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Oh Germany, You And Your Beer

Me Not You — Fri, 29 Jan 2010 12:17:34 +0000

For ages, Germany has been associated with beer. Still, this didn’t save its industry from the financial crisis. Many traditional brewers in Germany are currently struggling and fight fiercely for market shares. It seems like nothing can hold them back anymore: They even flog their products at give-away prices at discount grocery stores. For the industry this has dramatic consequences.

German discount grocery store Netto temporerely offered a bottle of Radeberger Pils (obviously under a different label) for 20 cent per bottle. 20 cent for a bottle of beer, that’s what I call cheap! Radeberger is not the only company practically giving their products away. Due to the competitiveness of the market, many producers made deals with discounters. The major idea behind that is that those discount grocery stores are able to purchase huge amounts of beer, leading then to sales increases of the producers. The discounters on the other hand will then sell those huge amounts of beer to their customers… at low prices, of course. So far so good for you and me.

What about the producers though? Of course they don’t want their products to be sold that such low price levels. Still, many brewers are looking at cooperating with discounters as they consider it a way out of the misery from which the industry has been suffering for years: the thirst for German beer is declining steadily. The per capita consumption fell from an average of 143 liters in 1990 to approximately 110 liters in 2008.

Cheap bear represents a risky strategy as presented by the Paderborner / Warsteiner case. Being a part of the Warsteiner label since 1991, the premium’s brand cheap spin – off is attracting more and more customers. To name a number: 13 % of Warsteiner’s customers were lost to Paderborner.

On top of that, while sales rise up, margins go down. A vicious circle for the brewers. What will happen next if brewers are giving their products away at production cost? Well, I’m expecting a decline in quality because they obviously will not accept the situation as it is right now. Remember, this is business, not charity. German beer: a further example of giving tradition in favour of profit? Hopefully not. What do you think? May we as customer influence this process? Should we accept higher prices for higher quality? Or is this simply not the time for being generous towards the industry as we’re all facing unemployment, stagnating salaries and uncertanity about the future? Let me know!

Struggle For Supremacy Decided: Cabury Battle Over

Me Not You — Fri, 22 Jan 2010 10:39:14 +0000

The British confectionery maker Cadbury is now more than likely to be sold to U.S. giant Kraft as other potential buyers are set to give up the battle. The chocolate war seems to be over.

Last Tuesday, Kraft finally had the stubborn Cadbury management drawn at his side. The battle for the supremacy in the bitter sweet chocolate business, which lasted several months (see previous coverage from November and December), now apparently is over. Kraft increased its offer to 11.5 billion pounds, a bid competitor Hershey will not outbid.

U.S. chocolate maker Hershey Co has decided not to launch a counterbid for British confectioner Cadbury Plc following a unanimous vote by its board late on Wednesday, the Financial Times said, citing a person briefed on the matter. (Finanznachrichten, 2010) Cadbury had turned to Hershey in order to avert Kraft’s hostile takeover – or at least push prices up. Well, that worked.

Industry insiders, however, had doubts from the beginning that Hershey could even raise the necessary funds. To fill its coffers, even the much larger Kraft group was forced to sell its US-based pizza business. Now the acquisition is perfect, if more than half of Cadbury’s shareholders accept the offer by the Americans.

Meanwhile, Billionaire investor Warren Buffett, who is also the largest shareholder of Kraft Foods Inc. on Thursday reportedly criticized the company’s proposed $19.6 billion acquisition of Cadbury plc. In an interview with CNBC, Buffett reportedly said that the bid by Kraft for Cadbury made him “feel poorer” and said he would vote against the bid if he could. He questioned how Kraft’s chief executive Irene Rosenfeld chose to pay for the deal, saying Kraft is overpaying for Cadbury as it is using its undervalued stock to fund part of the deal. (RTT News, 2010)

One of the first things Kraft plans to impose? An annual $675 million cost-saving plan. Now what a surprise! Will our beloved chocolate get more expensive, will it loose quality or will a few hundreds of Cadbury’s 5’600 employees in the UK and Ireland get fired? We’ll see, I suppose.

Cartel suspicions: Raids at Metro, Edeka and Rewe

Me Not You — Thu, 14 Jan 2010 14:34:13 +0000

Competition is good for business. That’s what they say and also what we saw last week when I gave you an overview about the current “price war” between Tesco and ASDA in the UK.

