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Aug 17, 2017 / Richard Hall

New Thailand tax on sugar

I’m in favour of comprehensive action to tackle obesity rather than singular measures that target individual products, but Thailand’s new sugar tax seems to make more sense than most.

It comes into effect on 16th September and the merits I could discern are:

• It’s designed to improve health and not just to support government finances.
• It has a six year strategy.
• It provides incentives as well as disincentives.
• So taxes will go down on sugar free beverages and progressively increase on high sugar products.
• The sugar threshold of 6g per 100ml is based on WHO standards.
• Its aim is to encourage change by both manufacturers and consumers.

However, every silver lining has its cloud. The tax rates and product categories have yet to be defined.

Aug 15, 2017 / Richard Hall

New US tax on bottled water

To me, better hydration means better health. All water contributes to that. And bottled water just as well as tap.

No calories, no treatment, natural purity, local sourcing, lightweight packaging, easy recycling, low carbon footprint, great convenience – the benefits are manifold.

And yet…

Washington State in the United States introduced a new tax on bottled water from 1st August.

It’s expected to raise $30 million in a full year.

Personally, I can’t fathom this. Compared with all other competing choices, water should be preferred not penalised.

Aug 10, 2017 / Richard Hall

Alcohol and dairy top Asia rankings

In the latest Nikkei ranking of top food and beverage companies in Asia, alcohol and dairy companies dominate the list, which is based on market capitalisation as of 20th July.

• 1 at $86.5 billion is Kweichow Moutai, baiju producer from China.
• 2 at $30.7 billion is Wuliangye Yibin, also in spirits from China.
• 3 at $19.8 billion is Kirin, alcohol producer from Japan.
• 4 at $19.1 billion is Asahi, also in alcohol from Japan.
• 5 at $18.8 billion is China’s Jiang Su Yanghe Brewery.

So, what about the dairies?

• 6 at $18.6 billion is Inner Mongolia Yili Industrial Group from China.
• 15 at $9.7 billion is Vinamilk from Vietnam.
• 17 at $8.2 billion is Mengniu from China.
• 20 at $7.4 billion is Indofood from Indonesia.

Other big international names also feature.

• 10 at $14.8 billion is Japan’s Suntory.
• 14 at $10.3 billion is Nestlé India.

The company with the highest sales, however, was China’s WH Group in meat at $21.5 billion.

Other companies with sales over $10 billion were Kirin on $19.0 billion, Asahi on $15.7 billion, Suntory on $12.9 billion and Uni-President of Taiwan on $12.8 billion.

Aug 8, 2017 / Richard Hall

Record 72 acquisitions in July

I wondered when it would happen. The September 2014 record of 62 food and drink transactions registered on the database was broken in July 2017 when there were 72.

Many of them were substantial, with 10 over $500 million, including 5 above $1,000 million:

• $4,200 million for US based McCormick to buy UK based Reckitt Benckiser’s food activities

• $1,800 million for Mexico’s Lala to win Brazil’s Vigor dairy business

• $1,300 million for Starbucks to acquire the remaining 50% of its East China joint venture from Uni-President and President

• $1,300 million for US based Multi-Color Corporation to take on Austria based Constantia Flexibles’ label operations

• $1,250 million for Refresco of the Netherlands to purchase the soft drinks manufacturing business of Cott from Canada.

Of the 72 total, 10 were in alcohol, 9 in dairy, 8 in soft drinks, 6 in meat, 5 in bakery, 4 in ingredients, 4 in plant-based, 3 in confectionery and 3 in packaging.

41 were international and 31 within national borders, 22 of these in the United States.

Overall 37 involved the United States, 8 the United Kingdom, 6 France, 6 the Netherlands, 5 Mexico (all purchases), 4 Canada (all sales), 4 Germany, 4 Italy and 4 Switzerland. Australia, China and Spain each contributed 3. 17 other countries were affected as well.

Jul 27, 2017 / Richard Hall

Global dairy market outlook

Polling at Zenith’s Global Dairy Congress in Dublin last month was buoyant about most issues except Brexit.

• The biggest challenge for the dairy sector was seen to be sustainability 58%, well ahead of health 18% and farm production 16%.

• The greatest growth potential for dairy sales was overwhelmingly in China 83%, with 15% saying India and 3% the United States.

• The best market growth prospects were considered to be yogurt/fresh dairy products 38%, cheese 33% and ingredients 17%.

• The most promise for added value was protein 62%, with 34% choosing yogurt and just 3% opting for dairy free.

• Brexit was felt to be “worse for everyone including UK” 54%, “drawn out uncertainty” 34% and “short term distraction” 10%, with “positive benefit” scoring a mere 2%.

Jul 26, 2017 / Richard Hall

Refresco/Cott significance

Refresco’s purchase of Cott’s soft drinks manufacturing business for $1,250 million is significant because:

1 Cott, a world top 10 player, is exiting traditional soft drinks manufacture as well as fruit juice, both of which are facing volume declines in developed markets.

2 Refresco will become a new global contract manufacturing leader, with strength in both Europe and the Americas.

3 Refresco will also be a new UK soft drinks leader to challenge the scale of Coca-Cola and Britvic/Pepsi.

4 Cott moves to become a primarily services business in water, coffee/tea and home/office refreshment. In filtration services, it has US leadership through DS Services and European leadership through Eden Springs.

5 Cott retains some substantial soft drinks service interests in concentrate production and Royal Crown franchising.

This is a more than $1 billion deal between two quoted companies, creating the world’s first really global contract manufacturing soft drinks producer in the new Refresco and enabling Cott to focus more on building its portfolio of service businesses.

Refresco’s strength will lie in producing the full range of soft drinks, while Cott devotes its strategy to water, coffee/tea and other refreshment services.

Jul 25, 2017 / Richard Hall

US beverage market outlook

Before the summer break for many people, I thought it might be interesting to review some of Zenith’s conference delegate polling in the last couple of months.

First, let’s take a look back at Beverage Digest’s Market Smarts conference during June in New York.

• The most important issue facing the US soft drinks industry was obesity/taxation 60%, far ahead of growth/profitability 25% and innovation/other 13%, with sustainability/waste trailing at 3%.

• Liquid refreshment beverage value growth in 2017-18 was predicted at 2-3.9% 62% and 4-5.9% 24%, with no one foreseeing a decline.

• The highest value growth potential over the next 10 years was expected to be functional beverages/personalised nutrition 43%, tea/coffee/sports/energy 26%, carbonated soft drinks 17% and plain water 14%. No one chose juice/juice drinks or milk/dairy alternatives.

• The new technology promising the greatest impact in the next 10 years was driverless vehicles 37%, click and collect 16%, self manufacture/dispense 11% and drone delivery 5%. Not invented yet/other came second at 26%.

• The biggest social media concerns were return on investment 43% and maintaining privacy 35%.

• The main purchase influencer in 5 years was thought to be word of mouth 56%.

Jul 20, 2017 / Richard Hall

Investing in innovation

So many big companies now have their own units to invest in, incubate or mentor start-up concepts, brands and technologies.

They are all very clear about what they are looking for and how they operate, but what do they find?

PepsiCo’s new European Nutrition Greenhouse is instructive because it offered support for 8 projects at the same time.

I was fascinated by the selection:

• 3 were from the UK and 1 each from France, Germany, Netherlands, Spain and Switzerland.
• 3 featured protein and 3 fibre.
• 2 aimed to improve convenience and 2 to reduce calories.
• 2 were vegetable-based and 2 more from plants.
• 1 was based on edible insects, 1 on edible seaweed and 1 was a tree juice.
• Superfood and organic credentials were also prominent.

I am always looking for clues pointing to the future. There are plenty here.