Commodity Conversations Weekly Press Summary

One of the biggest challenges for food and beverage manufacturers in the post-Covid era will be to offer consumers products that combine health, indulgence and affordability. A survey by ADM noted that people had become increasingly concerned – as well as knowledgeable – about their health but that they were also facing a weaker purchasing power. Besides, the stress of losing jobs and the general uncertainty is pushing them to indulge in comforting snacks. ADM noted that, in that category, plant-based snacks were becoming increasingly popular but remained expensive. 

The timing is perfect for Nestle, which, after selling several businesses over the past year and a half, said it was now looking to make acquisitions in line with the group’s new image as a “nutrition, health and wellness business.” The company just announced a USD 30 million investment in Closed Loop Partners, a company looking at food-grade recycled plastics, as part of its commitment to lower its use of virgin plastic by 30% by 2025. In China, it is investing USD 59 million to help make dairy production more sustainable as well as develop organic grains. Beyond health and wellness, it remains open to “high growth” categories, with an eye on the frozen food sector which has been growing steadily, a company official said. Another focus is to be able to reinvent their established big brands fast enough to meet the consumers’ needs, he added. 

Kraft Heinz, too, is changing the way it is looking at products. The CEO explained that they were now looking at what people need instead of thinking in terms of a range of products. The group has scrapped 1,100 products from its portfolio, the equivalent of 20% of its business, to lower its cost of procurement and avoid “cannibalising sales.” The plan is to use fewer ingredients, to lower the sugar content and work closely with suppliers to save USD 1.2 billion in its procurement division over the next 5 years as part of a major turnaround plan. 

Another group trying to speed up the pace at which it can meet consumers’ needs is Pepsi which just launched Driftwell, a sugar-free drink made with stress reducers L-theanine and magnesium to promote relaxation. The company said this was the “fastest new product to ever come out of the company” and is banking on the recent focus on good sleep and relaxation. 

Cargill is building a 50,000mt plant in China to produce a sugar substitute called trehalose. The plant, Asia’s biggest, will produce more than enough to meet China’s demand of 30,000mt for the sweetener. Although China produces almost three-quarters of the world’s sugar substitutes, consumption in the country has lagged because of permissions related to patent issues. But with demand for sugar-free drinks exploding, such as Yuan Qi Sen Lin which beat its full 2018 revenue in the first five months of 2020, demand for sugar substitutes is growing just as fast. And with a sweetener market share of only 10%, it still has a long way to go. 

But while new generation sweeteners such as erythritol and sucralose are perceived to be much better than the older ones such as Aspartame, they are still about 80 times more expensive to produce. Regardless, Cargill said it is a trend that is here to stay and food and beverage makers will need more and more solutions. In Hong Kong, however, the Consumer Council warned that many of the sweeteners used in diet drinks could potentially be harmful if consumed in large quantities. It noted that while drink companies in Hong Kong are only allowed to use some 10 sweeteners, there is no limit on the quantity.

Olam announced the launch of a new business arm, Olam Cocoa for Professionals, under which it supplies its premium deZaan cocoa powders to restaurants and bakeries in smaller bags instead of the traditional packing in tonnes destined for large manufacturers. Olam Cocoa has also been working on plant-based creamers that can be used in snacks and ice-cream, something that has been a challenge, a company official said. The market is growing – a survey commissioned by Olam in the UK found that more people were turning to plant-based snacks since the start of the coronavirus lockdown, in part because of health concerns. 

In the US, a multi stakeholder meeting is happening to figure out ways to incentivise farmers to switch to more environmentally friendly practices. Known as Honor the Harvest, the aim is to “create value chain financing where the customers or corporations partner with farmers to coinvest in climate-friendly practices,” the founder said. He explained that while farmers don’t like to be told what to do, it makes financial sense to get involved as the world’s major food producers, including Nestle, Danone, McDonald’s and more have plans to achieve net zero carbon at some point in the next decades.

After much negative press this summer, Tyson Foods announced it had tied up with certification provider Where Food Comes From to verify sustainable beef production practices on more than 5 million acres of cattle grazing land – the biggest initiative of its kind in the US. 

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Consumers of Swedish vegan milk company Oatly have called for a boycott of the brand after they realised that it had raised, earlier this year, USD 200 million from Blackstone Group, a group also known to invest in companies linked to the deforestation of the Amazon. In a typical case of Chinese whisper, Vice reported that Oatly had to defend itself and clarify that it was not, itself, involved in deforesting the Amazon. The company, which has been valued at USD 2 billion, said the investment was, actually, really good news for the plant-based food industry. And regardless of the PR fiasco, the demand for oat milk in the US increased by 290% between March and June this year. 

Israeli startup Redefine Meat is eyeing the whole-cut steaks meat segment – the highest margin segment in the meat industry – and working on a 3D-printed vegan alternative, with options including “roasted” and “grilled.” The printers should be able to produce 250kg of meat every day, the equivalent of a whole cow, the CEO said, adding that he would start selling them to select restaurants by the end of the year. 

