The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
3 – 7 de Noviembre de 2008

The World

Coffee wars – part 3: It seems that it is in the coffee market where all the action is taking place in the fast food segment. Of course this should come as no real surprise when you consider that in the United States, for example, there are some 150 million coffee drinkers, “57 percent [of which] drink the brew every day, and on average quaffed about 3.3 cups of coffee daily. That’s the highest percentage of coffee consumption since 1984”. And not only is consumption growing but consumers are also looking for more upscale coffee. Now, it is McDonalds’ turn to go all the way in this market. After test marketing the McCafe concept in a number of markets it finally seems that the company is ready to roll out the concept on a national level in the U.S. come next year. While they are betting on consumers’ move to gourmet-type coffee, their strategy is not so much aimed at taking away consumers from competitors, but rather to get their existing clients to switch from regular coffee, that sells for around US$1.70 a cup, to the company’s upscale coffee that, in the test markets, is going for about USD$2.40. And with close to a 70 cent difference per cup the coffee is expected to give a jolt not only to coffee drinkers, but also to the bottom line.

Saving the environment with cardboard boxes: A lot of consumers think that using cardboard destroys forests, which harms the environment. According to a study by IESE, the Spanish based business school, which is not necessarily the case. This is especially important for the food industry since in Spain 55 percent of cardboard box production goes to the food industry. The study points to the fact that the industry does not necessarily cut down virgin forests, but more often than not trees are being specifically planted for harvest by the cardboard industry. In fact, in Spain there are now some 430,000 hectares in tree production which will be used for manufacturing cardboard. They are saying that removes 133,500 tons of CO2, which “is the equivalent of the production of 67,000 cars annually”. And if you still want to look at plastic as an alternative, the study says that by way of contrast using plastic actually increases CO2 emissions. What we are seeing, of course, is an industry under pressure fighting to remain relevant in response to consumer concerns. This isn’t the first time we have seen something like this, and you can be sure that it won’t be the last.

Mexico

Slimming down fat Mexicans: Some time back we mentioned the growing obesity problem in Mexico. According to some sources around 70 percent of all Mexicans are now overweight. Looking to do something about it Congress is proposing a number of different initiatives. Some have to do with new labeling requirements; others contemplate banning certain foods from school programs, while others go so far as to contemplating imposing a special “fat tax” on certain processed foods. Interestingly, these initiatives focus on the food that consumers eat rather than on the concept of nutrition and a healthy life style. While it is difficult to predict whether one or more of these initiatives may eventually become law, the food industry can be sure that they will increasingly come under pressure to do something about what is becoming an obesity epidemic.