The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
1-5 de Junio de 2009

The World

Low on calories but also low in value: About five years ago Kraft came out with a new line of products the 100-calorie pack space snack food. The products took off with more than "US$75 million in sales in their first year". Seeing Kraft's success, Kellogg and General Mills jumped on the band wagon with their own lines of products. That was then, but now the story seems different. According to 52-week sales data ending in mid-April "sales of most 100-calorie items tracked by at the IRI are down". Not only are sales down, but also new product introductions are slowly. What happened to turn down the market? Probably in the short run the most important issue had to do with value. It seems that for the amount of food in a 100 calorie package the cost per calorie or per gram is just too expensive given the current economic difficulties. But there other factors which in the end will probably be the determining ones that will mark the decline of the product segment.

According to studies the concept of a 100-calorie pack as a means of weight management doesn't work. It seems that using a 100-calorie snack as a weight management tool actually led to overeating. As one researcher put it, they are "almost the license to overeat". If that isn't enough, there is the question of taste. To hit the hundred calories mark, there have been some adjustments in snack itself. Oreos in the 100-calorie pack, for example, "don't have a cream filling." Additionally, environmentalists have expressed concern about "too much packaging and... waste." So where will the market go? The 100 calorie snack pack is part of the whole concept of portion control for diets. This seems to be giving way to the concept of hunger control. In other words, will the snack product make you feel "satiated"? That is, make you feel that you don't need to eat again for a while. This may be the next new thing for food companies.

Redefining what the restaurant chain is all about: With the restaurant business in the U.S. suffering from “10 consecutive months of same-store sales declines and 19 consecutive months of falling store traffic”, the chains are struggling to stay afloat. What we are seeing is that the expansion of the menu has become a generalized trend. The idea is to have a “one-menu-fits-all” restaurant for avoid the “veto vote”, i.e. a consumer not going to a chain because there isn’t the food choice they want. What is particularly interesting is that as chains look to expand product offerings they are moving beyond their “founding principles, and carefully honed brand image.” This means is that, for example, chains such as Domino’s, the pizza chain, is selling subs or “Boston Market selling crispy chicken”. In other words, the strategy has changed from “buffing restaurants’ brand images [to] trying to give folks what they want.” This is all well and good now, but the question becomes how they will face the future with an unclear brand image?

Mexico

It’s not a ban on meat imports, but a thorough inspection: That is what Mexican agricultural authorities are saying as they move to fully implement NOM-030, as the procedure for inspecting imports of meats, including poultry is known. This means that trucks will have to be unloaded and inspected on the Mexican side of the border. Because the net effect will be to slow down imports, U.S. exporters are beginning to suggest that this is a non-tariff barrier designed to protect domestic producers. Of course, Mexican authorities could argue that it is not a non-tariff barrier, but that they are following similar procedures that other countries often impose on their exports.