US-based company Bond Pet Foods, meanwhile, is betting that vegan pet owners want their pets to be vegan too. The company said it had found a way to make pet food from lab-grown chicken. It will take some time – by 2023 – for it to be rolled out commercially, but it said its cultured-meat dog treat has been a success. 

In China, Pepsi’s Quaker oatmeal brand tied up with the pharmaceutical group Pan Gaoshou to launch products that combine health, local culture and traditional medicine. Their first two products are Hericium Erinaceus (a type of fungus also known as lion’s mane) oatmeal and donkey-hide gelatin oatmeal. As one analyst put it, it’s the new way of consuming traditional medicine

In Oceania, Coca-Cola Amatil invested in cryptocurrency payment provider Centrepay as part of the group’s plan to allow consumers to buy drinks in vending machines in Australia and New Zealand using cryptocurrency. In Europe, Coca-Cola European Partners will be moving to 100% recycled plastic (rPET) bottles in Norway and the Netherlands over 2020/21, with the shift already taking place in Sweden. A company official explained that local deposit return schemes were key in the process. 

Nestle tried a different approach in the Philippines where it said it had reached “plastic neutrality”, by which it means that it picked up and processed just as much plastic as it sells. In Switzerland, and similar to Coca-Cola’s local deposit return schemes, Nestle is testing reusable and refillable systems for petcare and soluble coffee products. In the US, Nestle also doubled its use of rPET for water products from 2019 to 17%. 

Nestle is also doing corporate and local education campaigns to encourage people to recycle. Taking things one step further, and not losing sight of its focus on scientifically-backed health food, the company just launched, an education platform about Age-Associated Cellular Decline (AACD). The concept is to offer consumers nutritional options to reduce the process of ageing

Cargill is pushing for a carbon pricing system to help the shipping industry – which accounts for 3% of global carbon emissions – meet its decarbonisation targets. A company official explained that carbon pricing was necessary to make the new technology and fuels viable, adding that bulk vessels travel to hundreds of ports around the world which will require significant investments. As such, Maersk added, the whole industry needs to get involved 

An analyst at JP Morgan Asset Management said that investments were already flowing into technological innovations that improve fuel consumption, adding that the coronavirus had not affected the investment flow. He added that ships would likely switch to travelling slower to reduce fuel consumption, which should also push up rates by reducing vessel availability. Investing in the Internet of Things (IoT) is another way to improve fuel consumption thanks to smart meters and better data analysis. A report noted that the maritime industry was the sector that has shown the biggest switch to using IoT, which has helped improve efficiency and reduce costs.

At a time when even The Michelin Guide is trying to figure out ways to “remain relevant,” fine dining restaurants are wondering whether people will still be willing to pay significant premiums to eat out. One restaurant making that bet is California-based the French Laundry which just launched a dining experience priced at just USD 850 per head. 

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Concerns have been growing that the coronavirus pandemic will lead to an unprecedented rise in world hunger. Oxfam estimates that, under the worst-case scenario, hunger could kill 12,000 people a day by the end of the year, more than the deaths caused by the virus itself. The crisis would be particularly shocking as we are also facing a massive global food surplus which is forcing many to destroy their crops. Farmers explained that the logistics do not exist to divert crops where they are needed, while farmers are also more likely to let crops rot instead of paying to harvest it and donate it. As an expert put it, “it’s hard to take surplus milk in Wisconsin and get it to people in Malawi”.

Some countries are particularly vulnerable as they import most of their food, like Gulf Countries. In response, the UAE recently purchased 4,500 Holstein cows from Uruguay, with more purchases to come. The country has also set up a trading platform, Agriota, to help local companies connect with Indian farmers. Some companies, meanwhile, are looking at improving their position in global supply chains. For one, Glencore Agriculture purchased a port terminal from Orezim in Ukraine. The Everi port terminal can load 1.5 million mt/year of vegetable oil. 

In the health science world, Nestle announced the purchase of Aimmune Therapeutics, the producer of the world’s first approved treatment for peanut allergy. The purchase valued the company at USD 2.6 billion. Nestle said it was hoping to get the treatment approved in the EU next year. Unilever has also been looking at health and wellness nutrition, as it signed a deal to buy Liquid IV. The firm produces drink mixes that claim to boost the hydration capacity of water by two to three times. 

In the technology realm, ADM Capital Europe bought an 11.7% stake in Saga Robotics. The Norwegian firm uses an autonomous robot to treat mildew with UV. The firm is also looking at commercialising harvesting robots. Otherwise, Unilever announced a partnership with Algenuity, a biotech startup researching microalgae. Algenuity is looking to remove the bitter taste and smell from microalgae to take advantage of the high levels of protein, antioxidants, vitamins and minerals. 