Meanwhile in Germany, news of the Federal Cartel Office accusing a total of 15 major retail companies and manufacturers of illegal price collusions was released today. Who’s in disfavour? Of course, the consumer.Germany’s Federal Cartel Office suspects price fixing of several retail companies and brand marketers . Over 100 police investigators aligned to the Cartel Office were therefore set out on Thursday to some of the largest German grocers and drug stores including Rewe, Edeka, Rossmann, Lidl and Metro. According to the antitrust authority 15 companies nationwide, 11 being trading companies, are affected. In addition, written procedures had been initiated against other groups.

Right now, the Bonn-based authority examines whether brand-name manufacturers have adjusted the prices of sweets, coffee and pet food with dealers. According to one of its speakers, the investigation could still enter more businesses and enterprises. The competition authorities can impose stiff penalties if the accusations turn out to be true. Those can theoretically be up to ten percent of annual turnover.

Other than that, this leaves a bitter feeling in my mouth. Obviously, those companies are in business to make money. But shouldn’t they do it by fair means? Can business even be fair? All I can do is remind you of a saying which I find very valable in this context: In retail, the consumers vote by using their feet. Or in other words: don’t support companies that “trick” you.

Every Little Helps: Price war in the UK

Me Not You — Thu, 07 Jan 2010 14:15:32 +0000

Food magically becomes more expensive right before Christmas. Or at least, that’s what most of us feel year, after year, after year. Now, Britain’s two largest grocers ASDA and Tesco are up for a price war as ASDA releases plans to make significant price cuts throughout the month of January. Are we customers finally in for some pleasant surprise? First reactions show scepticism.

In a press release from dating from this week, Asda, Britain’s second- largest supermarket operator, said it was making its biggest price “rollback” for a decade, promising cuts across a broad range of products.
It said that throughout January it would lower the price of 3,600 essential products. The price of one in five products would be reduced, Asda said, making this the broadest range of cuts for more than 10 years. (Fresh Plaza, 2010)

Customers will be able to enjoy those cuts for at least six weeks with an average of 13 % in price reduction.

How will those cuts be financed? Are we getting price cuts in bread just to spend more on butter? Apparently not, as ASDA accomplished them by negotiating better prices from suppliers as – well as efficiency saving (I wonder what they mean by that… probably they fired some people?).

Meanwhile Tesco, ASDA’s biggest competitor and famous for their slogan “Tesco: Every Little Helps”, annouced price cuts amounting to £280 million in total. (Financial Times, 2010)

So now we can all be happy, right? I, however, found some very relevent reactions on the homepage of the Times UK which I would like to share with you:

Zappy Corleone wrote:

FYI, on the 23rd of December I noticed that prices at ASDA are 6 to 13 pence higher than the previous day. Honestly I belive that this pricing War is a Scam agreed upon by the Major Supermarkets.

She has a point those, hasn’t she? It’s easy to be generous when you’re just reducing what you’ve increased a two weeks ago. I’m lacking proof for that but c’mon, it’s not that unlikely.

Martin Carter wrote:

Another phoney war in order to get free publicity in the newspapers. We read abot these periodically, but all I ever see is prices going up.

Oh, how right he is! And it works so well! Just consider this blog post as a further ad for the two companies. No, seriously! I mean how many people will read in the news papers “Tesco cuts prices”, “ASDA now cheaper” etc. which will lead to an increase in name recognition and popularity.

I guess we’ll have to stay critical (as always), take the good with the bad, compare prices and trust our own reason. To me this whole thing simply shows once more that there’s not only black and white out there in the business world.

What’s your view?

Healthy Christmas Everybody!

Me Not You — Tue, 15 Dec 2009 17:04:34 +0000

Put your hand on your heart: everyone’s eating way too much during the Christmas holidays. There’s virtually no – one who doesn’t gain weight “in between the years”.

With Christmas approaching quickly, I thought that it was time for some healthy festive tips.

For breakfast…

… why not add some fruits to your ordinary breakfast cereals? Raspberries, blackberries, blueberries and strawberries all make them more valuable for you. You can usually buy berries frozen, even when they’re out of season. Frozen fruit and veg, as well as fresh, tinned and dried, all count towards the 5-a-day fruit and veg target. Those of you who don’t trust frozen fruits may as – well choose local fruits such as apples.

You could cook up some scrambled eggs on wholemeal toast. And, for a bit of luxury, serve them with a ‘mulled juice’ from a cocktail of cranberry, orange and fruits of the forest juices – just warm up the juices and serve with a dash of cinnamon and nutmeg.

