Mr. Rick Shea

GLG News by Mr. Rick Shea, President

Kraft Continues Portfolio Shuffle

September 15, 2009

Analysis of:Kraft Under Pressure as Bid Value Slips | www.flex-news-food.com

Kraft Foods bid for Cadbury makes a lot of strategic sense and will allow them to increase their growth in international markets.The key to the deal is utilizing Cadbury's extensive distribution and sales network to further drive growth of existing Kraft products.Faced with the likelihood of having to increase the all cash portion of the bid Kraft will be looking at additional brands to divest and help pay for the acquisition.

World Class Packaging

April 2, 2009

Analysis of:FOOD PACKAGER OF THE YEAR: Packaging a big part of General success | www.foodandbeveragepackaging.com

The use and design of packaging is one of the most critical elements in a supermarket products success.Packaging provides multiple benefits and serves many key objectives for food manufacturers. ---Merchandising:Product must merchandise well and provide consumers with a quick,clean understanding of the product. ---Brand Positioning : Packaging conveys a feel and tone about every product including whether its value orientated or premium. ---Quality :Packaging must obviously protect the quality of any food product and contribute to shelf life in many cases. ---Preparation: Many packages need to provide a quick,cost effective way to prepare the product. ---Informational : All key labeling and nutrition info must be accurately and effectively communicated to the consumer ---Sustainable :Cost efficiency and environmentally friendly are very important to retailers and consumers.

Consumers Drive for Value in Their Food Purchases

March 25, 2009

Analysis of:What Sells in a Recession | www.time.com

The article provides a good descriptive assessment of how consumers supermarket shopping habits have changed in the last 3 months.Nervous, money challenged consumers are more price discriminating than ever before in their food purchases.Private Label sales are growing faster than the category and taking market share.Consumers are increasing their use of stores perceived as discounters. Walmart, Costco, BJ's and dollar stores continue to lead in same sales store growth.

Food Inflation Slows But Is Here To Stay

September 12, 2008

Analysis of:Food Inflation is likely to continue, experts say | www.venturacountystar.com

Commodity inflation appears to have peaked for the short term but long term commodities will continue to rise creating above average food inflation.How food and restaurant companies react will be the key to future price increases.

Food Companies Results Vary Based on Brand Strength

September 9, 2008

Analysis of:Amid turmoil,Big G still making dough | www.startribune.com

As commodity and energy costs continue to rise it has put more pressure on the botton lines of all food companies.Food companies have had to raise prices to offset these increases.However not all food companies are losing share to private label as a result of the price increases.

Organic and Natural Food Growth Stalls with Increased Commodity Costs

April 28, 2008

Analysis of:Naturally,Super Valu Customers Want More Options | www.forbes.com

Increasing commodity costs are having a negative impact to the growth of organic and natural foods.As commodities increase consumers are being more selective and price sensitive in their grocery shopping.This trend does not bode well for retailers like Whole Foods (WFMI) and the manufacturers that supply items to the leader in the organic and natural foods segment.

Apple's Superior Brand Strategy Leads to Strong Results

April 24, 2008

Analysis of:Apple's 2Q Results Beat Wall Street Views | biz.yahoo.com

Apple once again delivered very strong results in the face of hesitant consumers under recessionary pressures.Total revenue growth for the latest quarter was +36% led by the Mac brand in personal computers at +51%.The MP3 segment led by the I Pod brand delivered growth of +1% while the I-Phone sold 1.7 mm units.   So how is Apple able to deliver consistent sales and profit growth in tough recessionary times with premium pricing while many of its competitors deliver poor results.In a phrase --it's their superior branding strategy.  

Commodity Hedging-The Double Edged Sword

March 31, 2008

Analysis of:Against the Grain: Food Firms Hedge Costs | online.wsj.com

With ever rising commodity costs food companies that have hedged their key commodity purchases with forward buying have done quite well over the last year.Several key manufacturers have announced that they have hedged their raw materials by forward buying 60-70% of their 2008 needs.Lost in the discussion has been the potential for commodity prices to go down in the latter half of 2008.

Kraft and Sara Lee turnaround ? Real or wishful thinking ?

March 14, 2008

Analysis of:Kraft, Sara Lee say turnaround efforts are succeeding | www.chicagotribune.com

Kraft and Sara Lee executives recently spoke at analyst conference concerning their recent improvements to drive sales growth and improve operating margins.Both suggested the progress is real and sustainable.   Kraft highlighted new products and headcount reduction as keys to their progress.New products are clearly needed and our key to drive future sales growth.The job cuts they mentioned are real and should help them provide a lower cost basis to expand marketing and potentially improve margins at the same time.  Sara Lee also touted new product innovation and organizational restructuring as means to improve their growth and enhance profitability.Pricing is also key at both companies as they face strong headwinds in the face of commodity inflation.  Do we believe both CEO's assertions and are better days ahead for both companies ?

Who wins , who loses from rising food prices ? Part 2 --Retailers

January 11, 2008

Analysis of:Higher Food Prices Start to Pinch Consumers | online.wsj.com

As commodity prices increase, food manufacturers will be required to pass on higher raw material costs to their consumers.Over time these higher prices will put pressure on premium priced branded products and shift share to private label and value brands.Will this same pressure apply to retailers and hurt overall category sales ? Which retailers will benefit the most? Which retailers will be hurt on sales volume ?