For the time being, most plant-based proteins still come from the land. Bunge invested USD 22.7 million to help Merit Functional Foods build a plant that will produce canola and pea proteins. The Canadian firm hopes its patented extraction technology will help it expand in the USD 4.5 billion plant-based foods market. The traditional beef market is not yet doomed, however, and a USD 8.5 million project seeks to help cattle operations in Nebraska store some of their gas emissions in the soil. The project is supported by Cargill, McDonald’s and Target. 

Mondelez International signed an agreement to buy power generated by the Roadrunner solar plant. With 1.2 million photovoltaic panels, Roadrunner is the largest solar farm in Texas and will help Mondelez get closer to meeting its goal of reducing manufacturing emissions by 15% by 2020. In Cashmere, Washington, a producer of mealworm is pushing the high tech concept even further. A new plant will use the heat generated by computers mining cryptocurrencies and the waste generated by a neighbouring apple factory. The company behind the plan hopes that the mealworm, mostly beetle larva, will be used as feed for livestock and fish. 

Not to be outdone, Chinese researchers are also embracing the concept of “intelligent farming”. A few pig farms are testing the use of facial recognition to monitor every step of animals and, potentially, even their mood. The country is hoping the tech will help improve food security and deal with an ageing population and labour shortages. While the solution could hopefully improve the well-being of animals and replace the use of ear tags, a journalist wonders whether this sounded a bit like “Orwell’s nightmare”. 

A less controversial idea was announced this week with the launch of the world’s first carbon-negative vodka. The Air Company is now selling Air Vodka, a drink made using only water and ethanol produced from CO2, in a factory powered by solar panels. In India, Phool found a clever way to deal with the 8mt of temple flower waste that usually ends up in the river Ganga every day. The flowers go to make incense sticks, vermicompost, packaging and, most recently, Fleather – a vegan leather.

An ancient McDonald’s burger received some Internet fame this week as a woman discovered a burger 24 years old meal that looked completely intact. McDonald’s defended itself, however, arguing that their burgers do decompose like other food products, given a sufficient amount of moisture. 

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Brazil’s agriculture minister said the government was looking into ways to incentivise the financing of sustainable agriculture. She said that there were currently no interest-free loans for sustainable producers and that reaching out to small farmers was a challenge. Some banks are trying to step into that space, with Itau BBA saying its loan portfolio for the agricultural sector had increased to BRL 37 billion (USD 6.6 billion) in the first half of 2020, from BRL 30 million (USD 5.3 billion) for the whole of 2019. 

Taking a different approach, analysts at HSBC warned investors about Brazilian meat giant JBS after some funds dropped the company from their portfolio. They said that the group had no ways – and didn’t plan to set up systems – to ensure that its supply chain did not contribute to deforesting the Amazon. Nonetheless, HSBC still recommended buying JBS stocks, hoping that a plan to list on the New York Stock Exchange would force it to improve on governance. 

Commodity trading financing is going through a crisis, on the other hand. Several banks, such as ABN Amro, announced they were exiting the field while others are “reviewing” the situation, such as BNP Paribas and Rabobank. Banks have been trying to offset low and negative margins with higher volumes, taking increasing risks, which has been compounded with tougher regulations. This is paving the way to more expensive financing which could benefit bigger players by squeezing out the smaller ones, some say. But this could also lead to more expensive food down the line.  

In India, meanwhile, ICICI Bank is now using satellite images of farms to make financing decisions for the country’s millions of small farmers. The new system is also helping reduce costs by replacing the thousands of officers sent to visit farms before loans are granted. 

Unilever is working with Orbital Insight on a pilot program using geolocation and artificial intelligence to improve transparency in its supply chain and specifically the so-called “first mile.” It is starting with several palm oil mills in Indonesia and soy mills in Brazil to see where they really get their supply from by monitoring the real-time movements of trucks. A Unilever official explained that the “first mile” had presented a significant challenge, especially considering that almost half of Indonesia’s palm is supplied by small farmers. 

It is because it is so difficult to monitor supply chains that Olam created its AtSource sustainability platform back in 2018 and is now making it available for its customers. The group has some 3,500 “boots-on-the-ground” to collect the information. AtSource’s CEO explained that challenges vary from one supply chain to the other. In cocoa, for instance, there is a big focus on providing farmers with a sustainable income. In dairy, the priority is animal welfare while in Cote d’Ivoire, child labour is a major concern. They have to develop metrics for each of these requirements, he said. 

Companies are also struggling to choose which sustainability commitments and initiatives to choose from, given the multitude of options available. The Lobbying group Business for Nature noted a surge in big companies’ willingness to step up their commitments to protect nature, after decades of lackluster interest. The head of a large British supermarket chain said that customers were asking for it, but he added that more demanding government policies would help turn commitments to real action. 

One country which is stepping up its game is the UK. The government is looking into new regulations to eradicate deforestation from the supply chain of big groups such as supermarkets and fashion companies. The plan put forth, which is currently in consultation, would require these companies to prove the origins of products such as soy and cocoa, but also leather and paper, showing that these did not involve deforestation. 

