The company joins Nomad Foods, Premier Foods, Nestle, Mondelez and other processed food makers, which have benefited since March, when restaurants around the world closed, forcing people to eat at home.

The trend marks a bright spot for a sector that has been upended in recent years by challenger brands offering products seen as healthier or less-processed.

“In March, the company experienced an unprecedented increase in consumer demand for food at home,” General Mills said in a statement. “While the magnitude of… demand moderated in April, it remained significantly elevated compared to pre-COVID-19 levels.”

Sales of General Mills products — which include Cheerios, Progresso soups and Old El Paso meal kits — at U.S. retail stores tracked by Nielsen jumped 45 per cent in March and 32 per cent in April, the company said.

Besides basic pantry-stocking, large packaged food companies are seeing renewed strength in their traditional, classic brands, many of which have struggled to keep pace with changing tastes.

“In times of uncertainty, consumers turn to brands that they trust. They want to experiment less,” Kraft Heinz CEO Miguel Patricio said last month. “That’s what we’re seeing right now.”

A consumer survey last week by Jefferies analysts found that 38 per cent of respondents were purchasing more standard or classic brands versus only 16 per cent who were not.

Jefferies analyst Rob Dickerson said those big brands might be easier to find because their supply chains tend to be larger and more secure.

“In times of stress and duress, larger retailers are probably going to want to lean on some of their larger suppliers,” Dickerson said.

“It’s been all about the emerging brand. But all of a sudden, stuff hits the fan and when in doubt, you call on the big guys.”

Even in May and beyond, as lockdowns are lifted and eateries begin to reopen, consumers are not expected to rush out immediately, due to lingering fears about the coronavirus and soaring unemployment, which will slash household spending.

In a report last week, research firm Kelton Global found in a survey that more than 60 per cent of respondents remained afraid to go to a bar or restaurant.

Analysts at Wells Fargo estimate food-at-home sales to rise 14 per cent in 2020, and then fall five per cent in 2021.

“We suspect that between some permanent restaurant closures, lingering social distancing measures… and some stickiness to the work-from-home movement, at-home spending may not see as hard of a landing that some expect,” said Wells Fargo analysts.

Jefferies predicts an incremental boost to U.S. retail spending on food at home of around US$43 billion every three months for a period following the panic-buying that marked the early spring.

The S+P 500 Packaged Foods and Meats index is down 6.5 per cent for the year, compared to a 9.5 per cent decline for the S+P 500.

General Mills expects fourth-quarter organic net sales to increase by a double-digits percentage.

— Martinne Geller is a consumer goods correspondent for Reuters in London; additional reporting by April Joyner in New York and Nivedita Balu in Bangalore.

The post Packaged-food majors see sales spike in pandemic appeared first on Manitoba Co-operator.

Kraft Heinz, which was Kraft Foods until 2015, and snack food firm Mondelez bought $90 million of December 2011 wheat futures, which gave the companies a dominant position in the market, even though they never intended to take possession of the grain, the CFTC said (all figures US$).

The move sent a false signal that the companies had demand for wheat and caused an artificial price fluctuation that earned them more than $5 million in profits, the CFTC said.

Both companies said they strongly disagree with CFTC’s statement, which “blatantly violate and misrepresent the terms and spirit of the consent order” and will be seeking immediate relief from the court.

The commission first filed its complaint against the two firms four years ago, focusing on trading alleged to have taken place before Mondelez spun off from Kraft in 2012.

The CFTC said the companies’ goal was to narrow the price spread between the December 2011 and deferred-month wheat futures contracts, causing the market to sell cash wheat to the companies at lower prices, while earning them a profit on their speculative futures positions.

Wheat futures and options traders had also accused the companies of illegally manipulating the grain’s price at their expense.

The penalty is about three times the companies’ alleged gain, the CFTC said in a statement.

— Reporting for Reuters by Nivedita Balu in Bangalore.

The post U.S. CFTC says Kraft, Mondelez to pay $16M in wheat price manipulation case appeared first on Manitoba Co-operator.

