February 25, 2021

As Cost of Importing Food Soars, Jamaica Turns to the Earth

Across the Caribbean, food imports have become a budget-busting problem, prompting one of the world’s most fertile regions to reclaim its agricultural past. But instead of turning to big agribusinesses, officials are recruiting everyone they can to combat the cost of imports, which have roughly doubled in price over the past decade. In Jamaica, Haiti, the Bahamas and elsewhere, local farm-to-table production is not a restaurant sales pitch; it is a government motto.

“We’re in a food crisis,” said Hilson Baptiste, the agriculture minister of Antigua and Barbuda. “Every country is concerned about it. How can we produce our own? How can we feed our own?”

In a region where farming is still often seen as a reminder of plantations and slavery, the challenge runs deep, yet at regional meetings for years, Caribbean officials have emphasized that “food security,” primarily availability and access, is a top priority. Many countries are now responding, branding foreign food like meats and high-calorie snacks a threat, and locally grown food responsible and smart.

Jamaica started earlier than most. A decade ago, the government unveiled a national food security campaign with the slogan “grow what we eat, eat what we grow.” Grocery stores now identify local produce with large stickers and prominent displays.

Members of rival political parties have also been mostly unified in support of expanding agriculture by experimental means; Jamaica is now one of several countries that have given out thousands of seed kits to encourage backyard farming.

Schools are heavily involved in the effort: 400 in Jamaica now feature gardens maintained by students and teachers. In Antigua and Barbuda, students are now sent out regularly on planting missions, adding thousands of avocado, orange, breadfruit and mango trees to the islands, but in Jamaica, gardening and cooking are often part of every school day.

Teachers like Jacqueline Lewis, the acting director of a small school in east Kingston with a thriving farm, are on the front lines of what is considered a battle. That is how Ms. Lewis, 53, treats food and farming, as issues of national and local security.

A grinning disciplinarian who is quick to pull a lollipop from a second grader’s mouth, or to shout “Why ya late?” to dawdling students, she studied food and agriculture after growing up poor and walking barefoot with a grumbling belly as a child to the school where she now teaches. In 1998, she planted her first garden on a craggy strip of dirt in front of the school.

It stayed small, mostly peppers and cabbage, until a few years ago when a European development agency helped pay for a chicken coop and an expansion. Now her garden includes a second, larger plot. The government has yet to give her a cent (the agriculture minister said rural schools were the first priority), but officials have often praised her work, and so have her students.

On one recent morning, a dozen boys wandered toward her an hour before classes. Following quick directions, one group gave water to the chickens. Another, alongside Ms. Lewis, gingerly stepped into the garden to water Scotch bonnet peppers, and check if the callaloo — spinach, kind of, but earthier — was ready to harvest.

When Ms. Lewis grabbed a machete to show one shy 14-year-old how to loosen a carrot stalk, all the boys watched. When he pulled out a thick bunch, with stalks as bright as a sugary orange soda, they all cheered. “You will not go to town and find carrots like this,” Ms. Lewis said.

She later noted that many of the children came from troubled backgrounds and struggled in class. Farming, she said, gave them a reason to come: attendance and achievement have soared since the school, Rennock Lodge All-Age School, started offering free breakfast for students, usually stews made with ingredients they grew themselves.

“You can’t think when you’re hungry,” Ms. Lewis said.

Article source: http://www.nytimes.com/2013/08/04/world/americas/as-cost-of-importing-food-soars-jamaica-turns-to-the-earth.html?partner=rss&emc=rss

Starbucks and Danone Joining Forces to Sell Yogurt

To be called Evolution Fresh, Inspired by Dannon, the new products will capitalize on Danone’s long history of making yogurt and the extensive reach of Starbucks, which has grown to more than 10,000 stores in the United States.

“Yes, it is a new business channel for us, but I wasn’t really looking at it because of business,” said Franck Riboud, chief executive of the Danone Group. “I was really looking to Starbucks because I love their community, the 70 million customers who visit their stores each week, and the way they attract and talk and listen to that community.”

Yogurt is one of the hottest categories in food today, introducing new brands, flavors and permutations at mind-numbing speed, and shaking up traditional players like Danone and Yoplait, which is owned by General Mills and the French dairy cooperative Sodiaal. Chobani, the company widely credited with awaking American interest in yogurt, didn’t even exist 10 years ago, and now its founder is a billionaire.

At a time when dairy companies are fighting over limited space on the refrigerated shelves in grocery stores, Danone’s expansion into Starbucks space offers the yogurt company a powerful new sales outlet.

Still, Americans consume far less yogurt than their European counterparts. The French, for example, eat 33 kilos, or a little more than 72 pounds (144 cups), of yogurt per capita in a year, Mr. Riboud said, while Americans each eat an average of only 6 kilos, or roughly 13 pounds (or 24 cups).

That gap has convinced companies like Starbucks that as fast as yogurt sales have increased here, there is still plenty of room for the market to grow. “When I attended the natural foods show in Anaheim in the spring, I could not believe the ubiquity of yogurt brands,” said Howard Schultz, chief executive of Starbucks. “And over the last 18 months, there has been an acceleration of yogurt sales in our stores that is bigger than anything we’ve seen in the past.”

Harry Balzer, the chief food industry analyst at the NPD Group, has been calling yogurt “the food of the decade” for more than a decade. “Why yogurt is the food of the decade for that long is for this primary reason: You don’t need to prepare it,” Mr. Balzer said. “It can be breakfast, it can be lunch and it is the fastest growing dessert at dinner time, but what’s best about it is there is no cooking and no cleaning up involved and that’s exactly what Americans want.”

Yogurt sales have grown quickly over the last decade. Packaged Facts, a market research firm, estimates that yogurt sales in the United States grew 6.6 percent, to $7.3 billion in 2012, compared with 2011, driven almost wholly by increased sales of Greek yogurts.

But Mr. Balzer said sales had flattened this year because children were not eating as much. “Greek yogurt is a very important part of what’s driving the market, but it’s an adult product,” he said.

The perceived health benefits, he said, are secondary to convenience, but health is why Starbucks decided to rethink the yogurt parfait it has long sold in its stores. “Over the last few years, we have certainly begun to notice that anything we did in our stores that even evoked a healthier alternative has resonated with our customers,” Mr. Schultz said. “Adding healthier items and tweaking existing ones to increase their healthiness has provided a significant tail wind in terms of serving our customers.”

Additionally, he said, Starbucks’s business has become less dependent on morning traffic than ever before. “People are using Starbucks stores in many, many other ways throughout the day, and that has created opportunities for us in the food space,” Mr. Schultz said.

The company bought Evolution Fresh, a juice business started by the founder of Naked Juice, in 2011, and earlier this year, it paid $100 million for La Boulange bakery. Evolution products have begun showing up in Starbucks stores and on grocery shelves, and La Boulange’s products will begin replacing the company’s traditional lineup of baked goods and foods later this year.

Mr. Schultz and Mr. Riboud have known each other in passing for several years, but first met for a heart-to-heart about eight months ago, after Mr. Riboud read “Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time.” “I really wanted to meet Howard because of what he expressed in the book about the management of human resources and the DNA of the Starbucks company,” Mr. Riboud said. “I got the feeling that our DNA was not so far apart when I read about all the social programs of Starbucks, and I asked for an appointment.”

He shared a famous speech his father, Antoine Riboud, had made in 1972 about the social responsibilities a company has, and in March after a nice dinner, Mr. Riboud and Mr. Schultz shook hands on the deal to collaborate on Evolution Fresh, Inspired by Dannon. “I have eaten more yogurt in the last 18 months than I have eaten in my entire life,” Mr. Schultz said. “The product I love is Actimel” — a probiotic yogurt drink known as DanActive in North America — “which I think is an unbelievable hidden jewel within Danone.”

The new products will first appear next spring in Starbucks stores and in grocery stores in 2015. The companies said they would then roll them out in various international markets.

