The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
22 - 26 de Septiembre de 2008

The World

Putting flavor in your life: Like a number of industries related to the food market, the food industry is adjusting to changing consumer desires and trends. And in this case the consumer is no longer satisfied with “the basic chocolate or vanilla flavors anymore.” As consumers demonstrate a willingness to move beyond the basics, there are at least three trends emerging. The first is the willingness to try flavors that are exotic and/or offer an unusual or unique combination of flavors. Secondly, as the result of both increased immigration and consumers’ willingness to explore and experiment, the demand for ethnic flavors has also been growing. Thirdly, the health and wellness movement has reached the flavor industry. Here “flavors from natural ingredients” are expected to be the big movers over the next couple of years. Interesting, consumers’ preferences for flavors not only change over time, but they also change with age. Children’s preferences tend to be influenced by their parents. For the adult, preferences are “influenced by cultural factors”. Contrary to what one might think, the older consumers “are looking for more bold flavors”. It seems that by the time they reach old age they have become bored with the same old flavors they have had all their lives.

Battling it out over coffee and breakfast: It seems that major players in the U.S. institutional coffee market are adjusting strategies to improve their market position. Dunkin’ Donuts, had for the most part built on their existing client base by positioning themselves as a “middle-class brand”, or as “called by some the ‘anti-Starbucks’”. Now that Starbucks’ will close down some outlets, Dunkin’ Donuts has announced an aggressive expansion plan designed go from 6,000 outlets today to 15,000 outlets by 2020. While this isn’t designed to compete head-on with Starbucks, they certainly hope to eat away at some of Starbucks’ client base. In fact towards this end they have already added to their offerings “espressos, lattes and cappuccinos that cost roughly US$1 less than at Starbucks”. Of course Starbucks has their own strategy; one can’t help asking if their Pike Place Blend was developed partially as a strategic move aimed at Dunkin’ Donuts and McDonald’s. Interestingly, Dunkin’ Donuts sees McDonald more as a threat to their breakfast business than to the coffee business. What Dunkin’ Donuts is doing is to offer “more health-conscious foods as an alternative” to McDonald’s. They have come up with what they call the DDSmart menu which “includes egg white flatbread sandwiches, multigrain bagels, a lower-calorie smoothie and coffee drinks made with skim milk”. The strategy seems right, but we do find it hard to imagine a company with “donuts” in its name being perceived as the health alternative.

Mexico

Adjusting support mechanisms to farmers: When explaining the cut back in the proposed 2009 budget for agriculture the government points to the change in subsidy policy. A major adjustment is contemplated for the PROCAMPO program. The idea is to revise the payment structure so that smaller farmers will receive larger payments while larger farmers receive smaller payments. Five hectares is being considered as the dividing line. At the same time that the payment structure is adjusted, the government plans to cap the number of farmers as well as base land area receiving PROCAMPO payments. They also have the intention to give the new PROCAMPO a five year life cycle.