lunes, 14 de julio de 2008

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios, Rabobank, México
14- 18 de Julio de 2008

The World

Betting on better fast food dinning. In the tightening economic environment we are seeing companies trying to adjust their strategies and even going so far as to alter their business models as consumers change their purchasing and eating habits. Subway, the fast food sandwich chain, is going beyond just a new format, saying, rather, that they will be testing a new concept. The idea is for the development of an upscale café, which will offer “Panini sandwiches, gelato, baked goods and coffee drinks in addition to the chain’s traditional [submarine-type sandwiches]”. For the time being they are going to brand this upscale concept Subway Café.

The proposition of offering a better eating experience under the Subway brand is not without its risks. Subway has “three strategic platforms. The first two revolve around health” and the third around value. The new upscale offerings in Subway Café do not necessarily reinforce the concept of healthy eating. In fact, they tend to be somewhat more oriented towards the indulgence segment of the market. Likewise, even if the Panini sandwiches, gelato and baked goods are cheaper than in other restaurants, we expect that they will break the pricing scheme of Subway’s traditional foods. If they move forward with the concept, Subway will have to carefully manage two different positioning under the same brand.

Being organic in a contracting economic environment. Over the past couple of years we saw the organic market moving from a niche towards the mainstream. Now with economic growth slowing down in a number of North American and European markets, it will be the real test of how mainstream the organic market really is. Although it may be optimistic thinking, most analysts don’t see the organic market taking an especially strong hit as the economies slow down. They argue that dedicated organic consumers will continue to purchase organic products. Retailers have also responded with strategies designed to keep consumers coming. Whole Foods, for example, now offers a 10% discount on case-sized purchases. Interestingly some analysts are projecting that the gap between organic and non-organic foods will close somewhat. This opinion is largely based on the fact that input costs, specifically chemical fertilizers, for traditional growers have increased significantly, whereas organic growers aren’t facing these strong cost pressures. To the extent that the organic retailers depend on locally grown foods, some analysts also project logistic cost advantages.


Country of origin labeling. No we are not talking about what is contained in the U.S. Farm Bill, rather there are reports that the Hog Producers’ Confederation has been pressuring the Secretary of the Economy to require that pork and pork products from the U.S. be labeled as such. This is not a reprisal for the U.S. legislation, nor is it pure patriotism. Past studies have shown that Mexican consumers perceive imported pork as being older meat and likely to have been frozen for some time. Because of the preference for “fresh” meat, this is plus for Mexican pork. At the same time Mexican consumers felt that imported pork had high levels of chemicals. They did not see Mexican pork as laden with chemicals. Taken together, the labeling becomes an interesting marketing tool. While this may not slow down imports, it could give Mexican producers the leverage to differentiate their products on the local market, in order to command higher prices.

No hay comentarios.: