The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
17 – 21 de Noviembre de 2008

The World

Watching gasoline prices: In the U.S. market when gasoline prices were rising to what seemed to drivers as unimaginable levels, consumers began to change buying habits so as to cut down on driving, in order to save on gasoline. In response, retailers developed different strategies to get keep consumers coming to their stores. Among the more innovative strategies was that used by Meijer, the Midwest U.S. retailer. Like other retailers they sold gasoline at their supercenters. But in response to higher gasoline prices they went further than just keeping prices below those of the major oil company gas stations. The develop what they called their “Meijer Gas Alert”. Consumers would sign up for text messages and Meijer would send out alerts to these customers advising them that they would be changing the price of gasoline. That way drivers would either hurry up to buy gasoline before the price went up, or would wait until the price went down to buy gasoline. All in all some 250,000 were said to have signed up for the gas alert. It is unclear as to whether or not that strategy actually led to increased in-store sales. What is clear, though, according to David Diamond, a market analyst, is that consumers appreciated the Meijer Gas Alert. In other words they combined technology with a commodity-type product to enhance consumer loyalty. What makes this especially interesting is that Meijer has at other times been a leader in innovation. In fact, they —not Wal-Mart— are attributed with the development of the super center concept.

Not exactly robber barons: Pilferage has always been a problem for retailers, but now as margins come under increased pressure as economies contract, the controlling the cost of retail crime becomes even more important. According to the Global Retail Theft Barometer, over the 12 months through June 2008, “the overall cost of retail crime has increased substantially”, going from an estimated US$108.1 billion to US$112.78 billion. It should be pointed out that the cost of retail crime includes the both shrinkage and prevention. Considering only shrinkage, it is the “equivalent to 1.34 percent of retail sales”. Looking at who is stealing, interestingly, in North American and Latin America “employee theft is the largest source of shrinkage” —46.3 percent and 42 percent, respectively— while consumer theft is more important in Europe and the Asia-Pacific region. While the study refers to the entire retail sector, within the food segment, the theft of choice revolves around “alcohol, fresh meat/expensive foodstuffs [and] infant formula”. As the economic situation worsens we would expect that the cost of retail crime will increase.

Mexico

More corn: Because of the generally favorable growing weather in the country, corn production, according to USDA estimates, will come in at 23.7 million MT for the 2008/09 marketing year, up from 22.9 million MT in 2007/08. At the same time that production is projected to grow, so too is consumption. It is expected “that consumer purchasing power could be less in CY 2009 forcing many consumers to increase purchases of corn, dry beans and rice.” Corn use for food consumption is now estimated at 16.2 million for 2008/09 compared with 15.8 million MT in 2007/08. With feed use projected to be 16.2 million MT, imports will be in the around 9.3 million MT, up from 8.8 million MT in 2007/08.