The province on Monday announced the Mondelez Canada bakery in East York will get up to $22.6 million from the Jobs and Prosperity Fund, by way of that program’s Food and Beverage Growth Fund.

The funding will go toward an expansion of the plant — which today makes Oreos and Peek Freans and Lifestyle biscuits — including installation of two new bakery lines and upgrades of an existing bakery line.

The expansions, upgrades and added lines are expected to allow Mondelez to create new products at the East York plant, the province said in a release.

The public investment “will support opportunities in master baking, technician and engineering skills development,” the province said.

The Food and Beverage Growth Fund — one of four streams of the Jobs and Prosperity Fund launched in 2015 — is meant to support food, beverage and bioproduct manufacturing projects that “help create and retain jobs, increase domestic and export market access and enhance innovation and productivity.”

Illinois-based Mondelez, which booked 2017 net revenues of about US$26 billion, billed itself as holding the No. 1 spot in the biscuits and candy market worldwide last year. Biscuits accounted for about 42 per cent of the company’s 2017 net revenues.

Mondelez was formed in 2012 when Kraft Foods split its global snacks business off from its North American grocery business into two separate publicly traded companies.

The East York plant, which today operates 24/7 and employs over 450 people, dates back to 1949, when it was set up by the Canadian arm of British biscuit maker Peek Frean.

Peek Frean’s Canadian business later rebranded as Associated Biscuits before being taken over in 1983 by Nabisco, which in turn was taken over by Philip Morris in 2000 and merged into another Philip Morris subsidiary, Kraft Foods, in 2001.

“Since the 1950s, this facility has provided employment opportunities, supported local wheat farmers and other ingredient suppliers and developed new products to help increase Ontario’s profile in international markets,” Agriculture Minister Jeff Leal said in the province’s release.

“This investment, added to our own, will help us progress on our journey towards manufacturing excellence, which ensures that our products can continue to be made in the province,” Juan Carlos Torres Rodriguez, the East York plant’s manager, said in the same release.

“This investment brings state-of-the-art equipment, and the opportunity to increase the skills of our people in new and exciting ways, supporting jobs at the site. All this will enable us to remain globally competitive and help grow Ontario’s agri-food exports.” — AGCanada.com Network

The post Ontario backs Mondelez’s Toronto bakery expansion appeared first on Manitoba Co-operator.

Hershey, Mondelez International, J.M. Smucker and Campbell Soup said higher transportation costs hurt profits during the quarter, preventing them from taking advantage of lower commodity prices.

An increase in truck rates over the next 12 months implies a 15-18 basis point gross margin headwind for U.S. food companies on average, Bernstein analyst Alexia Howard said in a note last week.

Recruiting and retaining truck drivers has been a lingering problem for U.S. trucking companies as they compete for qualified ones at a time of low unemployment, while striving to keep pay, a huge expense, as low as possible.

Fuel costs are rising too. Diesel prices were 37 cents per gallon higher in September-December 2017 than a year ago (all figures US$). The average diesel fuel price per gallon for most of January was up 44 cents from last year.

Structural labour shortages and higher fuel costs would drive truck rates up five to six per cent in the next year, Howard said.

Freight typically accounts for about five per cent of costs of goods sold, or roughly three per cent of sales on average for food manufacturing companies.

“Looking across the entire food value chain, the margin headwind could be as high as 50-70 basis points for the entire industry,” Howard said.

Chocolate maker Hershey reported a 1.8 per cent fall in adjusted margins, partly hit by freight costs. Oreo maker Mondelez said margins in the quarter were flat compared with last year with cost of sales rising nearly three per cent.

This comes despite prices of key ingredient cocoa falling to a five-month low in December.

Jif peanut butter maker J.M. Smucker and soup maker Campbell warned in November that freight and truck-related issues would hit margins. The companies are yet to report results for the last quarter of the year.

“Demand for overall transportation is exceeding supply in marketplace and this makes a tough situation more difficult,” said Mark Pogharian, Hershey’s vice-president for investor relations.

He added that shippers would have limited flexibility to move shipments based on truck availability and may cause overall market rates to increase further.

— Reporting for Reuters by Sangameswaran S; additional reporting by Siddharth Cavale in Bangalore.