As such, businesses across segments are starting to see the benefits of working together. A sustainable sourcing specialist working with fashion conglomerate Kering said that fashion and agriculture were completely interconnected as things like leather, wool and cotton come from the same places our food comes from. By working together, these industries could multiply their sustainability impact. 

On the subject of joint efforts, the alcohol industry is looking into cashing in on the health trend. The FitVine Wine, for one, is marketed as a “low-sugar, keto-friendly wine.” If this doesn’t sound too appetising, don’t worry, because a group of Finnish researchers said they have finally found a cure for hangovers. The study wasn’t easy to do, apparently, with some participants who couldn’t cope with the amount of alcohol that had to be ingested while others just wanted more. 

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

The coronavirus pandemic has not slowed the efforts by the food and agricultural sector to expand internationally and fight for open markets, according to a survey of EU firms. It revealed that 90% of companies surveyed kept their plans to expand or at least maintain their market presence in the short-to-medium term. About 57% said they would concentrate on their core business. 

In the same vein, Olam mentioned that it has successfully implemented parts of its reorganisation plan in the first half of the year, as it reported strong results despite the pandemic. Olam International Limited​ closed its sugar, rubber and fertiliser desks, while Olam Global Agri​ saw good results in grains origination and merchandising. 

Some vulnerabilities in the global food supplies were made clear with the pandemic, however, and some cities are hoping to solve the issue with vertical hydroponic farms. Unfold, a joint venture between Singapore’s Temasek and Bayer AG, was created to focus on seeds aimed at vertical farms to improve food security in metropoles. It could help Singapore reach its goal of producing 30% of its own food needs.

In the meantime, the popularity of plant-based meat continues its impressive rise, as Impossible Foods reported that demand for its grocery business increased by 60 times. To keep up, the group has been raising capital and secured USD 200 million in the latest round, which will go to increase capacity and research and development. Impossible Foods also partnered with the Know Your Rights Camp to help Black and Brown communities in the US. 

Engaging in social and political activism is fraught with risks, however, as many firms found out after sending out awkward or even hypocritical messages in the wake of the Black Live Matter movement. One food maker stands out of the lot, as this Bloomberg cover piece highlighted, the Vermont-based Ben & Jerry’s. The key to its successful foray in social activism could be its decades of fighting for the environment, same-sex marriage and criminal justice reform. The 2000 acquisition by Unilever initially exposed a clash of culture, but Unilever is reportedly now taking inspiration from Ben & Jerry’s on how to react to the new conscious approach of shoppers. 

Ben & Jerry’s recent campaigning has not been welcomed by the UK government, however. The ice-cream maker tweeted at the interior minister criticising her for her comment that the UK will stop asylum seekers from crossing the English Channel. In response, a lawmaker said the comment was merely “statistically inaccurate virtue signalling”, while the Home Office called the brand “overpriced junk food”.

A less risky venture for agricultural business for now remains the fight to protect the environment. The Coalition of Action on Food Waste was launched this week, a consortium of 14 food producers and retailers, including Nestle and Walmart. The group will look at standardising date labels, better reporting of food loss data and partnerships with existing frameworks like the UN Sustainable Development Goals. 

The Chinese government also joined the fight against food waste by launching the “Clean Plate Campaign“. Nonetheless, the similar “Operation Empty Plate” launched in 2013 was not a great success as observers noted that empty plates are a Chinese cultural sign that not enough food was served. 

Another unlikely ally in the fight against food waste is the coronavirus. An analysis based on interviews found that British citizens had significantly reduced the amount of food they wasted because of a growing concern over the availability of food and fewer grocery runs. Other nations found similar patterns, while some suggested that the unemployment crisis and frugality could further the trend. Environmentalists welcomed the news as food waste is responsible for 8% of total greenhouse gas emissions. 

Some clever technological innovations can help address the issue, such as the plant-based edible film developed by Apeel Sciences which can help reduce avocado waste by 50%. Edeka and Netto supermarkets in Germany are now testing the solution, which acts as a barrier to retain moisture and slow oxidation, with avocados and citrus. 

Another promising discovery published this week was the successful cultivation of basil and spinach under semi-transparent tinted solar panels. The solar panels provide shelter and filter through red light which boosts the plant’s ability to photosynthesise. This method could pave the way for a merging of electricity and food production into something called agrivoltaics. 

Lastly this week, Unilever’s Good Humor ice cream distributor found an ingenious solution when it realised that a jingle used by ice cream trucks, called Turkey in the Straw, has a strong racist history. In response, Good Humor partnered with RZA, the leader of the legendary hip hop group Wu-Tang Clan, to develop a new tune which you can enjoy here.  

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Food wrappers are about to get a makeover after four manufacturers in the US volunteered last week to phase out the use of a PFAS chemical called 6:2 fluorotelomer alcohol, or 6:2 FTOH. PFAS – short for polyfluoroalkyl substances – are known as “forever chemicals” because of how long they take to disappear. They have been in use for decades to stop food from sticking to wrapping but some studies suggest a link between PFAS and health issues such as cancer and autoimmune diseases, among others. 

