BNET Food

It’s been a pretty lousy year for food and beverage industries, in absolute terms. Food company stocks dropped 27 percent, and beverage stocks dropped 21 percent. But if you step back and take a bigger-picture view, food and beverage companies are actually in pretty good shape, compared with the rest of the market.

The sinking economy sent more consumers to grocery stores, where private label brands did particularly well. And even some of the cheaper restaurants, such as McDonald’s, were able to profit from the economic gloom and doom.

Furthermore, a recent report suggests that as gas prices fall, one of the first places consumers spend that extra cash is at the grocery store.

Of course, it wasn’t just decreased consumer spending that sent profits spiraling downwards — input costs were also up until the beginning of fall. Hedging decisions on currency and commodities had huge impacts on company profits, and a lot of companies cut jobs, raised prices, or shrank portion sizes to increase their margins.

Most restaurants didn’t fare too well, and pricier grocery brands lost out to store brands, perhaps permanently. But compared to the economy as a whole, the food industry didn’t do too badly. After all, the basic facts of life and death are on its side — people will always need to eat.

PepsiCo, Beckham Part Ways
The decade-long endorsement relationship apparently ended amicably. Soccer star David Beckam said he has “nothing but good memories” of being paid millions to lend his name to Pepsi’s products. [Source: Reuters]

Chinese Dairy Exec Pleads Guilty
Tian Wenhua, head of Sanlu Group, admitted knowing the company’s products were tainted for months before alerting authorities. She might be sentenced to death. [Source: AP]

Food Stocks Fared Fairly Well in 2008
Some food companies have faltered, but in the main, the industry has done OK. As usual during downtimes, the food industry in general stayed immune to the deepening recession because people gotta eat. [Source: AP]

You Already Knew This: Restaurants Sank in 2008
Fast food has fared well in general, but otherwise, 2008 was a horrible year for the restaurant industry. Next year could actually be worse. [Source: AP]

Kraft last week launched the food industry’s first branded application for the iPhone. The iFood Assistant provides more than 7,000 recipes, creates editable shopping lists and gives directions to local grocery stores.

Users can rate the different recipes and provide feedback. And, naturally, while they’re waiting for the information they want, they can see picture ads for various Kraft products.

Because the application could actually benefit Kraft, it’s been argued that the smart thing to do would be to offer it for free. Instead, Kraft has opted to charge 99 cents for the download.

As to whether people will actually use it, a Kraft spokesman was “unable to provide specific numbers” today on how many people have downloaded the application since its release last week. But a Kraft Recipe Assistant launched earlier on Facebook did not attract many users.

However, that’s Facebook, where branded applications have for the most part all been flops. This is the first time a company has tried this kind of thing for the iPhone, and that could prove to be much more useful — especially if Kraft stays on the ball when it comes to responding to customer feedback.

Which they could. A Kraft spokesperson told BNET via email, “iFood Assistant was designed with the flexibility to evolve over time with the potential for partners joining to provide additional content and tools.”

Iowa considers banning junk food in schools — The state’s Board of Education is considering new rules that would remove junk food from public school cafeterias and vending machines. The board is scheduled to vote on the recommendations in February. [Source: AP]

Two Thirds of U.S. Bottles Not Recycled — A report by the Container Recycling Institute says that only one third of the 215 billion bottles used per year in the United States get recycled. This is five percent less than in the year 2000. [Source: Solid Waste & Recycling]

Pilgrim’s Pride in bankruptcy court — The chicken producer appeared for hearings today in a federal court in Texas. The debt-ridden company filed for bankruptcy earlier this month. [Source: AP]

Consumer Confidence at all-time low — The Consumer Confidence Index reached 38 this month - the lowest it’s ever been since the index was started in 1967. The previous low was 38.8, in October. [Source: AP]

Mexico Lifts Import Bans — Mexico had suspended shipments from 30 U.S. plants, citing sanitary conditions. Some analysts have said the move was in retaliation for new labeling requirements, but both Mexico and the USDA deny that. [Source: Reuters]

Black Sea Wheat Exports Surge — Countries such as Ukraine and Russia are fast becoming major players in wheat markets. The region is taking market share from the U.S. [Source: Wall Street Journal]

Cal-Maine’s Profit Dips — The egg producer’s net fell 32 percent in the second quarter. Revenues were up 6.5 percent. [Source: Wall Street Journal]

Wal-Mart Joins Russian Lobbying Group — Joining the retail association signals the chain’s interest in expanding in Russia. Other members include the French retail giant Carrefour, Germany’s Metro AG. [Source: Reuters]

The American Family Association is not happy with Campbell’s. The soup company started advertising its Swanson broth this month in the Advocate, a gay and lesbian magazine. One of the ads features a lesbian couple cooking with their son, while others show gay New York chefs.

A cynic might say that Campbell’s has simply recognized that the queer community is full of people who might want to spend some of their money on soup, especially in the current economy.

But to the AFA it’s ideological. According to its website, catering to gay and lesbian customers amounts to “openly… helping homosexual activists push their agenda,” and sends the message “that homosexual parents constitute a family and are worthy of support.” Therefore, the AFA asked its members and allies to write the soup company to demand that it pull the ads and “remain neutral in the culture war.”

To its credit, Campbell’s is ignoring the AFA. It will continue running ads that target the GLBT market.

“Our position on this is pretty straightforward,” said company rep Anthony Sanzio. “Inclusion and diversity play an important role in our business, and that fact is reflected in our marketing plan. For more than a century, people from all walks for life have enjoyed Campbell’s products, and we will continue to try to communicate in ways that are meaningful and relevant to them.”

