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Lenders are tightening credit to restaurant franchisees in a shift that could make it harder for owners to remodel existing locations and buy new restaurants.
It is a sign of how the turmoil on Wall Street is spreading to large companies and small business owners. Panera Bread Co., Yum Brands Inc., Sonic Corp. and DineEquity Inc., owner of Applebee's and IHOP, each rely to some degree on bank financing to build new restaurants or sell company-owned locations to franchisees.
General Electric Co.'s GE Capital, a large commercial lender, is becoming more stringent in pricing and issuing loans for new franchisees. Some restaurant executives and investment bankers say GE's franchise finance arm has essentially put a hold on new loans.
A spokesman for the Fairfield, Conn., firm said it is accepting loan applications but not quoting prices until the markets settle. "We're taking a longer look and even a closer look than we have in different times," he said.
McDonald's Corp. warned franchisees earlier this month that Bank of America Corp., another large franchise lender, had tightened lending to its restaurant owners, and that franchisees should find other lenders for immediate borrowing. McDonald's has since said its franchisees have access to sufficient credit for restaurant improvements.
The lending pullback comes as restaurant chains are struggling through a deep downturn. High ingredient prices and consumers curtailing dining outside the home are eating into profits.
Tighter credit could impede plans by restaurant operators to remodel existing stores, install new equipment, open new locations or convert existing company-owned stores to franchised locations, said Sharon Zackfia, a restaurant industry analyst at brokerage William Blair & Co.
"While clearly other sources exist for franchisee funding options, the recent pullbacks of two of the main lenders in the arena are disconcerting," Ms. Zackfia wrote in an investor note.
Last week, Sonic, a drive-in-chain with 3,400 locations, announced plans to sell its holdings in more than 200 underperforming stores. Stephen Vaughan, Sonic's chief financial officer, said the Oklahoma City-based company has "already had conversations with people who we feel are confident they can get financing."
A spokesman for Glendale, Calif.-based DineEquity said it remains on track to convert about 290 company-owned Applebee's locations to franchises through 2009, in part because potential buyers have their own financing or are bringing cash to the table. Spokespersons for Yum, which owns KFC and Taco Bell, and Panera didn't return calls seeking comment.
Credit in the restaurant industry has become tighter after several years during which major lenders backed leveraged buyouts and expansions. Company-owned Bennigan's filed for Chapter 7 liquidation in July.
Lenders are requiring restaurant operators to put up about half of the loan amount in cash before going forward with a loan, according to one restaurant investor. Banks were asking for as little as 20% in equity as of six months ago, this person said.
Some analysts think that tighter credit could help the industry by slowing expansion and reducing the glut of restaurants.
Almost 60 percent of Americans interact with companies on a social media Web site, and one in four interact more than once per week. These are among the findings of the 2008 Cone Business in Social Media Study.
According to the survey, 93 percent of Americans believe a company should have a presence in social media, while an overwhelming 85 percent believe a company should not only be present but also interact with its consumers via social media. In fact, 56 percent of American consumers feel both a stronger connection with and better served by companies when they can interact with them in a social media environment.
“The news here is that Americans are eager to deepen their brand relationships through social media,” explains Mike Hollywood, director of new media for Cone, “it isn’t an intrusion into their lives, but rather a welcome channel for discussion.”
When asked about specific types of interactions, Americans believe:
Companies should use social networks to solve my problems (43%)
Companies should solicit feedback on their products and services (41%)
Companies should develop new ways for consumers to interact with their brand (37%)
Companies should market to consumers (25%)
Hard-to-reach consumers
Men, a much sought-after target in the online space, are twice as likely as women to interact frequently (one or more times per week) with companies via social media (33% to 17%, respectively).
“The ease and efficiency of online conversation is likely a draw for men who historically do not seek out the same level of interaction with companies as women,” says Hollywood.
Likewise, of younger, hard-to-reach consumers (ages 18-34), one-third believe companies should actively market to them via social networks, and the same is true of the wealthiest households (household income of $75,000+). Two-thirds of the wealthiest households and the largest households (3 or more members) feel stronger connections to brands they interact with online.
“All of this is great news for marketers,” Hollywood explains. “Men and younger consumers are traditionally the most challenging to reach, while the highest income households are typically very desirable; here they are saying ‘Come market to us and interact with us online.’ This is really a license to put more energy and resources into this medium and do it effectively.”
About the survey:
The 2008 Cone Business in Social Media Study presents the findings of an online survey conducted September 11-12, 2008 by Opinion Research Corporation among 1,092 adults comprising 525 men and 567 women 18 years of age and older. The margin of error associated with a sample of this size is ± 3%.
Adding fish to a child's diet before the age of nine months could lessen the chances of developing eczema.
The rate of the painful skin condition has risen in Western countries in recent years, and scientists believe diet may be partly to blame.
Swedish scientists tracked the health of children in 5,000 families, and said that early introduction of fish cut the risk by a quarter.
The research was published in Archives of Disease in Childhood.
The children were all part of an ongoing health study looking at almost 17,000 infants born in 2003 in western Sweden.
Some of the families involved agreed to fill in questionnaires about diet and home environment when the child was six months and 12 months old.
Any evidence of eczema was also recorded, and the results analysed. At six months old, 13% of the families said their child had already developed eczema, and this rose to 20% by their first birthday.
Genes appeared have the most powerful effect - children with a sibling or mother with eczema were almost twice as likely to be affected by 12 months.
Breast feeding, the age at which dairy products were introduced, and the presence of a furry pet in the home had no detectable influence on eczema.
However, the introduction of fish before nine months cut the risk by 25%.
Omega-3 link
The researchers wrote: "The fact that fish is rich in omega-3 fatty acids could partly explain the effects found in this cohort."
However, they said they found no measureable difference between children who ate white fish, and those who ate other types of fish richer in omega-3, making it hard to say for certain.
Dr George Du Toit, a paediatric allergy specialist, said that fish had been linked to allergic reactions and eczema.
He said: "The connection between diet and eczema is complex.
"Eczema, particularly severe eczema, is commonly associated with the presence of food allergy.
"Parents of young children with eczema may therefore wish to consult with their doctor prior to the introduction of foods that commonly cause allergy, such as cows milk, peanut and even fish."
A spokesman for the National Eczema Society welcomed the study, agreeing that the genetic component of the condition was likely to be the most significant, and urging parents to avoiding harsh soaps and detergents on the skin from a young age in families predisposed to the condition.
An antioxidant-rich juice containing açai may reduce levels of markers of inflammation linked to conditions such as heart disease, says a new study.
Writing in the Journal of Agricultural and Food Chemistry, researchers report that the antioxidant-rich juice was able to protect cells from oxidative damage, and, when consumed by a small number of volunteers, showed anti-inflammatory properties.
“Antioxidant consumption, along with anti-inflammatory treatment, is being critically evaluated as a potential strategy for reversal of disease progression,” wrote lead author Gitte Jensen from Holger NIS Inc., a contract research laboratory.
“Given the high content of certain specific polyphenols in the juice blend, the increased antioxidant protection in vivo after consumption of the juice blend, and the anti-inflammatory capacity in vitro, further research is warranted to evaluate whether juice blend consumption may provide reversal of risk markers in subjects with conditions such as arthritis, obesity, chronic viral diseases, cardiovascular disease, and compromised cognitive function as well as other conditions associated with chronic inflammation.”
Açai berries (pronounced ah-sigh-ee) have long formed part of the staple diet of Indian tribes. With the appearance of a purple grape and taste of a tropical berry, it has been shown to have powerful antioxidant properties thanks to a high level of anthocyanins, pigments that are also present in red wine.
It is presently being sold in a number of countries, including New Zealand, Australia, South America, Japan, USA, and the Middle East
Study details
The researchers used the cell-based antioxidant protection of erythrocytes (CAP-e) assay to assess the commercially available MonaVie Active juice blend’s antioxidant activity in vitro.
The juice was found to possess a dose-dependent antioxidant activity, and protected cells were protected against oxidative damage. This indicated that the “compounds in the juice blend are able to cross the plasma membrane of living cells and, subsequently, are able to provide significant protection from oxidative damage within the cells,” said the researchers.
Comparing ORAC antioxidant activity values, the researchers report an ORAC value of 22.8 micromoles of Trolox equivalents per millilitre, which is higher than the ORAC values of most common juices, they said
The main antioxidants in the juice were primarily anthocyanins, they added, and predominantly cyanidin 3-rutoside, cyanidin 3-diglycoside, and cyanidin 3-glucoside.
Small clinical trial
Jensen and co-workers then recruited 12 healthy subjects (average age 33.9, average BMI 26.3 kg per sq. m, six women) to participate in a randomised, double-blinded, placebo-controlled, crossover trial.
Blood samples taken before juice consumption, and again after consumption, showed significant increases in blood antioxidant levels after two hours. The researchers also noted a significant inhibition of lipid peroxidation - a marker of oxidative stress - in the volunteers.