The US Food and Drug Administration explained that the agreement was done on a voluntary basis but health advocates said this was not enough and argued that PFAS must be phased out entirely. Mind the Store tested wrappers used by the US’ main fast-food chains and found that at least one food packaging item used by each of the companies was likely to have toxic PFAS. 

Several companies have already been pushing for PFAS-free wrapping. Whole Foods announced a plan to stop using them over a year ago while Taco Bell – the US’ fourth-biggest fast-food chain – said it would stop using it by 2025. Lawmakers in New York are also hoping the Governor will sign off a bill banning the food packaging that contains PFAS chemicals, following in the footsteps of places like Washington state and San Francisco. Mind the Store urged fast-food chains to be more proactive, however, in making the change happen. 

The UK gave the green light to Amazon to buy a 16% share in delivery platform Deliveroo for GBP 442 million (USD 575 million). The Competition and Markets Authority reportedly approved the deal because Deliveroo said it needed Amazon’s cash injection to survive and, if Deliveroo went down, there would be less competition in the market. Similarly, UberEats, which bought Postmates last month for USD 2.65 billion, saw its Apr-Jun revenues double to USD 1.2 billion but the unit still recorded a loss of USD 232 million. Uber’s CFO noted that losses had narrowed from last year’s USD 286 million but he expects the segment will continue to post losses for the next couple of years. Analysts doubt whether food delivery apps can ever become profitable as they continue to focus on market share over profitability and therefore continue operating at a loss. 

The issue goes deeper as more and more restaurants are complaining about the commission fees charged by the apps. An investigation by LAist said that none of the food delivery apps were transparent with their fees and that each restaurant negotiated their own terms. However, the Los Angeles-based restaurants interviewed all said the fees were around 30%, much higher than their own margins of 3-6%. A number of restaurants have been looking at alternative ways to cope, including delivering food themselves or focusing on drive-throughs. 

Countries continue to gear up their fight against obesity and the consumption of unhealthy foods. In the UK, Google announced that it will require advertisers to label their products if they contain a lot of sugar, salt or fat, and will not display them to people under 18. In Mexico, the state of Oaxaca took it several steps further and passed a law banning the sale of soda and junk food to minors

But if you were thinking you have to give up on your fast-food fix for the sake of your – and the environment’s – sake then there’s good news coming your way. This piece in Wired forecast that fast-food chains switching to plant-based meat could be a game-changer. Arguing that “You can have happy cows or cheap burgers, but you can’t have them both” and that “big problems demand big solutions,” the magazine explains that the sheer reach of fast-food chains would help lower the cost of alternative proteins and scale up their production. As such, replacing every burger in the US with an Impossible burger would lead to a 90% reduction in land and water use as well as a 90% cut in greenhouse gas emissions. 

Having said that, S&P Global Market Intelligence noted that there was very little disclosure about the real environmental impact of plant-based proteins. Looking at data from 2018, it noted that Beyond Meat scored 0% on their weighted disclosure for greenhouse gases, compared to 100% for meat companies Hormel and Tyson. 

And for those of us who are still on a coronavirus-induced baking binge, you can try out this new trend: cloud bread. Not convinced? You can also try Dalgona coffee

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Major food merchants surprised market experts this week by publishing surprisingly robust quarterly earnings. Both ADM and Bunge were able to seize on the volatility created by the US-China trade war and the coronavirus pandemic to improve the results of their trade desks. Another factor that seems to have helped was the weak Brazilian Real, combined with a strong demand from China. Some of the strategic bets made by the firms also seem to have paid off, like ADM’s decision to invest in probiotic nutrition, or Bunge’s cost-cutting strategy. 

Similarly, Cargill performed very well in the year ending in May, data analysed by Bloomberg suggested – since the firm recently stopped publishing its full financial results. The volatile environment and the focus on animal protein paid off, as net income grew 17% on year to the fourth-highest ever. As a result, the 125 family members received a record USD 1.13 billion in dividends. 

Global trade flows remain at risk of coronavirus disruptions, however, as demonstrated by recent interruptions at Argentina’s major export hub in Rosario. COFCO, Bunge and Vicentin all reported disruptions after workers tested positive for COVID-19. Nevertheless, the three firms said they were diverting products to other facilities which should avoid creating significant delays. 

The global pandemic poses less of a threat to the UK’s food supply than Brexit does, a report by the Environment, Food and Rural Affairs Committee argued. The country is due to leave the EU on December 31 and is yet to ensure that food supply will remain steady. A third of the UK’s food is imported from the EU, some of it on a “just-in-time basis”. In Northern Ireland, grocers are already warning that they might have to increase prices or leave the region entirely because of the added costs created by Brexit. Since Northern Ireland will follow the EU’s customs rule in 2021, UK grocers like Tesco will need to produce extra documentation when shipping animal products.

