lunes, 20 de abril de 2009

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
20-24 de Abril de 2009

The World

One less reason for not feeling guilty about eating chocolate: There are concerns about the future of the chocolate business; these are not necessarily really related to the global economic slowdown, but rather due to worries about the long term feasibility of growth of cocoa production: “the scope for [cocoa] production growth is reaching some upper limits, constrained by the paucity of geographic locations suitable for cocoa production.” Confectionery companies, as a result, are looking at different strategic alternatives. Mars, who is presently estimated to sell some US$10 billion in confectionary products and “claims to be the biggest end-user of cocoa globally”, is saying that by the year 2020 all of the cocoa that they use will be sustainably sourced. This means that, among other things, they will pay farmers a just price, and farmers are expected to adhere to sustainable production practices. We see this decision as responding to two objectives. Mars, we feel, is seeing a change in the business model that will define one of the key success factors as the ability control and guarantee origination of strategic inputs. At the same time this will help to position Mars as a social responsible company, assuring that retailers, who in turn respond to consumer demands for ethical products, will continue to stock their chocolate products.

What happened to online delivery? That is what clients of Supervalu, the large U. S. retailer, are saying. Supervalu, which operates some 2,500 stores under different brands, is changing their retail e-business strategy. They have been providing delivery through and Apparently, they now have concluded that providing a delivery services is not economically sustainable, nor is it as convenient to consumers as originally thought because delivery logistics difficulties. Although Supervalu is eliminating deliveries, customers will still be able to order groceries on line, picking them up at one of their stores. Rather than as a new business model, we see this as a movement along what can be considered as the click and brick B2C e-business model continuum. We would not be surprised to see more grocery retailers, especially in the U. S. market, moving maximize the brick side of the equation by eliminating the online delivery option.


Slowdown in the dairy market: According to a report in the Mexican business magazine Expansión, the consumption of dairy products showed a contraction in 2008. The downturn, according to the magazine which used information from Datamonitor, was the worst since 1998, with yoghurt consumption down 48%, cheese off 15% and butter contracting by 13%, respectively. While we see some of these numbers as excessively large, it does appear that the market is experiencing a slowdown. INEGI, the government’s statistical institution, reports that total dairy sales grew 3.7% in nominal peso terms in January compared with January 2008. BANXICO reports consumer level prices. Although it is not necessarily a true comparison, using their Consumer Price Index, which reports a 9.2% increase in dairy prices, implies that in overall volume terms sales were down. Consumer level dairy prices have continued to show annualized increases through March. The apparent slowdown in consumption, accompanied an increase in imports at the beginning of the year of certain dairy products should work to contain future dairy price increases.

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