Christmas lunch…

… is often neglected because everyone’s looking forward to the big Christmas dinner. What about a warming winter vegetable soup for a quick and easy option? If you use a ready-made soup why not liven it up with a dollop of half-fat crème fraîche or low-fat yoghurt and a sprinkling of herbs? And remember to check the label to look for those soups that are lower in salt.

Christmas dinner: the good news…

… is that the traditional British meal (turkey) contains more protein and much less fat than goose or duck. But try to avoid eating the skin because this is usually high in fat. So why not have a delicious turkey this year?

Nibbles…

… they simply belong to Christmas like presents, don’t they? I would recommend you some unsalted nuts, some dried fruit or you might want to dig out that satsuma from the bottom of your Christmas stocking.
Clementines, tangerines and satsumas are all healthy options for a cosy evening with your family and loved ones.

For more ideas…

Check out the British Food Standard Agency. All of those tips were offered by them for free on their homepage. Journalist Tash Hughes offers some more at the word construction homepage. And last but not least: a whole healthy Christmas cooking book presented by healthymenumailer.

Stay healthy everybody!

Merry Christmas and a Happy New Year!

Update: When Chocolate Turns Bitter

Me Not You — Thu, 10 Dec 2009 12:10:57 +0000

One month ago, I reported on the hostile take – over of Cadbury attempted by Kraft.
Today, I want to pick that topic up again and provide you with an update.

Throughout the last month, various developments took place, inter alia a concrete bid was proposed and a further potential buyer appeared on the horizon.

First of all, we’re now speaking about a concrete number: the hostile takeover offer is as high as £10.1bn.

The US company has stuck to the terms of its original proposal, offering Cadbury shareholders 300p in cash and 0.2589 Kraft shares for every Cadbury share. That values Cadbury at 713p per share, based on recent exchange rates and a Kraft share price of $26.50. Cadbury’s shares closed at 795p on Friday. (Financial Times, 2009)

Shareholders may decide to accept this offer until January 5th with Kraft still having the option to increase their offer.

Second of all, further companies show interest in Cadbury.

Hershey has also been considering making a bid. Nestlé may play a role if Hershey makes an offer – analysts have suggested the Swiss food group could be interested in Cadbury’s gum and medicated sweets. Italian group Ferrero, owner of Ferrero Rocher, Kinder, Tic Tac and Nutella, is also a possible buyer of some Cadbury brands. (Financial Times, 2009)

This chocolate battle is staying highly interesting as Cabury is expected to become more “proactive” as the offer period is coming to an end.

Through all this speculations several questions still remain unanswered: What will happen to local employees? What will happen to the product lines? Will Cabury loose its “British identity”? I’m wondering if stockholders are considering those questions when thinking about selling their stocks.

Meat From The Laboratory

Me Not You — Thu, 03 Dec 2009 15:43:57 +0000

Last Sunday, the Times reported that scientists have grown meat in the laboratory for the first time. Experts in Holland used cells from a live pig to replicate growth in a petri dish. (Times Online 2009) What does this mean for us, the consumers? The answer is simple: sausages and other processed products being made from laboratory meat in as little as five years’ time. (Times Online, 2009)

Would you really want to eat meat grown in a vat?

Interestingly enough, the so – called “meat” is not yet “meat” as we know it. The result of the scientists is rather a sticky muscle tissue which would still need excercise in order to become a steak, for example. Picture enormous meat factories similar to gyms where millions of muscles work 24/7, unencumbered by bodies. Tasty! Well, not in my books.

The advantages seem obvious, though. Global meat and dairy product consumption is expected to double by 2050, according to the United Nations. This could have an unprecedented impact on climate change because the warming effect on the atmosphere of methane, a digestive by-product from farm animals, is 23 times greater than that of carbon dioxide. The UN has attributed 18% of the world’s greenhouse gases to livestock. (Times Online, 2009)

On top of that, meat could be produced without animals suffering. This would create a whole new generation of vegetarians: they could eat “artificial” meat instead of “natural” one.

Still this whole thing leaves a bitter taste in my mouth. I feel like we crossed a line and it’s uncertain where we’re heading.

Mmmh, that looks healthy! McDonald’s goes green!

Me Not You — Thu, 26 Nov 2009 15:47:06 +0000

Which colour do you associate with nature? Green. Which colour makes you think of plants? Green. Which colour do you relate to being healthy? Green.