The researchers stated that the antioxidant profile of the juice as key to the apparent benefits. In addition to açai, the juice also contained white and purple grape, Nashi pear, acerola, aronia, cranberry, passion fruit, apricot, prune, kiwifruit, blueberry, wolfberry, pomegranate, lychee, camu camu, pear, banana, and bilberry.
“It has been suggested that the apparent failure of multiple larger clinical trials to document reversal of disease processes may be linked to the choice of antioxidants,” they stated.
“In particular, the frequent use of vitamins C and E in such studies may be due to availability and low cost, but may not have been the best choice, as both vitamins have pro-oxidant capacity as well.
“In contrast, studies on polyphenols may be much more promising, and may be more relevant, as these types of antioxidants are the most abundant in a health-conscious diet.”
If the study can be repeated in larger humans the juice could offers promise for preventing chronic inflammation, brought about by an over-expression or lack of control of the normal protective mechanism. Chronic inflammation has been linked to range of conditions linked to heart disease, osteoporosis, cognitive decline and Alzheimer's, type-2 diabetes, and arthritis.
Source: Journal of Agricultural and Food Chemistry
An Italian study, the first outcome of a large epidemiological investigation, finds new beneficial effects of chocolate in the prevention of cardiovascular disease
Maybe gourmands are not jumping for joy. Probably they would have preferred bigger amounts to sup-port their passion. Though the news is still good for them: 6.7 grams of chocolate per day represent the ideal amount for a protective effect against inflammation and subsequent cardiovascular disease. A new effect, demonstrated for the first time in a population study by the Research Laboratories of the CatholicUniversity in Campobasso, in collaboration with the National Cancer Institute of Milan.
The findings, published in the last issue of the Journal of Nutrition, official journal of the American So-ciety of Nutrition, come from one of the largest epidemiological studies ever conducted in Europe, the Moli-sani Project, which has enrolled 20,000 inhabitants of the Molise region so far. By studying the participants recruited, researchers focused on the complex mechanism of inflammation. It is known how a chronic inflammatory state represents a risk factor for the development of cardiovascular disease, from myocardial infarction to stroke, just to mention the major diseases. Keeping the inflammation process un-der control has become a major issue for prevention programs and C reactive protein turned out to be one of the most promising markers, detectable by a simple blood test.
The Italian team related the levels of this protein in the blood of examined people with their usual choco-late intake. Out of 11,000, researchers identified 4,849 subjects in good health and free of risk factors (normal cholesterol, blood pressure and other parameters). Among them, 1,317 did not use to eat any chocolate, while 824 used to have chocolate regularly, but just the dark one.
"We started from the hypothesis- says Romina di Giuseppe, 33, lead author of the study- that high amounts of antioxidants contained in the cocoa seeds, in particular flavonoids and other kinds of poly-phenols, might have beneficial effects on the inflammatory state. Our results have been absolutely en-couraging: people having moderate amounts of dark chocolate regularly have significantly lower levels of C-reactive protein in their blood. In other words, their inflammatory state is considerably reduced." The 17% average reduction observed may appear quite small, but it is enough to decrease the risk of cardio-vascular disease for one third in women and one fourth in men. It is undoubtedly a remarkable outcome".
Chocolate amounts are critical. "We are talking of a moderate consumption. The best effect is obtained by consuming an average amount of 6.7 grams of chocolate per day, corresponding to a small square of chocolate twice or three times a week. Beyond these amounts the beneficial effect tends to disappear".
From a practical point of view, as the common chocolate bar is 100 grams, the study states that less than half a bar of dark chocolate consumed during the week may become a healthy habit. What about the milk chocolate? "Previous studies- the young investigator continues- have demonstrated that milk interferes with the absorption of polyphenols. That is why our study considered just the dark chocolate".
Researchers wanted to sweep all the doubts away. They took into account that chocolate lovers might consume other healthy food too, as wine, fruits and vegetables. Or they might exercise more than others people do. So the observed positive effect might be ascribed to other factors but not to cocoa itself. "In order to avoid this- researcher says- we "adjusted" for all possible "confounding" parameters. But the beneficial effect of chocolate still remained and we do believe it is real".
"This study- says Licia Iacoviello, Head of the Laboratory of Genetic and Environmental Epidemiology at the Catholic University of Campobasso and responsible for the Moli-sani Project- is the first scientific outcome published from the Moli-sani Project. We consider this outcome as the beginning of a large se-ries of data which will give us an innovative view on how making prevention in everyday life, both against cardiovascular disease and tumors".
"Maybe- Giovanni de Gaetano, director of the Research Laboratories of the Catholic University of Cam-pobasso, adds - time has come to reconsider the Mediterranean diet pyramid and take the dark chocolate off the basket of sweets considered to be bad for our health".
The Moli-sani Project, carried out by the Research Laboratories of the Center for High Technology Re-search and Education in Biomedical Sciences "John Paul II" at the Catholic University in Campobasso, started in March 2005 –funded by the Pfizer Foundation- aiming at recruiting 25,000 citizens living in the Molise region, in order to investigate environmental and genetic factors responsible for cardiovascu-lar disease and tumors. Until now researchers have recruited more than 20,000 people and the final number is going to be reached by the end of 2008. The Moli-sani study is changing the face of a whole Italian region turning it into a large scientific laboratory. From clinical tests to electrocardiograms, from blood pressure to spirometry, from dietary habits to physical exercise: it is a huge amount of information collected from each participant.
It’s early on a gorgeous Sunday morning, and all across America, families are heading out to grab a hearty breakfast at their preferred local quick-serve restaurant chains.
At McDonald’s, the order of the day is a new-model, egg-white McMuffin served on a high-fiber, multigrain English muffin whose slightly sweet, toasted, nutty flavor offers a pleasing twist on the venerable breakfast sandwich.
Taco Bell, meanwhile, is proudly offering a range of whole-grain breakfast burritos, featuring eggs, tomatoes, onions, peppers, and light cheese wrapped in a whole-wheat tortilla.
Across town, Panera is serving up something truly novel: a hot, handheld maple-cinnamon oatmeal stick served in a foil wrap with a choice of fresh-fruit dipping sauces—fresh blueberry, strawberry, peach, and apricot.
And finally, there’s Pizza Hut, whose whole-grain flatbread breakfast pizzas layered with egg, cheese, turkey bacon, and fresh vegetables are giving customers plenty to crow about in the morning.
As it happens, this is more a vision of the future than a survey of the current quick-serve breakfast landscape, but it provides a window to how chains could, without upending their existing kitchen schemes or ingredient mixes, deliver breakfasts that are both enormously satisfying and highly nutritious.
Until recently, any restaurant purporting to serve a hearty breakfast would have to follow through with the obligatory high-calorie, high-fat, high-cholesterol standbys: massive omelets packed with cheese, meat, and potatoes; a heaping mound of pancakes slathered in butter and syrup; Belgian waffles drenched in fruit and whipped cream; and so on.
But “hearty,” as it happens, need not be synonymous with “heavy” and “unhealthy.” That’s thanks in large measure to the increasing prevalence and popularity of whole-grain products ranging from hot and cold cereals, to pastries, to breads, and other carriers.
Many of the world’s leading packaged-foods manufacturers, mindful of the nation’s obesity epidemic, are looking at replacing traditional enriched flours with higher-fiber whole-grain alternatives that, besides being healthier, also do a better job of filling us up. Because foods made with whole grains don’t cause glucose and insulin levels in the bloodstream to spike the way products made with enriched, heavily processed flours do, they tend to keep us feeling more satisfied—even satiated—for longer periods. A simple shift to whole-grain carriers would allow quick-serve chains to offer consumers a whole new kind of hearty breakfast—one that stands to win them new morning customers while burnishing their reputations as responsible stewards of the public’s health.
Some major chains have already stepped up efforts to introduce more whole grains into everyday offerings. At Au Bon Pain, for instance, Executive Chef Thomas John has led a charge to place more whole-grain breads and cereals among his stores’ more traditional a.m. fare. At a recent panel discussion at QSR’s Dine America conference, John mentioned that Au Bon Pain’s breakfast line could soon include the likes of the ancestral grain quinoa, as well as muesli and other natural whole-grain cereals. Corner Bakery already offers oatmeal and Swiss muesli, while Asian-bun purveyor Wow Bao is taking things to a slightly more exotic level with its High Energy Oatmeal flecked with goji berries, Chinese red dates, and red rice.
Elsewhere, Panera and Subway both boast whole-grain rolls, breads, buns, and other selections as alternatives to the enriched norms, while Papa John’s makes all of its pizzas available on whole-wheat crusts. And at Jamba Juice, consumers recently got their first taste of a new line of smoothies formulated to be eaten with a spoon. The chain’s Granola Toppers consist of blended fruit, low-fat yogurt, and soymilk served under a bed of organic granola.
