The Agribusiness World Today

Ken Shwedel

Investigador de Agronegocios de Rabobank, México
3 - 7 de Marzo de 2008

The World

That’s fair – trade, that is: Just the other week we were expressing our concern about the number of company run schemes for ethical marketing. The option, we argued, is for the development of industry – wide schemes or third – party sponsored schemes. The latter is what Tate & Lyle has decided. They announced that they will "convert [their] entire retail sugar range to fairtrade". The plan, which is said to come after some two year's planning will be carried out in conjunction with the UK's Fairtrade Foundation in Belize "where [Tate & Lyle] sources all [their] white cane sugar".

While their decision will be a great help to the Belizean sugar industry "which faces challenges from changes to the EU Sugar Regime and from Hurricane Dean, which devastated farms in the region in 2007", it also has a commercial component. According to estimates by Mintel the fairtrade market grew some 265% between 2002 and 2006. In fact fairtrade can now be considered mainstream in some markets and segments. And it didn’t hurt Tate & Lyle’s commercial interests that they announced their decision at the start of the Fairtrade Foundation’s annual Fairtrade Fortnight.

Limited coverage – and also of their energy drink: That is Playboy’s, the newest player in the energy drink market, initial tactic for their branded Playboy Energy Drink. Their idea is to roll it out in a couple of cities, creating a ‘buzz’ that will support further geographic coverage. While we have seen traditional food companies looking to stake out a position in the crowded market place building on non – food company brands by co – branding, it is no longer unusual for non – food companies to ‘go it alone’ looking to capitalize on their image in a specific market segment. This is what Playboy is doing. For them, this isn’t an entirely new corporate strategy.

They already have their “name on chocolates and mints”. In this case, they feel that the energy drinks category has developed into a lifestyle statement. And if nothing else, “Playboy is really about delivering a lifestyle to [their] customers and part of the image is fun and parties and energy drinks capture that”. Interestingly, they are offering both a regular and a sugar-free version of the energy drink, seeming to recognize that even when having fun and partying, some consumers want to watch their calories – others, of course, are watching something else.

Mexico

Oh yes, we also sell food: That is what Comercial Mexicana, the retail chain must be saying now that they announced an arrangement with BANORTE to create a financial institution (SOFOM). With this they will be joining other retailers, including Wal-Mart, CHEDRAUI and SORIANA in getting into the banking business. Both Comercial Mexicana and SORIANA have partnered with traditional banking institutions while the other retailers are going it alone. Comercial Mexicana’s plan is have operations up and running in 184 of their stores by the end of the year. For BANORTE they will be able to extend their coverage a lot faster and a lot cheaper than opening branch offices.

In fact, they project that they will be able to grow the number of clients by 50 percent. Comercial Mexicana, for their part, because they will promote the use of their credit card, sees the percentage of cash transactions going down from 70 percent, with the average sale increasing from MX$180 to MX$400.