The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios, Rabobank, México
28 de Enero - 1 de Febrero de 2008

The World

Taking a beer on a diet. That is what Miller Brewing is about ready to do with their Miller Genuine Draft (MGD) line in the U.S. The MGD has been losing ground. Between 2004 and 2006 barrel shipments fell from 4.15 million 3.45 million and “indications are that trends worsened for the brand during 2007.” The strategy is to makeover their MGD Light, cutting the calorie count practically in half from 110 calories to 64 calories. The MGD Light will be rebranded as MGD 64 – good thing they got those last five calories out of the beer. They are saying that this will be the lowest calorie mass marketed beer in the U.S. Looking to draw a contrast with the competitors in this segment, particularly Bud Light, which comes in at 96 calories, they are presently planning to market the beer around the tagline “As light as it gets”, with advertising being focused on such strategies as “placing ads in and around health clubs”. While there is some concern among analysts that MGD core drinkers aren’t particularly low – calorie concerned, the thinking in the company is that this will help position the beer particularly to women. Apparently they are will to risk losing core drinkers to gain market share among women drinkers.

Giving a boost to the renewable energy sector in the EU. That is what the European Commission did last week when they presented their climate action and renewable energy package. The package of proposals, which still needs to be adopted, reaffirms EU “efforts to reduce greenhouse gas emissions.” Among the key elements of the proposals is a 21 per cent reduction by 2020 in emissions over 2005 levels in the sectors already covered and a 10 percent reduction in sectors not covered. There are also changes contemplated for the EU Emission Trading Scheme (ETS) and a “cap on the use of the Clean Development Mechanism and Joint Implementation.” Looking at the proposed package analysts point out that it will mean stiffer reductions than “what Europeans [have been] used to” until now, with a proportionally larger burden on the member countries with larger GDPs. Interestingly, the EU won’t count the use of biofuels that don’t meet environmental sustainability criteria. We can expect that this will have an impact on the biofuels market, limiting some projects while creating options for others.

Mexico

Retail banks look at rural banking. In what is an expansion of retailer’s banking operations Banco Wal – Mart de Mexico has announced that they have reached an agreement with FIRA to enter into the agricultural credit segment, with operations set to begin in the second half of this year. We don’t see this as necessarily a precursor to a move by Wal – Mart to aggressively extend their retail operation into rural Mexico, nor as a move to finance rural Mexico. Rather, we feel that this represents a strategy by Wal – Mart to become more involved with their supply chain for fresh produce and other food products. Besides Wal – Mart, BanCoppel is also said to have reached an agreement with FIRA.