The great news is the shift to whole-grain carriers doesn’t have to entail a dramatic change to a product’s sensory profile. ConAgra’s Ultragrain whole-wheat flour looks, tastes, and performs like regular white flour, but packs the fiber content and low-glycemic advantages of a whole-grain variety. Wonder Bread-loving kids generally don’t notice a difference, but their nutrition-conscious parents certainly do.
The upshot of all this whole-grain mania is that quick-serves now have the ability to lead the charge for better nutrition in the morning simply by making a few choice revisions to their ingredient mixes. Using more whole-grain flours in everything from bagels to English muffins can substantially enhance breakfast products’ nutritional profiles, while the creative addition of elements such as whole-grain cereals—granolas, muesli, oatmeals, etc.—could lure a whole new group of converts to the quick-serve breakfast routine.
In an effort to keep our hearts healthy, many of us are turning to "functional foods" fortified with natural substances so they can pack more nutritional punch and work better than they would on their own.
As registered dietician and Early Show contributor Keri Glassman noted in the first part of the series "Heartwatch" Monday, we're gobbling up enough functional foods to bring them to an expected $60 billion sales mark next year.
Glassman detailed three such food groups: omega 3 fatty acids, plant sterols, and calcium, and told which foods are fortified with them and what they promise to do for our hearts.
One ready example: calcium, found naturally in milk and yogurt, but added to orange juice to fortify it.
Glassman stressed that you should always get nutrients from the foods they're in naturally, when possible. Fortification is merely a bonus when you're already eating those foods. For instance, if you don't eat chocolate, don't add it in to get your plant sterols!
OMEGA 3s
We frequently hear about these essential fatty acids. Essential means our bodies can't produce them, so we must get them from food. Good sources include salmon, sardines, walnuts, and flax. Omega 3s lower blood pressure, triglycerides and the so-called "bad" cholesterol, LDL. They aos increase "good" cholesterol, HDL, and reduce inflammation, which is a contributor to heart disease and stroke.
Foods fortified with Omega 3s include: Eggs, with DHA, a specific omega 3 Smart Balance PB, with omega 3s from flax oil 1 percent Plus Milk, with omega 3s from fish oils Tropicana, with omega 3s from fish oils (Tilapia, sardines and anchovies)
PLANT STEROLS
The essential components of plants have a structure similar to cholesterol's. But, they can reduce bad cholesterol in the blood by preventing its absorption. This may mean a reduced risk of coronary heart disease. The American Heart Association recommends plant sterols for people with high cholesterol or who've had a heart attack, but not for the general population. They occur naturally in nuts, seeds, fruit, and veggies.
Foods fortified with plant sterols include Corazonas chips, Health Valley Heart Wise cereal (which also has omega 3s, Benecol spread, and Promise Active yogurt shot (which also contains omega 3's)
CALCIUM
We all know calcium is a mineral good for strong bones. But, it's also important in lowering blood pressure, and helps with a regular heart beat and muscle contractions.
Foods being fortified with it include Ronzoni Smart Taste pasta, Wonder Bread Kids (this is an example of where it's better to drink milk and eat whole grain bread!), and waffles.
From the first reports of a salmonella outbreak this spring, it took a full 89 days before jalapeño and serrano peppers correctly came under suspicion as the culprit. During that period, as more than 1,440 victims trickled in to hospitals, federal officials struggled to trace the source of the outbreak, erroneously singling out tomatoes for weeks before homing in on peppers. No sooner had that outbreak tapered off than the high-end Whole Foods Market was forced to launch a massive recall of E. coli-infested ground beef.
The incidents prompted renewed calls for reform and stricter oversight of food safety. Some lawmakers are even suggesting stripping the Food and Drug Administration and the U.S. Department of Agriculture of their inspection duties and giving them to a new agency. Yet the FDA in particular has long been starved of funding and understaffed. Its workload, meanwhile, is rapidly expanding as the global food chain grows larger, more complicated, and less transparent, all of which adds to the agency's already overcrowded plate.
Congress is under pressure to take up major food-safety legislation this fall that would offer sweeping proposals for regulatory change. The country's appetite for reform, however, is likely to collide with an uncomfortable reality: The responsibility for food safety, as it works today, lies heavily in private hands. Even as bacterial outbreaks have become more high-profile and the financial fallout from recalls more severe, the government has been handing off many food-safety responsibilities to industry. Food safety today is a business—and a booming one at that.