Article source: http://www.nytimes.com/2013/07/24/business/starbucks-and-danone-joining-forces-to-sell-yogurt.html?partner=rss&emc=rss

General Mills Profit Falls 28%; Costs Rise Faster Than Prices

The company maintained its full-year outlook and said it expected strong sales and profitability gains in the second half of the fiscal year. However, it cautioned that its gross margins would be lower during that time given continued cost pressures and its recent acquisition of the lower-margin Yoplait.

General Mills, which makes Cheerios cereal, Nature Valley granola and Hamburger Helper, remains one of the most popular food brands in grocery stores. But like most of its peers, it has struggled with higher costs for things as diverse as ingredients and labor. The company forecast cost increases of 10 to 11 percent for the year and has raised its prices to offset that pressure.

Net income was $444.8 million, or 67 cents a share, compared with $613.9 million, or 92 cents a share, in the period a year earlier. Excluding charges tied to its Yoplait deal and other items, earnings were 76 cents a share.

Revenue rose 14 percent, to $4.62 billion.

“We knew it was going to be a tough environment and it is, but the year is shaping up as we anticipated,” said Don Mulligan, the company’s chief financial officer.

The company, based in Minneapolis, reported that its biggest revenue increase was in its international business. General Mills, which already distributed Yoplait products in the United States, announced in July that it was acquiring a controlling stake in the company. This was the first full quarter with the yogurt brand under its ownership, which lifted its international sales 55 percent.

Revenue at the bakeries and food service division increased 12 percent, with strong sales of products like Pillsbury Mini-Pancakes and French Toast. Revenue from the company’s United States retail business increased 3 percent on strong sales of cereal and snacks, but sales of yogurt and some baking products with higher prices were weaker.

For the full year, General Mills still expects adjusted earnings of $2.59 to $2.61 a share; analysts forecast $2.61 a share.

Shares fell 32 cents, or almost 1 percent, to $39.27.

Article source: http://feeds.nytimes.com/click.phdo?i=55495f79ff949e0525c1eba9f1b560fb

Retail Sales Rise at Expensive Stores but Are Mixed Elsewhere

Sales at stores open at least a year, as reported Thursday, rose 4.4 percent in July at the 25 retailers tracked by Thomson Reuters. But while expensive stores turned in strong results, including a startling 15.6 percent increase at Saks Fifth Avenue, almost double what analysts had predicted, middle- and low-end stores were largely dependent on marked-down summer clothes for their increases.

“There’s definitely been a split,” said Ken Perkins, the president of the research firm Retail Metrics.

The divide has extended all the way to grocery stores, a manifestation of what Safeway’s chief executive, Steven A. Burd, has described as a “bifurcated recovery.”

“I can’t give you a quantitative percentage, but my guess basically splits our customers as about 25 percent recession’s over with, times are good, spending as they always did,” he said in a recent call with investors. “And then the other 75 percent, really very cautious and very concerned.”

Saks Fifth Avenue, Neiman Marcus, Nordstrom and Macy’s, which owns Bloomingdale’s, have outperformed other department stores throughout the year, mostly on the spending power of well-off shoppers, Mr. Perkins said. “They’ve been seeing better wage gains, more stability, and their confidence level is higher,” he said.

Nordstrom and Neiman Marcus reported July increases of 6.6 percent and 7.7 percent, respectively. Saks said several major categories, including women’s apparel, women’s shoes, men’s apparel and men’s accessories, were big contributors to its increase. Nordstrom said women’s shoes, dresses and cosmetics were popular, and the average purchase price increased compared with July of last year, even as visits fell.

At the other end of the retail scale, there has been a lack of confidence among shoppers.

There is “uncertainty affecting our customers, especially the lower income customer,” said John Cato, chairman, president and chief executive of the Cato Corporation, in a statement. Cato sells budget fashion, and its same-store sales fell 3 percent; analysts had expected a 1 percent decline.

Kohl’s, the midtier department store, also missed analyst expectations, by a margin of 8.1 percentage points. It reported a decline of 4.6 percent, saying that footwear and the children’s department did worse than other categories.

Retail executives say poorer people are not buying at the end of the month, suggesting they are heavily dependent on month-to-month paychecks.

