for the whole company when I say how profoundly sad we were to hear of Sir Ken’s death. He was an inspirational leader and the driving force behind Morrisons for over half a century. Although he retired several years ago, his legacy is evident every day and in every aspect of our business.

“Taking Morrisons from a small Bradford-based family business to a major UK grocery retailing chain is an outstanding achievement in the history of UK business. On a personal level, Ken was an enormous help to me as we made some significant changes to set the business on a new course; his knowledge of retail and his strategic insights have remained as relevant and intuitive as they were when he first built the business.

“Ken will be remembered by us all for his leadership, his passion for retailing and for his great love of Morrisons. To honour his memory in the most appropriate way we can, we will continue to develop the company that he built and loved.

“We will miss his friendship and his wise counsel very deeply, and our thoughts are with his family at this difficult time.”

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Diageo Plans New Whiskey Distillery in Dublin

Diageo plans to invest €25 million in a whiskey distillery in the old Power Station building at its St James’s Gate site in Dublin and is also launching a new premium blended Irish whiskey, Roe & Co.

As seen in other spirit categories in recent years, Diageo has identified a clear opportunity in Irish whiskey to drive overall category growth via premiumisation. Responding to this, Roe & Co was born. The brand has been created to reflect modern, contemporary luxury, in everything from pack to liquid, and with a focus of making Irish whiskey more prominent in Europe’s booming cocktail culture. Roe & Co is made from the finest hand-selected stocks of Irish malt and grain whiskies and aged in bourbon casks. It has the signature smoothness of Irish whiskey with remarkable depth of flavour – a luxuriously smooth blend, with a perfect harmony between the intense fruitiness of the malt and the mellow creaminess of the grain whiskies. The first blend of Roe & Co will be available in key European cities from 1st March 2017 as part of Diageo’s growing Reserve portfolio.

Roe & Co is named in honour of George Roe, the once world-famous whiskey maker who helped build the golden era of Irish whiskey in the 19th century. His distillery, George Roe and Co extended over 17 acres on Thomas Street in Dublin and was once Ireland’s largest distillery. As neighbours for hundreds of years George Roe and Co and Guinness were the two biggest names at the heart of Dublin’s historic brewing and distilling quarter.

Diageo will now build on this rich heritage with the creation of a new distillery by converting the historic former Guinness Power House on Thomas Street. The new St. James’s Gate distillery, will be situated just a stones throw away from where the George Roe and Co distillery once stood and subject to planning approval will begin production in the first half of 2019.

Using her 30 years of experience, Diageo’s master blender Caroline Martin (pictured) and her team set about meticulously sourcing and selecting stocks of the very finest Irish whiskies. Having trialed over 100 prototype blends since December 2014, Caroline Martin has created an extraordinary expression of Irish whiskey. The high proportion of first-fill casks gives notes of creamy vanilla balanced with its hints of fruit and soft spice and a remarkable depth for such an elegant and refined whiskey. Roe & Co is non-chill filtered and bottled at 45% ABV.

Tanya Clarke, general manager of Reserve Europe, comments: “This is a wonderful project for us at Diageo, highlighting the opportunity we see to develop the premium segment of Irish Whiskey and contribute to the category’s growth as it sees new investment and entrepreneurial interest. In crafting Roe & Co we explored the demands of today’s consumers for more premium drinking experiences and the desire of bartenders for an adaptable, flavourful whiskey that works in both traditional and new cocktails.”

Colin O’Brien, operations director of Diageo, says: “The planned distillery will provide employment in the coming years – both at construction and operation stages. It will complement what is already the country’s most popular tourism offering, The Guinness Storehouse. This investment further demonstrates Diageo’s commitment to the growing vibrancy of The Liberties, one of the City’s most dynamic districts and the home of Irish whiskey during the original golden age of Irish distilling. We are excited that the planned distillery will help revive the proud tradition of distilling in the Liberties.”

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