For most Americans, however, the FDA is still the public face of food safety. It was created in 1906 amid the fervid response to Upton Sinclair's The Jungle, which exposed unsanitary conditions in meatpacking factories. Today, the duties are split. The USDA handles meat, and the FDA takes care of pretty much everything else. But in reality, oversight of farms and food plants has gradually changed hands. A pivotal moment came in the mid-1990s, after 21 people in Connecticut and Illinois were hospitalized during a huge lettuce-related outbreak of E. coli that was ultimately tied back to a grower in California. In response to this and other incidents, federal officials worked with academics and industry to come up with a set of voluntary guidelines to avoid future outbreaks.
Inspections. The move spawned a whole new cottage industry of third-party companies calling themselves "food-safety consultants." Practically every major food manufacturer today—from Kraft to Costco—hires experts to check out the ingredients that are entering its facilities.
In some ways, this represents a huge step forward. Even with an engorged budget, the FDA couldn't begin to get inspectors into all the factories, processing plants, distribution centers, warehouses, and packing plants in the country to check them for problems. Right now, the agency focuses on juices and seafood, because those two products have a higher risk of going bad. Indeed, it would cost the FDA more than $3.5 billion to inspect every one of the roughly 250,000 domestic and foreign food facilities just once, a recent Government Accountability Office report found. Industry insiders say the FDA is lucky if it gets to the same facility once every three years.
But the new model has also created some alarming potential gaps. For one thing, there's no certification system for these third-party inspectors. Critics worry that retailers hire these companies not only to ensure food quality but also as a defense mechanism to help protect their public image in case something goes wrong. "These audits are like icing on the cake of litigation," says Bill Marler, the attorney who represented more than 100 victims in the 1993 E. colioutbreak case linked to the Jack in the Box fast-food chain. "Every major manufacturer does them, and every manufacturer pays no attention to them."
There are other potential troubles, too. Tomato and spinach growers are audited heavily because they've had so many problems in the past, but other crops, such as broccoli and cauliflower, are scrutinized less. "Retailers aren't demanding it," says Trevor Suslow, a food-safety expert at the University of California-Davis. Many growers, he adds, "are living in a continuing state of denial about whether they should be doing anything." And there's also the concern that these efforts could, perversely, be making food less safe. In some cases, experts say, a grower will have to pay for audits from six or seven companies just to satisfy the demands of all of its different buyers. The overlapping attention might help eliminate problems, but it's also costly. For slaughter facilities squeezed by rising costs, cutting out E. coli tests has been one of their money-saving tactics, as recent raids have revealed.
The price tag is important. With new technology, companies can do all sorts of wild—if at times unsettling—things to keep food free of bacteria. For one thing, they can zap it with radiation. The government approved irradiated meat in 1997, and regulators last month gave the nod to leafy vegetables like lettuce and spinach. But irradiation is still controversial. Advocacy groups say it ruins taste and destroys nutrients, and consumer fears about irradiation have limited its adoption. More broadly, companies with effective new products—be they oxidizing sprays, viral cocktails, or microbe detectors—often struggle to find buyers, because of either costs or public concerns.
Biotech companies, for example, are working on another promising technology that food companies prefer not to talk about—bacteriophages, which are naturally occurring viruses that kill certain bacteria, including E. coli and Listeria. One company, Intralytix, received FDA approval in 2006 to sell its "phage cocktail" as an additive to ready-to-eat meats like hot dogs and deli turkey, which are more prone to factory contamination. It's now used by at least one commercially available smoked salmon brand. But don't look for it on many labels. Intralytix CEO John Vazzana says that food companies are interested, but they get cold feet about having to put a disclaimer on their hot-dog or deli-meat packaging that would alert consumers about the little guys inside. (Some are bypassing the rules by removing the viruses before packaging.)
Little enforcement. Whether it's new technology or inspectors-for-hire, private-sector remedies can go only so far. Voluntary inspection guidelines clearly have their shortcomings. They didn't prevent the 2006 outbreak of E. coli involving spinach that claimed five lives and caused more than $350 million of damage. To win back consumers, the Western Growers Association, which represents California and Arizona produce farmers, spent much of 2007 working with the federal government to overhaul its guidelines. Under the new agreement, state agriculture officials are being trained to do inspections, and more scientific sanitation standards have been adopted. Observers say these moves could help, but enforcement and penalties are limited. Though many growers choose to participate, they are not required to by law.