Well, what a coincidence that McDonald’s announced this week that they wanted to change their predominant used colour to green. (Süddeutsche Zeitung, 2009) Why would they do that?

Every company has a so – called corporate identity. This identity helps us, the consumers, to differentiate between McDonald’s and Harrods, for example. It also helps the company in their business decisions (How do our products look? Where do we sell them? Which message are we sending to our customers?).

So far McDonald’s used red in their logo, as – well in their restaurants. What was the purpose behind that? Red – being an aggressive colour – had lots of advantages. First of all, one would notice the red logo from far away. Let’s say, for example when you’re riding a motorway. Second of all, customers didn’t stay long at McDonald’s restaurants due to the colour’s psychological effect on us: “Red” makes us feel alarmed, restless and weary.

Anyway, who wants to spend hours at McDonald’s? Not me.

Much more interesting is this chain of associations: green = healthy. To me, this whole campaign has just one aim: tricking us into consuming more noisome fast food and thinking we’re doing ourselves a favour.

As they say: all that glitters is not gold. Or, as in our case: all that’s green is not healthy.

Enjoy Carefully

Me Not You — Mon, 16 Nov 2009 13:51:30 +0000

So called “healthy” snacks are bought by mothers who only want the best for their children.
Unfortunately, this often turns out rather badly. Some new examples are presented in this post.

What about Kellogg’s Frosties Cereal and Milk bars? Kellogg’s advertise them as following:
“Fortified with vitamins, iron and calcium, now you can give your kids a great tasting snack that you can be sure won’t come back from school in the lunchbox!” (Kellog’s, 2009). What they forget to mention is the fact the bar is made out of seven different types of sugar (Guardian, 2009). In fact, sugar makes up one third of the bar’s net weight.

Even more interesting are the Fruit Strings by Fruit Factory (Ocado, 2009).

The company reasons that “Parents know how important it is for children to have a well balanced diet, but today’s lifestyle means it can be difficult to combine healthy eating with convenience and variety.” (Ocado, 2009) Erhm, yes. How are we supposed to understand that statement? Maybe this figure speaks a clearer language: 24g portion of fruit strings contains 13.7g of sugar. (Guardian, 2009)

But wait! There’s more you could do wrong.

Let’s have a look at Dairylea Lunchables Ham ‘n’ Cheese crackers. You know those which come with “(…)cheese slices, with added calcium and vitamin D”. (Ocado, 2009) Sounds really healthy, right? You shouldn’t forget though that this snack contains 1.8g of salt, more than half the daily allowance for a four- to six-year-old. (Guardian, 2009)

Do your child a favour and buy him some fruits and vegetables.

When Chocolate Turns Bitter: Kraft Wants Cadbury

Me Not You — Mon, 09 Nov 2009 13:33:33 +0000

We all love some chocolate, don’t we? Maybe you live in one of the 33 countries where Dairy Milk, Britain’s favourite chocolate is sold (Cadbury, 2009). This Cadbury classic was created in 1905 and is successful ever since.

Cadbury, a British confectionery and beverage company, is quite successful in general. Especially in emerging markets such as Eastern Europe or Arabic Countries. In fact, it’s the largest confectionary manufactor in the world (Bloomberg, 2009). They make (some of the) chocolate we love to eat. (Cadbury, 2009)

So, whenever someone is successful, there will be people who want their piece of the cake, or as in this case the chocolate. This is where Kraft Foods comes into the picture.

Kraft is the second largest food and beverage company in the world, right after Nestlé SA (remember, the guys who sell those “healthy” Fitness Flakes). With profits of US$ 2.9 billion, one could argue that they already make some money (download their annual report). Naturally however, they want to make some more.
Kraft, being dominated by the US business, obviously has interest in Cadbury as the company is still growing especially in new markets like Eastern Europe. A merge would enable Kraft to profit from those markets as-well and would enhance the company’s global influence.

In September Cadbury rejected a £10.2bn proposal from the maker of Toblerone, Oreo biscuits and Dairylea. But Kraft will reportedly bypass the company’s board and appeal directly to shareholders (Sky News, 2009).
This means that the shareholders then individually decide if they sell their shares directly to the company.
By that, Kraft could acquire enough shares to take over Cadbury even without permission of the company board. We call that hostile takeover.

What would that mean for us, the consumers? Would Kraft as new owner keep our beloved products as they are? Would they try to make them more “American”? What happens to the British Cadbury workers? How many would lose their jobs? We don’t know yet. But the thought of it is bitter-sweet.