IFDA's Daily Update

July 22, 2008

A weak dollar and soft U.S. economy will lead to more takeover attempts by foreign food and beverage companies, similar to InBev's buyout of Anheuser Busch.

Agree - 94%
Disagree - 6%

Distributor News

As of July 14, U.S. average diesel fuel prices were $4.72 per gallon, down 4.6 cents per gallon from a week ago, and up $1.83 from one year ago. Full Story

Operator News

Subway is adding 800 locations this year. There is now about one Subway for every 13,800 people in the U.S., said Don Fertman, director-development for the chain. Mr. Fertman believes Subway can take the ratio to one restaurant for every 12,000 people in the U.S. while revving up growth overseas, where it now has 8,000 outlets, reported Advertising Age. Full Story (Free Registration Required)

Sales of specialty coffee at McDonald's have fallen significantly short of the company's goal of about 350 per restaurant each week and continue to decline in test markets, according to Crain's Chicago Business. In Kansas City, sales were at only 217 drinks per week in the end of June, while sales figures for two other test markets, Bakersfield, CA, and Raleigh-Durham, NC, showed similar trends. The chain is struggling to attract its price-conscious regulars, many of whom do not drink coffee, to pay $3 for the beverage. Full Story (Free Registration Required)

BusinessWeek Online examines the subtle ways independent coffee shops compete with Starbucks. Full Story

Border Foods Cos. will open 31 Sonic locations in Minnesota in the next five years. Sonic plans to open 30 to 40 more locations across Wisconsin in the next two years, according to a company spokeswoman, reported TwinCities.com. Full Story (Free Registration Required)

Applebee's franchisee AppleGrove Restaurants closed the sale of an 80% interest in its company to a subsidiary of AmRest Holdings N.V. Full Story

Fazoli's Restaurant's nine Central Florida locations are for sublease or sale as the company tries to expand its franchising network, while keeping its corporate-owned sites closer to its Lexington, KY headquarters, reported Orlando Business Journal. Full Story (Free Registration Required)

Papa Bello Enterprises expanded its franchise business into South Carolina with the sale of an area rep agreement. The first location opened on July 21 in Wal-Mart, with an additional three Wal-Mart locations planned. Full Story

Domino's Pizza opened 25 new stores this year in the UK and Ireland, and is planning to open 50 more each year until it has 1,000 outlets in both countries, reported Reuters. Full Story

Consumer Food Spending and the Changing Economy

Although the slumping economy is impacting the restaurant industry and restaurant growth is forecast at the lowest level since 1991, concepts that offer unique and resonating value equation can find success, noted Kevin Higar, Senior Manager of Technomic Inc. during the Consumer Spending and the Changing Economy webinar presented by Technomic Inc. and The Food Institute. Additionally, opportunities to increase menu prices do exist, as not all menu price elasticities are created equal. Meanwhile, supermarkets can benefit from trading down, noted Ron Paul, President of Technomic. If you missed the webiner, but would like to purchase a recording of the event, click here.

Retail News

The Stop & Shop chain is revamping its image with a new logo, redesigned store uniforms, and an expanded prepared food section. The company is also testing a product line called "Choose and Cook," a refrigerated collection of fresh, color-coded food ingredients that can be combined into a meal for four in 20 minutes. These changes and others come as Stop & Shop is more than 75% finished with its aisle-by-aisle, price-rollback "value improvement program" at its stores, reported Boston Herald. Full Story

In fiscal 2009, Supervalu's capital spending is projected to be approximately $1.3 billion, which includes 165 major store remodels, approximately 15 new traditional supermarkets and 55 to 65 limited assortment stores, including 30 licensed stores. Full Story

Walgreens introduced "W Market," an extension of its Café W beverage concept. W Market is a section in the front of the store that features an expanded selection of specialty coffees; a soda fountain; a two-flavor Icee machine; and a variety of snacks, along with bakery items branded Café W, reported CSP Daily News. Full Story

Sam's Club is offering a membership for college students. With a valid college identification card and college email address, students can buy a yearlong membership for $40 and receive a $15 gift card. The membership includes a free second card so a student can add a roommate or friend to the membership. Full Story

Long Island's largest chain of supermarkets, which includes A&P-owned Waldbaum's and Pathmark, agreed to buy "substantially more" local produce to keep shipping costs down and nearby farms alive, reported Newsday. Full Story

Several West Virginia specialty food markets feature foods for specific consumer needs, including Mountain People's Market Co-op and Groceries & Spices Inc., both profiled in the Times West Virginian. Meanwhile, the newspaper also cites a smaller supermarket in Mannington, North Marion IGA, which will order specific items for customers who make requests. Full Story

Industry News

The Atlanta Journal-Constitution examines the long climb and quick fall of America's Kitchen, which ceased operations in May after being ambushed by rising commodity prices. The spike exacerbated problems for a company that was already weakened by poor accounting and two disastrous expansions into the bakery business. Full Story (Free Registration Required)

Latest sales & earnings for food related companies (Updated Daily)

SunTrust Banks, Inc. sold 10 million shares of The Coca-Cola Company common stock. Full Story

Heartland, Inc. signed a letter of intent to acquire the stock of the Lee Oil Company, Lee's Food Marts and Lee Enterprises, Inc. The Lee businesses have operations in Virginia, Tennessee and Kentucky. Full Story