“In a soft economy like we’re experiencing, the difference in sales between the beginning of the pay period and the end of the pay period is approaching double digits,” said Mr. Burd of Safeway. “I’ve never seen that in 20 years.”

With higher prices on gas, food and clothing, lower-end consumers just do not have much extra cash.

Safeway said its food inflation was up 2 percent in the second quarter. Clothing retailers are entering a season where prices are going to be higher than usual, because they paid for fall’s merchandise when cotton was very expensive. Other raw-material costs are also increasing.

While gas prices have tempered a bit, they were still a dollar higher this July than a year ago, said Michael McNamara, vice president for research and analysis at MasterCard Advisors SpendingPulse, which tracks gasoline prices and use along with overall consumer spending.

That dollar a gallon means money “that’s being spent on the gasoline category or sector that’s coming from other areas — high gas prices do matter, and in July, it was about a $10 billion bill,” he said.

In July shoppers went to air-conditioned malls to get out of the heat, but when they visited mid- and lower-end stores, they bought items to wear right away, not fall clothes. And they did not buy much of anything toward the end of the month. For instance, at J. C. Penney, where same-store sales rose 3.3 percent in July, there was “particular strength in the sales of ‘wear now’ summer apparel and fashion accessories,” the company said. At Ross Stores, where same-store sales increased 7 percent, dresses were the top-performing category, with sales increasing in the high teens.

“Late July slowed materially, as shoppers were in search of ‘wear now’ product, and macro uncertainty affected consumer sentiment,” Adrienne Tennant, an analyst at Janney Montgomery Scott, wrote in a research note after same-store results were reported.

That is a troubling sign for back-to-school sales, which traditionally account for the second most important retail season, after the Christmas holiday.

Some schools start as early as July, and “generally, in early back-to-school markets, you would see a preponderance of early back-to-school and fall products” selling well, said Joel Bines, managing director in the global retail practice at the consultancy AlixPartners. But this year, the 100-degree weather in much of the country had shoppers skipping purchases of traditional sweaters, vests and other back-to-school items.

“Fall is not on anyone’s mind, anywhere in the country, right now,” Mr. Bines said.

Article source: http://feeds.nytimes.com/click.phdo?i=4875e148d34e6b88ce86d663ee3c9de7

Contrarian Adding Bets in Mideast

Instability is nothing new in the region, he said. It’s been that way for 5,000 years.

“The Middle East is printing money and it’s used to operating in chaos,” said Mr. Barrack, who runs Colony Capital, which controls $36 billion in private equity and real estate investments around the globe, including more than $200 million in the Arab world. “In fact, it tends to do better in times of chaos than it does in times of peace. Regime changes are just a fact of life.”

While other private equity investors back away from the area, Mr. Barrack said he was “looking hard” at adding to his holdings there, which include hotels in Cairo and Bahrain, and grocery stores in Syria.

“Even though the West is thinking that this is a once-in-a-civilization kind of event, these events have taken place many times,” he said. “The time to buy is when everybody else is running for the hills.”

Indeed, executives at the private equity giant Carlyle Group, which is partly owned by the Abu Dhabi investment firm Mubadala Development and raised a $500 million fund to make Middle East investments in 2009, said they were suspending some of their investment plans in Egypt.

A Carlyle co-founder, David Rubenstein, warned in a speech last month that while his firm was not rushing for the exits, “today isn’t the day to do an investment in Egypt.” He added that “what’s going on in the Middle East isn’t going to end anytime soon.”

In an e-mailed statement on Tuesday, Mr. Rubenstein added, “The events taking place in the Middle East are significant and will take time to resolve themselves, but we are optimistic about the region’s long-term prospects.”

Until recently, the Middle East was a hot area for private equity firms, which raised billions of dollars to invest in the region only to discover that their visions of quick profits were a mirage. Some players, meanwhile, are concerned that with the current unrest stretching from North African nations like Libya, Tunisia and Egypt to Bahrain in the Persian Gulf as well as Yemen and Syria, people will seek opportunities elsewhere.

