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European Business News – Week ending February 25, 2011

 Breaking News
  • HKScan Strengthens its Meals Offering With Investment in Estonia HKScan, the leading Nordic food company, plans to invest in its Rakvere unit in Estonia. The €8 million investment will go towards modernising the unit’s frying department, including the expansion of the building and the installation of new cooking and packaging lines enabling implementation of new technologies and packaging solutions. Construction is to commence in [...]...
  • Food and Drink is at the Heart of the UK’s Largest Packaging Show Packaging Innovations, Empack and Label&Print returns to Birmingham’s NEC on 28 February-1 March 2018, and is set to be the most innovative show to date. With over 290 exhibitors already signed up, the UK’s largest annual event for the entire packaging supply chain will feature the latest industry innovations and technologies, alongside a major free-to-attend [...]...
  • AGRO Merchants Group Acquires Grocontinental AGRO Merchants Group, a global leader in cold storage and logistics solutions, announced today the acquisition of UK-based Grocontinental Limited. This transaction reinforces AGRO’s position as the leading cold storage and logistics provider in the United Kingdom and Ireland, deepens its commodity expertise, and substantially enhances its value-added service offerings for customers. David Grocott and Linda Grocott, third generation owners of [...]...
  • Trade Fair and More – The Event and Congress Programme For Anuga FoodTec 2018 Resource efficiency will be the primary focus of Anuga FoodTec 2018, the leading international supplier fair for the food and beverage industry, which will be held in Cologne, Germany from 20 to 23 March 2018. Around 1,700 suppliers from more than 50 countries will be presenting their new products for the production and packing of [...]...
  • TINE to Invest €77 Million in New Jarlsberg Plant in Ireland TINE, Norway’s largest farmer-owned dairy co-operative, is to invest €77 million in a dairy with the capacity to produce 20,000 tonnes of Jarlsberg cheese a year. The goal is to secure and strengthen Jarlsberg sales outside of Norway as export supports are phased out in 2020. This will make export of Jarlsberg from Norway unprofitable. “Jarlsberg [...]...

European Business News – Week ending February 25, 2011

February 28
12:22 2011

The continuing rise in raw material costs was again highlighted during the past week when Britvic, the second biggest soft drinks manufacturer in the UK and Ireland, cautioned that its profitability would be impacted. Britvic had initially been projecting input cost inflation in the 5-6% range for its core Great Britain and Ireland markets and had negotiated its product prices on this basis. Following an unprecedented escalation in input costs, particularly for sugar, steel and PET, the company now expects inflation of 9-11% and will not be able to fully recoup this additional cost from customers, resulting in a squeeze on Britvic’s profit margins.

 

Muhtar Kent (left), chairman and chief executive of Coca-Cola, with William Johnson, chairman, president and chief executive of Heinz.

Packaging Partnership

PET is the reason for a landmark strategic partnership between Coca-Cola and HJ Heinz. Heinz will use Coca-Cola’s PlantBottle sustainable packaging technology to produce its ketchup bottles. PlantBottle packaging is like traditional PET plastic but up to 30% is made from plants. According to Coca-Cola and Heinz, the partnership serves as a model for further collaboration in the food and beverage industry. Both companies hope others will follow their lead to share smart technologies and to encourage sustainable packaging and manufacturing practices globally.

Turkish Delight

Diageo’s £1.3 billion swoop to acquire Mey Icki, the leading Turkish spirits producer, confirms Turkey’s status as a highly attractive emerging market. According to Diageo, Turkey is a substantial and fast expanding economy with a growing and increasingly affluent middle class, and consumer spending is forecast to be twice the rate of GDP growth. The £1 billion-plus price tag for a company with sales of £300 million and EBIT of £120 million illustrates Diageo’s confidence in the Turkey’s future prospects, and is in line with its strategy of investing in emerging markets with a rapidly growing middle class, such as China and Vietnam.

 

Russia's economy appears to be recovering far more quickly than initially anticipated.

Russian Recovery

Another emerging market in the spotlight last week was Russia as its economy appears to be recovering from recession far more quickly than initially anticipated. For instance, Carlsberg reported that Russia, its largest beer market, was stronger than envisaged during 2010 and consumer sentiment continues to improve. At the beginning of the year, Carlsberg expected a market decline of low double-digit percentages following the sharp rise in excise duty in January 2010, which effectively pushed up consumer prices by 25%. However, due to favourable weather conditions and the ongoing recovery of the Russian economy, the beer market picked up in the second half of 2010 leading to a decline of approximately 4% for the year. For 2011, Carlsberg is projecting growth of 2-4% in Russia.

Reflecting similar confidence in the future, Austrian group Agrana is planning to invest Eur27.6 million to expand its Russian fruit preparation plant at Serpuchov to capitalise on rapid growth in demand for fruit yoghurt in Russia and neighbouring states, due to rising consumer affluence and health consciousness.

Russian confectionery company CJSC Landrin has just announced investment of $20 million to upgrade and expand production capacity as part of its strategy to increase turnover to $100 million by 2012. Meanwhile, Norway-based Orkla Brands has decided to merge its Russian chocolate and confectionery companies – Krupskaya and SladCo – into a single business.

On the home front in confectionery, Tangerine Confectionery, the largest British manufacturer of sugar confectionery and branded popcorn, is reported to be seeking a new private equity investor to help fund further expansion. Tangerine has quadrupled in size since being formed following the buy-out of Danish company Toms in 2005. Current turnover is more than £150 million and Tangerine’s ambition is to become the largest independent manufacturer of confectionery in Europe within five years.

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