The post Moving freight to get more expensive for food companies appeared first on Manitoba Co-operator.

Formed in 2012 by Kraft Foods’ spinoff of its grocery business, including the Christie and Nabisco cookie and cracker lines, Mondelez joins a slew of companies shifting to cage-free eggs amid pressure from consumers and animal-rights groups.

The company, which already uses cage-free eggs in all of its European chocolate brands as well as in its biscuit products sold in Belgium and the Netherlands, also said it would switch to cage-free eggs for all its products sold in Europe by 2025.

“We ultimately want all eggs to be produced cage-free, and we’ll continue to advance conversations with suppliers to establish timelines for cage-free production in other regions, when we have evidence that commercially viable supplies are available,” Jonathan Horrell, the company’s director for sustainability, said Friday in a release.

The decision comes at a time when the food industry is under pressure from groups such as the Humane Society of the United States, Mercy for Animals and World Animal Protection, which have successfully lobbied many companies to adopt animal welfare practices.

Both General Mills, the maker of Betty Crocker cake mixes, and Kellogg said last year they would source 100 per cent cage-free eggs by 2025.

Fast-food companies have made similar announcements. McDonald’s said in September that its 16,000 U.S. and Canadian restaurants would serve only eggs laid by cage-free chicken within 10 years, while Burger King has committed to using such eggs by 2017.

— Reporting for Reuters by Ramkumar Iyer in Bangalore. Includes files from AGCanada.com Network staff.

The post Snack maker Mondelez plans for cage-free eggs by 2020 appeared first on Manitoba Co-operator.

Ardent Mills, the joint North American flour venture of agrifood giants Cargill, CHS Inc. and ConAgra, announced Thursday it will buy the former Kraft Milling operation in Mississauga, Ont. from Mondelez Canada for an undisclosed sum.

The site of the Mondelez facility, along the Credit River in Mississauga’s Streetsville area, has hosted flour milling operations since the 1830s, but ramped up operations starting in 1968, when it converted from a river-powered operation to a pneumatic electric-powered mill.

The mill operation was sold to cookie manufacturer Christie Brown and Co. in 1969, then went to Kraft Foods in 2000. In 2012 the mill became part of snack giant Mondelez Canada, formed when Kraft spun off its grocery business, including the Christie and Nabisco cookie and cracker lines.

According to the Ontario Municipal Board (OMB), the Mississauga mill is the largest soft wheat flour mill in Canada and the second-biggest in North America, sourcing wheat primarily from growers in the surrounding region.

As of 2009, the facility had peak annual production capacity of 130,000 tonnes of soft wheat and hard wheat flour.

The deal, expected to close in the next few weeks, marks Ardent’s first acquisition since the joint venture was formed last year.

Ardent said Thursday the Mississauga mill, which makes soft- and hard-wheat flours for Mondelez brands and for other processors, will “add to its capabilities to serve food manufacturers across Canada.”

The mill’s staff, which today numbers over 30 people, is expected to join Ardent when the deal closes, the company said.

Ardent CEO Dan Dye said the mill has a “strong team in place” and the buyer wants to “nourish this facility and its people as we serve our Canadian customers and ultimately consumers with safe, nutritious grain-based products.”

Dye said the company is “excited about this mill’s future and we’re confident we can leverage our innovation and supply chain capabilities, after the transaction closes.”

The expanding Mississauga mill in recent years has run up against residential development of the surrounding area.

Kraft, at the OMB in 2009, successfully appealed against a move by Mississauga officials that would have limited any further expansion of mill operations to five per cent of the existing plant floor space. The city’s move would also have allowed nearby land to be redesignated for high-density residential development.

Ardent’s other operations in Canada include the former Robin Hood flour mills in Montreal and Saskatoon; the former Robin Hood dry baking mix plants at Burlington, Ont. and Saskatoon; and a product development facility at Burlington.

Horizon Milling, the ConAgra/CHS venture that brought those assets to Ardent, had also planned in late 2011 to build another flour mill on land it owns at Guelph to serve food processing customers in the southwestern Ontario market. — AGCanada.com Network

The post Ardent to buy major Ontario soft wheat mill appeared first on Manitoba Co-operator.

