The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
5 - 9 de Noviembre de 2007

The World

Buying more wine, but staying with a limited number of “flavor types”: That is what is happening in the wine market, particularly in the U.S. What is interesting, though, is that an important part of the growth in the wine market has come from new wines, i.e. “new brands as well as line extensions”. Estimates place new wines capturing 10 percent of the growth in sales in the U.S. Behind the growth has been the ability to find untapped segments. IRI has identified E&J Gallo as for example, “dominating the new items category”, particularly at the low end of the price spectrum, with their Matti’s Perch is selling for U.S. $4.99 a bottle. But market growth hasn’t been limited to inexpensive wines, rather it has been “spreading through the price tiers”. This contrasts with what the situation just a couple of years ago when about half of the new wines were in the popular price range. In the U.S. market, at least, when it comes to origin of new wines, i.e. domestic or imported, there seems to be no particular preference. There is not a large variety when it comes to preferences for types of wine: “five ‘flavor types’ captured 63 percent of total dollars spent [in the U.S. market], with pinot noir leading the bunch followed by chardonnay, red blends, syrah and then riesling.” Even as the market grows, it appears that consumers are rather conservative in trying new varieties. In other words, there is nothing wrong with being out in front of the market as long as you are not too far in front.

Redefining or refining what is organic in the UK: The Soil Association, which certifies around 70 percent of that country’s certified food sector, now says that they will change the way they certify food air-freighted food in to the UK. The food will have to meet what they say are “tough ‘ethical trade’ standards.” Their ethical trade standards cover a range of concepts, including “employment, trading relations, social and cultural conditions, origin of products and ingredients”, among others. The reason, apparently that they are focusing on air-freighted food is a concern about the carbon emissions associated with transporting food by air over long distances, i.e. the carbon footprint. So far most of the criticism centers around the impact that this could have on poor farmers from low and middle income countries, especially those in Africa, who may not be able to meet the association’s standards or can not afford the cost of certification. The Association, for their part, has responded to the criticism saying that they aim “to balance the importance of the organic market for developing countries with rises in CO2 emissions.” While the Association’s worries about carbon emissions are important, we are concerned about the blurring of the two concepts in one label. If anything, rather than aiding the consumer, we see it as having the potential of confusing the consumer.

México

Coming into Mexico City: Moving away from being characterized as a regional chain – and in fact, with stores located in 29 states it they are not – SORIANA finally opened their first store in Mexico CityFederal District. By being willing to deal with the Mexico City proper. They already have stores in the metropolitan area but until now they had not opened one inside the bureaucracy and extra costs, they are sending a message that will aggressively compete in the country’s largest consumer market.