lunes, 7 de abril de 2008

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios, Rabobank, México
7 - 11 de Abril de 2008

The World

Bringing organics to Buckingham. Although Hain Celestial is the largest manufacturer of organic groceries in the U.S., they don't seem to believe in growing organically – at least not recently anyway. Since last May they have made four acquisitions including two food brands, as well as White Wave Foods' tofu and meat businesses. Now they have announced in the U.K. the acquisition of Daily Bread Ltd., "a producer of prepared foods whose sales last year were about 12 million pounds". You might ask why Hain would want a relatively small company. More than the fact that Daily Bread is an accredited supplier to Buckingham Palace, what is attractive for Hain is Daily Bread's presence in the foodservice channel. They are betting that "more consumers [will] seek out healthful 'on – the – go' eating solutions." At the same time this acquisition will further broaden branded offering within the European market, adding to their positioning as a one – stop organic supplier.

Buying the brand. Organics wasn’t the only acquisition last week. Looking to reduce debt by selling –off state owned businesses, the government of Sweden sold, through an auction process, their spirits business, to Pernod Ricard. While the acquisition will propel Pernod “ahead of Beam as the world’s No. 2 spirits concern by case volume”, what Pernod and everyone else really wanted was Absolut. With vodka the “in” spirit, Absolut’s 2007 sales of 11 million cases places it as the leading global premium vodka brand. Interestingly, in the U.S. market Beam has “the distribution rights to Absolut through a joint venture [that] …runs until 2012”. The speculation now is that Beam will pick up the U.S. rights to Stelichnaya, which Pernod has marketed in that country. Although most of the analysis and commentary has focused attention on the acquisition of the Absolut brand, Pernod also acquired Cruzan, a rum brand. This could help them fill a gap that they have in the U.S. where they can’t distribute Havana Club, which Bacardi says was illegally seized by the Cuban government and they still own.


Investing to stimulate the economy. A number of indicators point to a slowdown in the economy. The Mexico City Chamber of Commerce, for example, is reporting an 8 to 9 percent drop in sales during the first quarter of the year. This is on top of falling sales during the last part of 2007. Now, by way of contrast, in what is a manifestation of confidence in the future of the economy – and probably some “encouragement” by the government – the country’s leading businessmen are promising the government that their companies will invest 23.7 billion dollars this year. According to their calculations that level of investment will generate some 1.3 million new jobs. Interesting, the amount that they will invest exceeds projections for foreign direct investment this year. To the extent that they carry out their plans it will decouple the performance of the Mexican economy this year from the effects of the downturn in the U.S. economy. It is also interesting to reflect on what this says about the concentration of wealth in Mexico.

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