According to AdAge, Campbell’s is as conservative as companies come, and its official policy is to avoid implying “that Campbell supports specific points of view.” Nonetheless, the Advocate is now asking its readers and allies to contact Campbell’s and thank the company for its “gay-supportive stance.”

At one liberal discussion board, commenters are even urging each other to donate cans of Campbell Soup to their local food shelters. “Eat it around conservative evangelicals,” said one, “and when you’re done… exclaim… ‘That was faaaaaaaa-BU-loussssth!’”

Christmas may be over, but family farmers — and big agribusiness like ConAgra, Cargill and ADM — found a big present under the tree this season in the form of lower oil prices.

Commodity prices have been insanely volatile over the past 18 months. Prices for soft white wheat, for example, spiked as high as $15.12 a bushel in January 2007, only to collapse to around $4.70 by mid-October. As one farm economist noted this fall, that’s twice the volatility we saw on Wall Street during the same period.

Last week, prices were hovering in the $5.50 to $5.80 range, which is about $2 a bushel above the norm for the past 20 years. But as recently as six weeks ago, farmers and farm economists were warning that a tightening was coming to the Farm Belt, because growers would need at least $6.50 or $7 a bushel just to break even.

The reason? High oil prices. Not only does farm equipment require a whole lot of fuel — combines and tractors are built for performance, not fuel economy — but key “inputs” like pesticides and fertilizers typically are derived from petroleum or natural gas. With oil trading over $100 a barrel for most of 2008, the prices of those inputs shot up, even as grain prices started to slide. Throw in the credit tightening, which hits farmers as hard as any other small business operator, and things were looking pretty scary back around Halloween.

But since then, oil prices have collapsed. It’s trading around $35 a barrel today — nearly $110 below the mid-summer peak. That’s going to make a huge difference for growers, and could even spill over to help implement dealers like John Deere, and provide a much-needed boost to the economic fortunes of America’s heartland.

U.S. meat rejected at Mexican border — Mexico has unexpectedly blocked meat imports from 30 plants in the U.S., including those of major processors like Tyson, Cargill and Smithfield. No official reason was given, but the move may be retaliation for U.S. country-of-origin labeling laws. [Source: AP]

Six go on trial in China for melamine — The men are accused of manufacturing and selling the chemical that made more than 300,000 kids sick and killed at least six. Companies added melamine to milk to trick tests into registering higher protein content. [Source: BBC News]

Asahi, Itochu to boost safe China milk production — The companies said they’ll start doubling output at their joint China plant as early as February. Their milk, launched in China in September, is advertised as safe, closely-monitored and melamine-free. [Source: AsiaPulse]

McDonald’s hires crowd for Osaka restaurant — The burger company admitted that 1,000 of the customers who lined up for the opening of a new branch in Japan were actually being paid. However, McDonald’s said it only hired them to give consumer feedback for marketing purposes, not to boost the size of the crowd. [Source: Japan Today]

Starbucks stops guaranteeing 401(k) contributions — The coffee shop chain said that starting Jan. 1, it will not necessarily match employee contributions to 401(k) retirement accounts. Instead it will switch to a “discretionary” program, meaning the company can elect whether or not to match contributions. [Source: Wall Street Journal]

Cadbury sells off last drinks division — Asahi Breweries purchased Cadbury’s Australian drinks unit for $811 million — the last of Cadbury’s soft drink holdings, including the Schweppes brand. Cadbury sold off Dr Pepper Snapple in May. [Source: Reuters]

Chipotle debunks Cereplast press release — Chipotle said it has no plans to expand its relationship with Cereplast, which makes compostable plastic silverware for one of Chipotle’s California stores. Cereplast had announced a “system-wide rollout of up to 800 Chipotle locations” in an earlier press release, without Chipotle’s approval. [Source: Food Business Review]

McDonald’s rejects naked photo lawsuit — The owner of an Arkansas McDonald’s said he should not be held responsible in a case in which naked pictures from a cell phone left at the restaurant wound up posted on the Internet. “The phone was left at the restaurant solely due to the plaintiff’s negligence,” his motion said. [Source: AP]

Ebola-Reston found in swine — Scientists in the Philippines found that some sick pigs were infected with the Ebola-Reston virus as well as Porcine Reproductive and Respiratory Syndrome (PRRS). It’s the first time the disease has been found in pigs, and international health experts have been called upon to investigate. [Source: Meat&Poultry]

FDA ‘Scolds’ Coke Over Label Claim –The agency sent a warning letter to Coca-Cola about its Diet Coke Plus drink. The label says “Diet Coke with Vitamins and Minerals,” but doesn’t contain enough of either to justify the claim, the FDA says. [Source: AP]

Wal-Mart to Settle Suits –The world’s largest grocer will pay up to $640 million to settle 63 suits that alleged employees were underpaid. A settlement would end the majority of employee lawsuits against it. [Source: Wall Street Journal]

Food Safety May Take a Back Seat –Despite all the outbreaks of foodborne illnesses, tainted imports and other problems, reforms at the FDA may take a while because Obama will be forced to spend time and attention elsewhere. The issue “will have to wait its turn,” said Sen. Dick Durbin of Illinois. [Source: Los Angeles Times]

Grupo SOS completes Acquisition of Bertolli — The company now owns the olive oil and vinegar business that had been owned by Unilever. The deal was announced in July. [Source: Food Business News]