“Over the last three years or so, we had big investors in the U.S. and Europe starting to get interested in private equity investments in the region,” said Ahmed Youssef, a partner in the Dubai office of the consulting firm Booz Company. “Now my worry is when will this interest come back or whether it will come back at all if people are scared,” he said.

Mr. Barrack, however, has a long history of challenging the conventional wisdom. The grandson of Lebanese immigrants who owned a grocery store in the suburbs of Los Angeles, Mr. Barrack became a billionaire by buying out-of-favor assets.

Those contrarian bets include buying bad loans during the savings and loan crisis as well as betting on Asian assets after the Asian currency crisis of the late 1990s, both of which turned out to be hugely successful investments. The Colony funds that were raised from 1998 to 2003 posted annual returns of more than 20 percent, according to one investor.

Now 63, with a gleaming shaved head and trim figure — his hobbies include polo and surfing — Mr. Barrack, who speaks Arabic, has moved comfortably within the worlds of Middle East royalty and powerful leaders for four decades. When he’s not traveling, he splits his time between a ranch in Santa Barbara with four polo fields, where he raises horses and makes four wines (Wine Spectator rated his 2005 Piocho a 92), and a 6,000-acre oceanfront resort in Sardinia, called Costa Smeralda.

Mr. Barrack landed in Saudi Arabia in the early 1970s, just after finishing law school, when a partner at his law firm learned of his family’s roots. Soon after arriving to work on a deal for a gas liquefaction plant, one of the Saudi operating executives there asked Mr. Barrack if he knew how to play squash, because someone needed a partner.

“So I started playing squash with a local Saudi,” he recalled. “I had no idea who it was, and he asked if I could play the next day for a couple of hours. Turns out this guy was one of the sons of the king. So my first break had nothing to do with gray matter in my head or intellect or knowledge of deals. It was because I was the one person within 1,000 miles who could play squash.”

His connections came in handy again in 1974, when Mr. Barrack was the legal counsel for an agreement involving Lonnie Dunn, a Texan who bought land in Haiti with the goal of building a refinery, the Haitian dictator Jean-Claude Duvalier, and two Saudi princes, for the rights for Saudi oil to be sold to Haiti at a discount.

Article source: http://www.nytimes.com/2011/04/06/business/global/06equity.html?partner=rss&emc=rss

DealBook: Diamond Foods and Pringles to Merge

Diamond Foods announced on Tuesday that it would merge with Pringles, a unit of Procter Gamble, in a deal valued at $2.35 billion.

The combination of the two business would create a company with roughly $2.4 billion in annual revenue and earnings of up to $410 million. The deal is expected to increase profit in the first fiscal year, excluding costs associated with the transaction.

“Pringles is an iconic, billion-dollar snack brand with significant global manufacturing and supply chain infrastructure,” Michael J. Mendes, chief executive of Diamond Foods, said in a statement. “This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products.”

The newly combined company will have a portfolio of top snack brands, including Emerald nuts, Pop Secret popcorn and Kettle potato chips. The deal will triple Diamond’s snack business, giving it more influence in grocery stores. The transactions will also give Diamond a bigger presence in fast-growing overseas markets. After the deal closes, international countries will account for 49 percent of the company’s total revenues.

Diamond has been on an acquisition binge in recent years, as it looks to gain size and scale. In 2008, it bought Pop Secret, increasing market share in the brand since then by 3.5 percentage points.

Two years later, Diamond picked up Kettle brand potato chips, whose sales have grown in the double digits. Overall, the company said revenue had doubled in the past five years, with earnings increasing at a faster pace.

The $2.35 billion transaction includes $1.5 billion of Diamond stock and the assumption of $850 million of Pringles debt. Diamond’s shareholders would own roughly 43 percent of the combined company. One-time transaction costs will amount to about $100 million over the next couple of years.

Morgan Stanley and law firm of Jones Day advised P.G. Bank of America-Merrill Lynch and the law firm of Fenwick West advised Diamond.

Article source: http://feeds.nytimes.com/click.phdo?i=fabff1a586bb22560c2c81f33ef53a2f