European Business News – Week ending April 29, 2011

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European Business News – Week ending April 29, 2011

May 01
10:07 2011
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Coca-Cola advert from 1922.

On May 8th, The Coca-Cola Company will celebrate the 125th anniversary of its iconic, flagship brand. From selling just nine drinks a day in 1886, Coca-Cola has developed into the world’s leading brand. Coca-Cola was calculated to be worth $70.45 billion in 2010, by branding consultancy Interbrand, making it the world’s most valuable brand, ahead of IBM, Microsoft and Google. Indeed, Coca-Cola has now held this accolade within Interbrand’s annual ranking of the 100 best global brands for eleven consecutive years.

Of course, The Coca-Cola Company has similarly evolved from being a single product business to a global empire marketing more than 500 brands in more than 200 countries today with annual sales of $35.1 billion.


Muhtar Kent, chairman and chief executive of The Coca-Cola Company.

Winning Formula

Interbrand attributes Coca-Cola’s success and longevity to its continual ability “to adapt to whatever challenges the marketplace throws its way.” According to Muhtar Kent, chairman and chief executive of The Coca-Cola Company: “The fact that we are a thriving business after nearly 125 years is a testament to our youth, not our age. There is something special indeed about an enterprise that is in a state of constant renewal and dynamic growth.”

Billion Dollar Brands

During the past week, The Coca-Cola Company added Del Valle, its Latin American juice brand, to its portfolio of brands that have achieved global retail sales of more than $1 billion, bringing the number of its billion dollar brands to 15. Del Valle is the fourth brand within The Coca-Cola Company’s juice and juice drink portfolio to reach the one billion dollars mark, joining Minute Maid, Simply and Minute Maid Pulpy. Indeed, the company’s last three brands to achieve billion dollar status have been juice and juice drink brands, reflecting the major efforts made by the world’s biggest soft drink producer to broaden its portfolio beyond carbonates to adapt to changing consumer demands.

Changing Consumer Shopping Preferences

A recent newsletter noted that the severity of the current recession is likely to result in long-term changes to consumer preferences and shopping patterns with consequent implications for food and drink manufacturers. Private label/own label food products are projected to significantly expand market share and the discount sector is expected to make permanent gains.

Recent research on the UK grocery market from Kantar Worldpanel, for the first quarter of 2011, confirms this trend with German discounters Aldi and Lidl leading market growth for this period, with year-on-year sales increases of 15% and 14.7% respectively. Both retailers have now attained their highest ever UK market shares of 3.3% for Aldi and 2.6% for Lidl.

Kantar Worldpanel points out that this change is not just a re-run of 2008 when new shoppers turned to these outlets in response to the recession and 9% food price inflation as the current growth is being driven by existing shoppers sharply increasing their spending levels.

Retirement of Robert Schofield

Robert Schofield, chief executive of Premier Foods, is retiring.

Robert Schofield, chief executive of Premier Foods has announced that he will retire when a successor is appointed or no later than next April. Under his leadership, Premier Foods became the UK’s largest domestic food processor, chiefly through the £480 million purchase of Campbell Soup’s UK and Irish business followed soon after by the £1.2 billion takeover of rival RHM in 2007.

Armed with a strong brands portfolio, including well-known household names such as Hovis bread, Mr Kipling cakes, Bisto gravy, Ambrosia and Bird’s desserts and Branston pickle, Premier Foods’ strategy has been to grow its branded sales, whilst also supplying retailer own label products, and focusing on efficiency improvements and cost reductions to improve operating profit margins. However, the acquisition spree left Premier with indigestion and it has been shedding businesses recently to try and reduce its debt mountain.

Chewing Gum and Nutraceuticals

The increasing interest in functional and nutraceutical products and the closer co-operation between the food and pharmaceutical industries were again highlighted during the past week with Gumlink of Denmark strengthening its leading position in the global nutraceutical chewing gum market by acquiring a 50% stake in Canada-based Tab Labs.

Like dairy products, confectionery is well suited as a delivery system for nutraceutical products. Gumlink is the world’s leading B2B developer and manufacturer of chewing gum. Its links with the pharmaceutical industry, through sister company Fertin Pharma, has allowed it to create nutraceutical concepts.

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