On top of all that, the EU’s food supply is being threatened by the dry weather. Rainfall in France was 25% below normal in July, making it the driest month in 60 years. The corn harvest and beet crops were at risk as a result, while the country’s soft wheat production could drop 25% on year to a 20-year low. Production in the UK could be 30% lower and Romania expects a 6-year low harvest. On the other hand, recent rains helped the crops in Germany and Poland. 

The overall food trend over the next few decades, however, points towards abundant and cheap food, according to a group of economists disputing the idea that we are facing a potential food crisis with a growing population. Climate change could seriously challenge our ability to make food beyond 2050, but the main causes of concern for now remain conflict and poverty. In the meantime, more countries should actually consider paying farmers to turn crop land back into forests or grasslands, they argued. 

The fastest growing food sector in the world is aquaculture and half of all sea-food currently consumed is farmed. The sector holds great potential because of its unparalleled nutrient efficiency but is at risk of creating environmental damages if operations are not made more sustainable, a paper in Nature Food highlighted. Researchers laid out a series of improvements to address issues like the reliance on antibiotics or the use of wild-caught fish as feed. 

While Nestle’s sales for the first half of the year were down 9.5% on year, some product segments performed much better and the firm expects full-year organic sales to grow 2-3%. The pet food brand Purina and Nestle Health Science performed particularly well in the period. And the launch of new plant-based products allowed the segment to report a 40% growth in sales. To get into the mind of Nestle’s marketing genius, check out this story on how a psychoanalyst helped get Japanese people to drink coffee. By focusing on childhood and launching coffee flavoured KitKats, Nestle was able to create an emotional bond with coffee. 

Sales of fast food products in the US are surging with the reopening of some states and major fast food chains are now going on hiring sprees. Chipotle Mexican Grill, McDonald’s, Starbucks and Taco Bell all unveiled plans to hire thousands of workers, as half of all restaurant workers were laid off in Mar-Apr. The most exciting fast food news of the week, however, came with the launch of a fashion brand by Chipotle Mexican Grill. If you’re new to the world of fast food fashion, you need to check out KFC Crocs!

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Nestle has been using augmented reality to keep employees connected despite the coronavirus containment measures. Nestle’s team in Switzerland even managed to help set up a new production line at a Thai factory using the technology which, as a result, was completed ahead of schedule. A company official forecast that “Going forward, remote assistance will become a new way of working” as it will reduce traveling, and therefore lower costs and CO2 emissions. 

Another challenge for food and beverage companies has been adapting to online sales. For one, Coca-Cola is investing to become more visible and more attractive for online shoppers, including making images that are optimised for screens as well as better content, videos and descriptions. The idea is to have a product that is just as appealing online as it was designed to be in supermarket aisles. 

In China, Danone is following Nestle’s strategy and is focusing on importing premium water brands like Evian and Volvic. Nestle also launched a new sugar and sweetener-free flavoured water bottle range targeting children, as well as a coffee bean based bottled water. The Plant+Water by Buxton line is banking on the plant-based diet trend, an official said. As part of the same strategy, Nestle is launching the world’s first plant-based condensed milk from oat and rice flour. It will come out in September in the UK. Nestle also tied up with Starbucks to release plant-based creamers from almond and oat. 

Going back to the topic of water, Cargill has given more details on its new sustainability water targets. It plans to restore 600 billion L of water in priority watersheds – more than twice the amount of water the company uses across operations. It also plans to reduce 5,500mt of water pollutants – all of that by the end of 2030 and across its supply chain. The United Nations said this was the biggest water related sustainability target for a single company, especially as it does not only apply to its direct operations but also to its suppliers. Cargill explained that getting the right data was relatively easy thanks to its tie up with the World Resources Institute (WRI) but getting farmers to make the changes was a bigger challenge. To get other stakeholders to join the effort, Cargill and the WRI have worked on a Water Management Toolkit and made it publicly available. 

Governments around the world seem to be caught between a rock and a hard place managing the effect of the coronavirus. In the UK, the government has asked Nestle’s KitKat to rethink its decision to switch to buying Rainforest Alliance cocoa instead of Fairtrade cocoa. The Members of Parliament (MPs) said that poor coca farmers would be affected at a time when they are already struggling because of the coronavirus. The MPs said the move could affect consumer confidence in KitKat. They criticised the fact that farmers have agency over only one third of the Rainforest Alliance premium, compared to the full premium with Fairtrade. 

The UK government is being much more aggressive in its fight against rising obesity rates which it called a “a time bomb.” Backed by health data showing that 8% of those critically ill from the coronavirus were obese, compared to less than 3% for the general population, the government is banning the advertisement of junk food on television and online before 9pm. It is also banning ‘Buy one get one free’ discounts on products that are high in fat, sugar and salt, and these products won’t be allowed at checkout counters any more. Besides, big restaurants will have to display calories on their menus. Other measures that the government is looking at include completely banning online junk food advertising and adding calories counts on alcoholic drinks, among other measures. 