If Congress takes up food safety this fall, it will most likely focus on efforts to improve the response time to outbreaks, perhaps by adopting a national trace-back program to locate contaminated food more quickly. It also might push the Centers for Disease Control and Prevention, the agency responsible for tracking down the source of an outbreak, to do a better job of sharing information with the FDA.
But these reforms are just one side of the coin. The other half, the prevention part, will depend on bringing order to the sprawling mosaic that is the global food chain. Today, about 80 percent of the nation's seafood and slightly less than half its fresh fruits are imported from overseas. But the FDA inspects only about 1 percent. Private auditors must be part of the answer, says Christine Humphrey, a former FDA field investigator. The challenge is to make sure they're qualified. She points to medical devices as a possible guide. In the late 1990s, regulators couldn't work fast enough to approve new devices. To eliminate the waiting list without lowering standards, the FDA began certifying third-party companies. "The results have been phenomenal," she says.
Likewise, having more bodies watching over food production could be a good thing, as long as they're qualified. The only entity with the independence and credibility to make that call, most experts say, is the federal government.
THE POD BUSINESS WELL OVER 5 billion dollar annual business. As such, it means a great deal to the coffee industry. Particularly because, since pods shed their marginal status and moved into mainstream investments and sales, the coffee industry began to see its new flower of expansion--the international
Espresso consumption start to hit technical and cultural walls. It's been some time that the coffee industry had stalled in growth worldwide, after the brick pack boom matured and flattened.
Great promises have tagged the pod from its inception. Overcoming the manufacturing difficulties high speed forming and packaging of a new and relatively fragile consumer product--led to frenetic brewing development and the formulation of pod product lines. Pod mania hit the industry in full force.
Several packaging companies with a coffee focus soon had pod makers on the market. A few forward-looking roasters jumped for the machines, found brewer manufacturers to turn out conversion kits for existing espresso machine filter handles--and then, in time, pod dedicated brewers (relatively simple devices). These pioneering pod marketers began the labor of selling the new and, for coffee, quite alien product to the public--the home and out of home users. Initial success gave these businesses contract packaging links, which were business to business deals that filled their capacity to the full. The pod contract-packaging sector remains strong, for store brands and for numerous roasters either too small or too busy with their traditional coffee production to venture into a specialty area. Nevertheless, the sale of pod manufacturing/packaging machines steadily grew--now boom and suddenly one could see one sitting on countless coffee roasting factory floors.
As a result, espresso pods have held center stage in the coffee industry for the past few years. The pod market has already been fully segmented--from discount to gourmet quality pods, from complex blends to single origins and decaffeinated espressos. This is true also for the brewers. One has a wide choice of models from at least 50 brewing machine manufacturer’s traditional semi to fully automatic espresso machines dedicated pod brewers from the most basic plastic boxes to chrome and steel temples of design.
Pods, thus, stimulate investment in factory equipment, in brewing equipment and in the product itself, which necessarily is more costly even in the discount range on a per cup basis than regular loose R&G.
The vast new turnovers engendered have provoked a new age in design for coffee. The pod has given espresso a way out of its technical/cultural cage. It has also now spawned the pad, and given greater acceptability to other single service coffee systems, such as caps.
The development of pod-making machines with speed and enough quality control to make pod production profitable; the burst of imaginative pod product lines, packaging, displays; the incredible diversification in brewing devices and designs ... all this pod mania inside the industry has meant a historic infusion of enthusiasm and creativity that has now grown beyond the espresso sector itself.
The early hope for the pod was for the most dynamic demographic group in rich countries--young singles and couples--to all acquire a pod brewer for their kitchen counters. Then, they would all go shopping at the hypermarket for their pods of choice.
Out of home use was also targeted. Bar coffee service would be revolutionized in non-espresso-tradition nations. It would be accepted in time, even in the traditional heart of espresso Italy, France, Spain and Portugal.
A billion dollar-plus business has risen for coffee, some of it new business, some of it replacement business for other forms of coffee consumption--meaning that the industry has not actually gained a billion-plus in turnover (although huge increases in turnover are a fact, from machinery lines to the roasted product to the serving system). Pods are all "added value" to the industry, and this will be more and more so as spin-offs, such as pads and caps continue to gain.
But--and the "but" has been coming--the pod has its enemies. I am speaking of the detractions that have kept it from gaining a place as a household word, or a household product throughout the cash flow consumer cultures. The expensive equipment required to make the pod, the investment in a new brewer; the distribution and price of pods ... these elements have all worked against the product.
