The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
27 de Abril – 1 de Mayo de 2009

The World

Clicking for pizza: That is what fast food pizza chains are hoping for. Right now in the U.S. “the major pizza chains do 20 to 30% of their business on line”. Their objective is to push that up to 50%. Obviously there are cost savings from having consumers ordering pizza online: Domino’s, which now takes around 75 online orders a minute says that as a result they now have “fewer employees answering the phone and more of them making pizzas.” At the same time, as more customers order online, it becomes easier to build a database for targeted marketing, logistic management and improved cost analysis. But there are other reasons. Interestingly, the “online buyer [according to Domino’s] spends US$2 more than one who orders by phone or in person.” At the same time, the online customer tends to be more satisfied with the experience. This may be because the online customer can take his/her time and not be rushed by the “impatient” order taker. Also once the online customer has created an account, the order process is less hustle free than ordering by phone or in person. The combination of benefits to the company and enhanced consumer satisfaction will, in our opinion, prove to be the motor changing the food service take out business model.

All bottled up: The changing competitive environment, according to PepsiCo, requires that companies rethink not only their strategies, but rather their business model. The non-alcoholic beverage market over the past decade or so has undergone radical changes. Whereas carbonated soft drinks dominated in the past, today the market is characterized by an increasing participation of a wide range of beverages running all the way from teas to waters to power drinks. This also meant that the market is characterized by innovation: many of these beverages have been recently introduced to the mainstream market. In what seems to be a reversal of their strategy in the 1990’s when they spoon-off bottlers PepsiCo has announced their intentions to acquire control of Pepsi Bottling and PepsiAmericas, two of their largest bottlers. Of course, the acquisitions would, according to the company, “result in US$200 million in pre-tax synergies annually”. But, looking to adjust to this new market environment their interest goes beyond just these savings. They see that the acquisitions would give them a much more flexibility in the distribution system letting them “bring innovation to the market much faster. At the same time “PepsiCo would be better positioned to bundle promotions for their snacks and beverages”. In other words this would allow them to align their value chain along a new business model. The question that the market is asking now is what will Coca Cola do? For the time being Coke is implying that they will continue looking for more acquisition, but not necessarily any bottlers.

Mexico

Less remittances: Last year saw remittances falling 3.6%. Through the first two months of this year the trend continues, with total remittances contracting by 6.4% compared with the same period last year. While the total number of operations has contracted the average per operation has remained relatively constant at US$339 compared with US$338 last year. What is interesting is that by type of operation the average amount sent by money orders fell by 3.6% while cash remittances grew 4.5%.