Critics say that the food, advertising and TV industry will be significantly affected. They also pointed out that the new measures are in direct contradiction with the government’s ‘Eat Out to Help Out’ promotion designed to stimulate the economy. The Advertising Association argued that junk food ads had already dropped by 70% over the last 15 years without any impact on obesity rates. Government officials, on the other hand, said that the sugar levy had been successful at forcing beverage companies to reformulate, adding that the new rules could have a similar effect. 

Similarly, analysts say that the coronavirus pandemic is hitting Mexico particularly hard because of the high incidence of obesity, diabetes and hypertension. While Coca-Cola noted a 28% global drop in sales during the second quarter due to the coronavirus and lockdown measures, sales in Mexico only dropped by 5% as people drank just as much but inside the home. 

The Minister of Economy said Mexico’s new labeling rules to highlight food and drinks products that have sugar, salt or fat content above a certain threshold will be rolled out as planned on October 1. He added that the coronavirus made this policy a priority. In response, the National Chamber of Sugar and Alcohol Industries (CNIAA) argued that sugar should not be blamed for the obesity crisis. Mexico’s per capita sugar consumption decreased by 36% in the past 25 years, while obesity and diabetes cases have been rising, it highlighted. 

Overall, however, the coronavirus pandemic is expected to cause a surge in obesity rates. A study by the University of Alberta found that stress, especially financial stress, enhances people’s urge to eat comfort food as the body, under stress, looks for high-calorie foods. To make things worse, many beverage companies, including alcoholic beverage makers, are facing a shortage of aluminium cans as producers have been adapting to the in-home consumption market and using cans instead of kegs. As a result, more companies are having to resort to using plastic bottles. 

If you’ve been thinking of switching to sugar-free Haribo Gummy Bears you may want to think again. A series of Amazon reviews brought to light the fact that the sugar substitute used, Lycasin, caused significant digestive and gut issues when consumed in large quantities. One review in particular caught the attention of The Mirror and likened the experience to a scene of The Games of Throne taking place in the bowel. 

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

The changes in food habits caused by the coronavirus over the past four months are starting to have an impact – growers can no longer rely on predictable consumption trends when making planting decisions. One big winner has been Canadian durum wheat as the surge in pasta, flour and cereal purchases pushed prices to a three-year high. The situation was compounded by bad weather and a drop in output in Europe and North Africa. A Canadian industry member noted that as a result, “If you eat couscous in Casablanca, you’re probably eating Saskatchewan durum wheat.”

Not every product has benefited from the shift in consumer demand, however. Meat, cheese and butter, for example, tend to be used much more in restaurants than in home cooking. In California, a farmer was forced to destroy his lettuce crop because of the drop in restaurant demand. But restaurateurs are not giving up on their business model and are looking for new systems to adapt. Some are combining the concept of ghost kitchens – restaurants that only serve for delivery – with outdoor food halls to create “ghost food halls”. 

For the moment, online delivery continues to be the most obvious alternative in times of social distancing. In China, Starbucks expanded its partnerships with Alibaba to allow more consumers the option to pre-order drinks via mobile apps. But the surge in online orders is starting to have an impact on online prices which have gone up 4.2% over the last six months, data from Adobe Inc showed. The inflation pushed digital purchasing power into negative numbers for the first time. 

Many firms are also hitting a limit on capacity, like Campbell Soup which is facing manufacturing challenges after the demand for ready-to-eat soup surged 140%. One solution we mentioned last week has been to reduce the number of products on offer. Nestle announced that it was looking to sell its water business in China. The company previously said it might sell water brands in North America and the Chinese Yinlu Foods business. Similarly, Coca-Cola said it would stop selling what the CEO calls “zombie brands”, starting with Odwalla juices. For its part, Pepsi was able to weather the coronavirus downturn in the second quarter thanks to its wider product diversification, as it also owns Quaker Oats Company and Frito-Lay. 

The recent surge in online shopping and the simplification of product ranges were actually part of an ongoing long-term shift in the food supply, according to the experts at IDEO. As such, the coronavirus is not really “new information. It’s more of a reveal”, a consultant argued. The pandemic is also accelerating other ongoing changes, like the focus on regional food and farmers’ markets, along with a growing concern for working conditions in the food industry. 

The virus has highlighted the risks of animal diseases spreading to humans and the need to protect wildlife, according to a director at Danone. He suggested that our current system was “broken” although he was optimistic that shareholders and consumers would embrace a new approach based on sustainability. Danone was the first firm to entrench environmental laws in its official rules based on a 2019 French law. 

Cargill has also been busy reducing the impact of its operations around the world. In northeast Brazil, it has partnered with the Omega windfarm to supply port terminals in Bahia and Para with renewable energy. Cargill also unveiled a new water management practice to help make agriculture more regenerative. And in Zanzibar, Cargill is partnering with the Nature Conservancy to provide guidelines for algae farmers. When done correctly, algae farming can have a positive impact on water quality and wildlife habitat, a spokesperson highlighted. 