Who wins , who loses with higher food prices ?

January 10, 2008

Analysis of:Higher Food prices Start to Pinch Consumers | online.wsj.com

Commodity prices continue to rise driving prices higher in the grocery aisle.Wheat ,corn,dairy and oil prices continue to climb creating a very challenging environment for food manufacturers and retailers.The rising prices begs the question of who will this benefit and who will this hurt over 2008 ? There are several distinct categories of companies that rising food costs will impact: --Branded Food Manufacturers (Kraft,General Mills,Kellogg's etc) --Value Food Manufacturers (Private Label producers,value priced branded companies) --Restaurants and Foodservice manufacturers --Grocery Retailers

Organic and Natural Foods Go Mainstream

December 5, 2007

Analysis of:Hot Cereal , Hey It's All Natural | www.nytimes.com

Large consumer packaged goods companies are finally waking up and embracing the volume opportunity in Organic and Natural Foods.For years ,most of the top selling products at Whole Foods and other Natural stores were made by small manufacturers.Large CPG companies were not quick to offer products because the volume was still small and there are greater difficulties in the manufacturing process to produce Natural and especially Organic products. Times are changing with many key retailers now starting to embrace Organic and Natural Foods.If their retail customers want these products its important that the large CPG companies offer them as part of their product portfolio.

Who Will Buy Wonder Bread ?

November 8, 2007

Analysis of:Twinkies Baker Opens Door To Bids | www.reuters.com

The recent article on Interstate Bakeries bankruptcy hearings now officially puts the company in play.IBC struggling from high plant and route costs and the unprecedented rise in flour costs has been attempting to emerge from bankruptcy.IBC Management has stated that their proposal values the company at  a value of at least $580mm.Yucaipa and Bimbo (Mexican bread retailer and owner of the Oroweat brand) have formed a group to propose an alternative deal.The result has been to effectively put IBC up for sale to all competing companies.

Ralcorp to Purchase Post cereals ?

November 5, 2007

Analysis of:Kraft Near Deal to Sell Post to Ralcorp | biz.yahoo.com

Ralcorp's potential pucrhase of Post cereals for $2.8 billion dollars will shake up the cereal category and provide another stronger competitor to General Mills and Kellogg's.The winner will be Ralcorp if they can successfully integrate Post and leverage their brands to strengthen their private label sales.The losers will be Malt-O-Meal and Quaker as both brands will be under further pressure in a consoildated category.  For Kraft Foods it means their divestiture strategy will speed up and provide them additional dollars to pursue acquisitions.Kraft's growth startegy is predicated on shifting their portfolio to focus on more international growth and focusing on the key snacks,beverages and possibly confections in markets outside the US.

Are All Food Companies Hostage to Commodity Prices in 2008 ?

November 2, 2007

Analysis of:Kellogg's 3Q profit up,warns on 2008 | biz.yahoo.com

Wheat prices are up 100% in 12 month's. Dairy prices continue to climb, increasing the costs of most food manufacturers.Is this a temporary phenomenon or is food inflation here to stay ?  Both Kellogg's and Kraft have provided disappointing guidance in the last few weeks blaming wheat and dairy along with other commodity prices as the chief culprits.Does this mean all food companies will underperform for the next year or two ? What companies are best positioned to withstand the increasing cost pressures ?

Can food companies survive the large increases in commodity costs ?

October 24, 2007

Analysis of:Kellogg's downgraded by Citigroup | www.marketwatch.com

Commodity cost increases (wheat,corn,oil,sugar) are causing havoc with food and CPG companies bottom lines.The significant upward pressures of wheat (+100% latest 12 months) specifically impact all cereal,baking, pasta and many other food companies profits. The key questions surrounding these increases include: 1) Are companies able to take pricing to offset this increase in costs? 2) What companies will benefit the most and be hurt the most by rising commodities ? 3) What impact will it have on consumer sales if companies pass through the cost increases? 4) What % of their total P & L is tied to commodities and can they offset the increases with savings and productivity in other places ?

Will Wonder Bread Survive?

October 11, 2007

Analysis of:Interstate Bakeries Says Unions Only Looking Out For Their Own Interests | www.topix.com

Interstate Bakeries and its unions are locked in a negotiating stalemate  over employee jobs and compensation.Specifically, IBC's management is looking for job cuts and lower costs from the unions to make the company more cost competitive.The unions obviously are seeking to minimize impact on its members and disagree with IBC's strategic plan to reorganize the company.The results will likely determine if IBC can survive and exit bankruptcy.

Where's Kraft Foods Volume Growth ?

September 14, 2007

Analysis of:Kraft Boosts Outlook | biz.yahoo.com

Kraft Foods has reported some progress in their recent quarterly earnings but the jury is still out on whether they can show sustainable sales and growth.Kraft has underperformed its food company peers over the last few years primarily because they have gotten away from what made them successful: new products and innovation and world class marketing.  If you look at what's been successful in the last few years in CPG food its been competitors & retailers embracing the natural & organic food trend and stronger focus on catering to the alternate channels (Walmart,Target,Warehouse clubs and even drug & convenience stores). Kraft has yet to devise a strategy that taps into these growing segments and growing customers.Until they do any volume growth will only be temporary and will be unsustainable. 

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