General Mills launched a new website, www.generalmillscstore.com, to help convenience store retailers. Through the website's Master Your Business section, retailers can access category management information on salty snacks, bar snacks and cereal. This section also gives retailers access to promotional offers from General Mills and tools such as convenience store shopper consumer insights and merchandising plan-o-grams, reported CSP Daily News. Full Story

Gatehouse Holdings, LLC acquired Amalfitano's Italian Bakery. The acquisition will combine Amalfitano's with D'Ambrosio Bakery and will expand Gatehouse's bread routes and depot system into Delaware and Maryland, according to Gatehouse managing director Christopher D. Jansen, D'Ambrosio's president. Full Story

The versatility of cheese as a snack, appetizer, or ingredient is keeping the product popular, according to a new Nielsen study. At an average price per pound of $4.48, cheese costs more than chicken, but compares well price-wise with other meat and seafood choices as a protein source, despite its large price rise this year. Full Story

Lion Capital LLP reached an agreement to acquire The FoodVest Group from funds advised by CapVest Limited. FoodVest is a frozen food manufacturer in Europe, which operates the Young's and Findus seafood businesses. Full Story

The UK alcoholic beverage industry should act more responsibly, according to British ministers, or face new laws governing alcohol sales. A review of retailers showed many were not following a voluntary code calling on them to display details on units and to encourage sensible drinking. Ministers responded by launching a consultation on proposed laws covering happy hours, promotion and labeling, reported BBC News. Full Story

Supercenter Sales Hit $208.3 Billion In 2006

Supercenter sales reached $208.3 billion in 2006, up 15.5% from 2005 and up 34.3% from 2004, according to the latest edition of the Supercenter Industry Overview, part of the Supermerchants series published by alternative format expert James M. Degen & Co. The number of supercenters in the U.S. Increased 12.5% to 2,837 in 2006. This report covers company specific market size and growth, top companies, physical characteristics, consumer demographics, competitive response and an outlook for future developments. Click here to order.

Health News

The pulp of grapefruit may improve bone health and reduce the risk of developing osteoporosis, according to researchers from Texas A&M University published in the journal Nutrition, reported Food Navigator. Full Story

Washington News

The U.S. will limit farm subsidies to $15 billion per year as part of a global trade deal. The offer is an improvement from Washington's previous $16.4 billion limit. The deal is contingent on Brazil, China and India opening up their industrial markets, a key demand in the World Trade Organization's seven-year-old negotiations, reported The Associated Press. Full Story

Sara Lee Corp. reached an agreement with the Center for Science in Public Interest to clarify its labels showing the amount of whole grain contained in its Soft & Smooth bread. The former label said "whole grain goodness," which the advocacy group claimed was misleading as the product was made mostly from refined white flower. The label will now reflect that the bread is made up of 30% whole grains, reported The Associated Press. Full Story

Fast food restaurants would be banned from opening in parts of South Los Angeles under an ordinance to be considered by a Los Angeles City Council committee. The ordinance would prevent fast food chains from opening new restaurants in a 32-sq. mile area that includes South Los Angeles, West Adams, Baldwin Hills and Leimert Park. The ban would be in effect for one year, with the possibility of two six-month extensions, reported The Daily Breeze. Full Story

The National Association of Manufacturers is among 40 trade associations requesting that Congress delay implementation of the "10+2" rule, a regulation that would require the submission of 10 new categories of data on cargo containers before they are shipped to the U.S. by sea. The groups argued that the rule will cost U.S. companies more than $20 billion annually, which they claim are costs that will likely be passed on to U.S. consumers. NAM Release

Agricola Zaragoza, Inc. initiated a voluntary recall of its jalapeno peppers because they have the potential to be contaminated with Salmonella. The recall is a result of sampling by FDA, which revealed that these products were contaminated with the same strain of Salmonella Saintpaul responsible for the current outbreak. It is unknown if any of the more than 1,200 illnesses reported to date are related to this particular product or to the grower who supplied this product. Distribution of the jalapeno peppers were suspended while FDA, Texas Department of State Health Services, and the company continue the investigation into the source of the outbreak. Full Story

FDA is advising foodservice providers, restaurateurs, and retailers to not sell or serve raw jalapeno peppers, avoid handling them, and discard them due to possible salmonella contamination. Attempts to kill Salmonella by cooking may result in cross-contamination and is not recommended. Full Story

Since April, 1251 persons infected with Salmonella Saintpaul have been identified in 43 states, the District of Columbia, and Canada. Illnesses began between Apr. 10 and July 4. Full Story

Market News

The Coalition of Immokalee workers is now targeting Chipotle, requesting an extra penny per pound for Florida tomato pickers. Chipotle's only response has been to stop purchasing tomatoes from Florida, according to the coalition's spokeswoman. The organization plans to wait for action from Chipotle over the coming months, before putting pressure on its next target, Subway Restaurants, according to Bradenton Herald. Full Story

An experimental treatment could help protect some fresh produce from microbes such as Salmonella, Listeria and E. coli, according to the Agricultural Research Service. The treatment relies on cold plasma, as the process of turning gas into plasma has an antimicrobial effect. Full Story

California Giant Berry Farms and Driscoll Strawberry Associates Inc. were chosen to supply fresh strawberries to the Olympic Village, reported The Packer Online. Full Story (Subscription Required)

Prolonged cooler weather in California's Sacramento Valley could cause problems for rice farmers. Chilly nights bring particular concern, because extended periods of temperatures below 56 degrees could cause rice plants not to form kernels, reported California Farm Bureau.