KFC is making progress on its effort to offer more meat alternatives as it announced that it will collaborate with Russia’s 3D Bioprinting Solutions to print chicken meat using cells and plant material. Although more environmentally friendly, the final chicken will still contain meat. Meanwhile, KFC’s fully plant-based fried chicken is being offered in more restaurants across the US. The chicken is made by Beyond Meat. 

In the same vein, Burger King is advertising beef made from cows that emit 33% less methane, thanks to the introduction of lemongrass in their diet. While the idea of modifying a cow’s diet to lower methane emissions has shown promising results, experts noted that the Burger King claim was not yet backed by peer-reviewed science. The move was still welcomed, however, as Burger King starts by accepting that “we are part of the problem”. 

Lastly this week, we recommend watching the “fascinating but useless” experiment conducted by an Australian marathon runner. He ate only tinned beans for the 40 days leading up to a 50km ultra-marathon. Besides showing his love for beans, the experiment was most revealing as it deprived him of a source of creative expression. It also gave him terrible wind, obviously. 

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Commodity Conversations Weekly Press Summary

Brazil’s private sector is putting pressure on the government to act and protect the Amazon from deforestation. Some of the country’s main corporations sent a letter to the President saying that concern over the Amazon was driving foreign investment away. Brazil’s poor environmental image is also being used against it in trade discussions, such as the in EU-Mercosur deal. The Ministry of Economy denied that investments were falling, noting a 26% increase in investments in 2019. It also argued that Brazil was one of the countries that did the most to protect its environment, with 60% of the territory preserved, almost twice that of the US and Canada. 

One of the companies involved in the letter, Cosan, argued that protecting the Amazon would help Brazil become more competitive. This comes as Brazil’s agribusiness exports reached a record high for the month of June, with sales up 25% on year. Most of the increase is due to a surge in soybeans exports to China, but sugar and ethanol exports combined increased by 75% on year. The head of Cosan said he had spoken with the President to work on a campaign to improve the country’s image

In China, the possibility that the Shanghai and Shenzhen stock exchanges may start to require disclosure of environmental, social and governance (ESG) information at some point this year could be a big step forward for the use of sustainable palm oil. A researcher explained that although China is the world’s third-biggest consumer of palm oil, there is very little consumer awareness in the country. Palm oil is almost always consumed within another product, notably in instant noodles, and is usually labelled as “vegetable oil.” As such, while the country’s main palm oil importers do trade certified palm oil, they mostly don’t import it into China as no one is willing to pay a premium for it. Palm oil has recently been displacing soy oil which has become more expensive due to the trade war with the US but also because the soybean meal industry, from which it was a by-product, collapsed with the African Swine Fever. 

A conservation professor noted, however, that while most of the world seems to have agreed that palm oil is bad and coconut oil is good, coconut palm trees threaten many more species than palm. This is because coconut grows in areas with far more biodiversity. Data from the International Union for the Conservation of Nature showed that, for every million tonnes of oil produced, coconut threatens over 20.2 species, followed by olive oil with 4.1 species and palm with 3.8 species. He argued that the solution was not to discriminate one oil over another but for each oil to be produced in the most sustainable way possible. 

Some of the world’s multinational food companies are reducing their product ranges to cut the costs of maintaining stocks in this new era of online grocery shopping. Mondelez, for one, announced it would shelve 25% of its products. The CEO said, “we have too many flavours, too many sizes.” Similarly, General Mills is reducing by almost half its range of soups. The CEO explained that websites could not host as many options as supermarkets so it did not make sense to have that many varieties of the same product any more. 

Another big change at Unilever is the group’s decision to put carbon footprint labels on every one of their products. An analyst noted that, a decade ago, Tesco had also tried, and failed. But he argued that Unilever’s tight supply chain would make the data collecting process more feasible. All they need now is an independent carbon labelling standard. 

Cattle ranchers frustrated with the meat labelling standards in the US are working on selling their meat directly to consumers under their own brand, a trend that has been accelerated by the coronavirus. They complain that meat that has been processed or packaged in the US can get the ‘Made in the USA’ label even if the animal was not born in the US. Congress is looking into making it easier for smaller slaughterhouses to operate but cattle ranchers say the cost of setting up is still prohibitive and it is unclear whether consumers are willing to pay a premium. Three groups control close to 60% of the US’ beef industry and, as of 2019, 12 plants processed over half of the country’s cattle. 

If you thought the issue of food labels was not complicated enough, pet owners are now getting worried that misleading labelling on feed bags could be contributing to their pet’s obesity. An estimated 100 million pets are overweight in the US and a law firm is looking for complainants to build a class-action lawsuit against a major pet food manufacturer. They argue that the suggested portions are deliberately based on a working dog’s needs, whereas most pets don’t do much more than relax at home.

This summary was produced by ECRUU

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.