Nestle chairman Peter Brabeck-Lemathe told the company’s annual shareholder meeting the creation of Kraft Heinz Co. and Jacobs Douwe Egberts, as well as “spectacular” growth of some other companies in developing markets, required two things of Nestle in order to remain the global leader.

“First of all, an acceleration in our policy of adjusting our portfolio of activities and at the same time better use of our size,” Brabeck said.

Nestle, the world’s biggest food group by sales, has already taken steps toward both of those goals. It has sold underperforming businesses including PowerBar and the bulk of Jenny Craig, and created a new executive board role to oversee several corporate support functions globally. The move was aimed at making the most of its scale.

In Canada, Nestle’s business includes 21 processing plants, distribution centres and sales offices across the country, with brands in pet foods, baby foods, frozen pizzas and desserts, prepared meals, coffee and chocolate.

Nestle’s acquisitions in recent years have included Kraft’s Delissio frozen pizza business in Canada and the U.S., the Gerber line of baby foods and, in 2012, Pfizer’s infant-nutrition product lines, such as Materna vitamins.

Brabeck’s comments come three weeks after the announcement that H.J. Heinz agreed to buy Kraft Foods, backed by Warren Buffett’s Berkshire Hathaway and private equity firm 3G Capital, creating the third-largest packaged food company in North America.

“Ruthless”

“3G and Buffett have pulverized the food industry market, particularly in America with serial acquisitions,” Brabeck said. “3G’s partners are known in our industry for ruthless cost-cutting and have already proven numerous times that they are capable of reducing operating costs in particular by between 500 and 800 basis points, which has a revolutionary impact on all the other members of the industry.”

A spokesman for 3G declined to comment on the remarks.

3G’s founders orchestrated the formation of Anheuser-Busch InBev, and the takeovers of Burger King, Tim Hortons and Heinz.

European coffee company D.E. Master Blenders is in the process of forming a joint venture with the coffee business of Mondelez International. The combined company will be the world’s largest standalone coffee company, though it will still be far behind Nestle’s coffee business.

Brabeck also voiced support for the Swiss National Bank’s recent currency move, saying the stronger Swiss franc would aid Swiss competitiveness in the long run by encouraging innovation. He also dismissed the possibility of Nestle moving to report in any other currency.

“I’ve often said that for as long as the Swiss flag flies over our corporate buildings, Nestle will stick with the Swiss franc,” he added.

— Martinne Geller is a Reuters correspondent covering the European consumer goods sector from London. Includes files from AGCanada.com Network staff.

The post Nestle says taking action to keep top slot in food industry appeared first on Manitoba Co-operator.

The regulator alleged that Kraft and Mondelez bought $90 million of wheat futures, or a six-month supply, but never intended to take delivery of the grain (all figures US$).

The two then earned more than $5.4 million in profits as a result of market shifts in reaction to the enormous position, the CFTC said in its complaint.

“A market participant who is not happy with cash prices available to it may not resort to manipulative trading strategies in an attempt to artificially lower that price,” CFTC enforcement head Aitan Goelman said in a statement.

The regulator said it was seeking a permanent injunction from future violations by the two companies, as well as disgorgement and civil monetary penalties.

Kraft said it did not expect the matter to have a financially material impact and that Mondelez International would predominantly bear the costs of the matter.

The complaint focused primarily on trading that occurred before the two companies split in 2012, Kraft said.

Mondelez declined to comment. It has said in a previous regulatory filing that it was being investigated by the CFTC, and that it would seek to resolve the matter prior to any formal action being taken. It said at the time it expected to predominantly bear the cost of the probe, but that this would not have a material effect on results.

The CFTC said that the companies had also violated speculative position limits, and that they had engaged in numerous noncompetitive trades in wheat.

— Reporting for Reuters by Douwe Miedema and Anjali Athavaley in Washington, D.C. and New York City.

The post U.S. CFTC sues Kraft, Mondelez over alleged wheat price manipulation appeared first on Manitoba Co-operator.