INTERNATIONAL news
Nestle set to return Maggi to Indian shelves
Sabmiller uses cassava to brew in Africa (photo credit: SABMiller) from previous page
the Managing Partner, are well known as aggressive investors in and operating businesses especially in the Americas. The firm has offices in New York City and Rio de Janeiro. In July 2015, 3G Capital partnered with Berkshire Hathaway to complete the combination of H.J. Heinz Company and Kraft Foods Group, forming the Kraft Heinz Company, following 3G and Berkshire’s acquisition of Heinz in June 2013. In December 2014, 3G Capital completed the combination of Burger King and Tim Hortons, forming Restaurant Brands International, following 3G’s acquisition of Burger King in October 2010. The company is (in) famous for driving costs out of the business and for its push to increase profitability to its shareholders, at all costs. With 3G Capital’s drive and AB InBev’s focus on its ‘Focus Brands’, it remains to be seen how the new company with deal with SABMiller’s multitude of regional or country-specific brands especially in Africa, where some product lines may be low volume, consumer-centric lines. The company states in its website that, “We have rigorously reinforced our Focus Brands strategy. Focus Brands are those in which we invest most of our marketing money, and to which we dedicate the greatest proportion of our share of mind. With a portfolio of well over 200 brands, we are prioritizing a small group with greater growth potential within each relevant consumer segment.” “A likely implication of the “focus brand strategy” is that AB InBev may decide to cull some of SAB’s or its own brands that currently compete against each other in different segments. AB InBev may decide to identify those candidates from the aggregate portfolio that can be cultivated as “Focus brands” of the future. Culling in-house competition (by acquiring it) in certain segments provides greater breathing space for the focus brands of (the) future,” notes an analysis by Harvard Business Review. 8
NOVEMBER 2015 | Food Business Africa
INDIA – The Swiss multinational Nestle is set to re-introduce Maggi noodles to the Indian market following successful testing of its product by regulatory authorities in the country. Nestle is returning its hugely popular noodles into the Indian market after about six months of arguments with the Food Safety and Standards Authority of India (FSSAI) and state food safety bodies – and a court case at the Bombay High Court – that resulted into one of the most expensive recalls in India’s history, due to fears of lead content in its products. The company, expected to have lost up to US$250 million of its brand value and in direct product loss due to the Maggi case by consultancy firm Brand Finance, has recently reported reduced full year forecast for its organic sales growth to come down from 5% to 4.5%, in part due to the Maggi case. “In the emerging markets, lost sales of Maggi noodles continued to have a significant impact on growth in the South
Asia Region,” the company reported in October, as the company reported a 0.5% reduction in organic sales growth in its Asia, Oceania and sub-Saharan Africa (AOA) region. Following a Nestlé India legal petition filed with the Bombay High Court, seeking a judicial review of the recall order, the Court ruled in favour of Nestlé and overturned the government’s ban on Maggi noodles in August, but ordered for fresh tests in court directed laboratories, before allowing the company to start production and sale of the noodles. “Test results from all three of these laboratories have shown Maggi noodles to be safe, with lead content well within the permissible limits. In compliance with the orders of the Bombay High Court, Nestlé India is now commencing manufacture of the noodles. Once fresh tests on these new batches reconfirm that they are safe for consumption, Nestlé India will make the products available for sale in the market,” the company said in a statement.
Mixed flavour juice to grow, reach 10% of global juice market WORLD – A recently released report by the research company Canadean has revealed that consumers have over the years started to favour premium juices with mixed flavours over historically popular single flavours such as orange and apple. The Soft Drinks Market Insight report found that global sales of orange and apple juice declined by half a billion litres between 2013 and 2014 to under 12 billion litres. This compares with more than 13.5 billion litres of combined global sales only five years ago in 2009. “In many Western markets fewer people have a traditional breakfast meal and more consumers are concerned about the high sugar content of juices. Flavour mixes are providing a much-needed volume boost for struggling juice manufacturers,” says Chris Strong, an analyst at Canadean. The research reveals that more exotic and unusual flavour combinations are beginning to emerge, including vegetable, blood orange and passion fruit juices. On a global basis, mixed flavours have grown by 2% compounded annual growth rate (CAGR) between 2011 and 2014 compared to a 2% decline for the juice category overall. This translates into a volume rise of around 100 million litres in only three years, from 1.6 to 1.7 billion litres. In the leading North America market the segment recorded almost 8% growth. In Western Europe, mixed flavours rose by 1%
in 2014, against a 5% decline for the juice category overall. The emerging markets of China and India will continue to drive mixed falvour juice volumes, having seen a 40 million litres increase in volume since 2011, reaching 81 million litres in 2014 in the two countries, driven by rising disposable incomes. The category is expected to grow 14% in 2015 in these countries. Canadean forecasts mixed flavours to make inroads into the wider juice category globally, taking a share of almost 10% by the end of the year.
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