Recently, an acquaintance here in France heard me talk about pods, and told me she wanted a pod brewer for her husband's birthday. She asked for some advice, which I gave. My first bit of advice was to look for the pods of choice. She did--to no avail. She even called the roaster of choice, and one or two distant hypermarkets had some stocked, but in fact for her the only realistic means of getting the pods was to have them shipped to her door. The per cup price thereby soared, and her husband did not get a pod brewer for his birthday.
Cost has put the lid on pods, as well as the distribution. Also, the industry has added confusion, which in consumer marketing is considered bad news. And what is bad for consumerizing is bad for the distribution system. The industry's competing non-crossover pod style systems, competing non-crossover dedicated pod brewers: coffee had and still has too much choice in pods, too much variety, and too many technical conflicts.
And finally, the plain truth. What is relatively costly may gain a place on a shelf in an upscale shop or neighborhood, but it will not crowd out the standard brickpack or tin from the big store retail shelf.
The dilemma for the industry, thereby, is whether to make the pod a true mass market product--lower prices, reduce the level of confusion in consumers by reducing the dazzling array of choice--or keep it a high margin, specialty niche.
At present, it would seem that the espresso pod is being aimed at the latter. This has been reinforced by the advent of the pad--non-espresso coffee in a small paper filter bag. The pad already holds the promise of becoming a mass-market product, with the espresso pod as its high brow cousin.
As for the out of home market areas, the espresso pod so far has not found acceptance in the four traditional espresso coffee nations for bar/cafe service. But it has taken off in office coffee service, and too in the travel sector--in hotels, at airports, train stations, on trains and planes.
OCS, however, is becoming genuine pod/pad territory. This, to such an extent, that in Italy the pod actually created the nation's office coffee service sector or at least gave the sector a significant coffee economy. Before, at given times in the working day, Italian workers would troop down to the nearest or most favored bar for their quick gulps of espresso. With the pod appearing in more and more offices, the effect on Italy's bar/cafe coffee business has been dramatic some reporting a decline of almost 25% in bar/cafe espresso coffee sales.
This has not helped in making pods friendly in the bar/cafe sector. I have even encountered roasters who seek to keep their pod business shielded from their bar\care business.
So where does the pod go? I think that in time, it will become a young, single person's product for the home. A cup of coffee can be positioned as a gift to oneself, a pleasure like a nice piece of chocolate. Cost then is not the factor--pleasure and fashion replace it.
I also think the pod espresso or non-espresso--will become a replacement item in more and more fast food-service businesses. Coffee seems to gain some repositioning in the fast food sector, mirroring what will come with the young. Coffee is showing signs of escaping from soft-drink look-alike service, and to being elevated even to a real cup, even to a choice of coffees (made via pods).
Coffee has, for long, been a prized money earner for out-of-home service. It will be more so, even if volume dips, as it becomes a more expensive product (pod/pad influence) and a far more exotic one, due to the flourishes of espresso blends, single origins, cold coffee drinks What is brewing for all is a whole new coffee world to consumers--again, a coffee menu possibility made possible by the pod/pad.
SOME CONSIDERATIONS:
TERMINOLOGY--
One can refer to pods and pads, or more particularly to hard and soft pods.
MAKING AND PACKAGING--
Speeds range from 45 pods per minute to 1,000 per minute, and technology is now reaching up to 2,000 units per minute.
EQUIPMENT INVESTMENT--
This is a spreadsheet of possibilities and thus costs--depending on speed, on whether the pod is enveloped in the making process, or needs a stand-alone packaging unit of some kind at line end, with or without cartoner. A complete high-speed line can cost more than one million euros or about 1.25 million dollars at current exchange rate. Euros are quoted because the majority--but not all--pod machines are made in Italy and Germany.
PACKAGING POSSIBILITIES--
What choices: in sachets of varying barriers with or without vacuum, naked in bags of different sealing systems, or in tins. Sachets packed loose up to 150 per carton, or in boxes or tins of 18--literally "whatever."
POD SHAPES AND SIZES VARY, TOO-- Single or double serving sizes are the principle difference.
SOME MANUFACTURERS MAKE BOTH HARD AND SOFT PODS--
But these normally need to include the enveloping as an integrated function. In higher speed production, two separate packaging units are required as stand alone equipment. Other possibilities are separate, dedicated, hard and soft pod makers.
BRICK PACK LINES ARE SELLING--
However, at a flat rate, mainly as replacement equipment for older machines rather than to increase capacity.
Obviously this means that new capacity for roasters is going to hard and soft pod production. The sales of pod makers boomed rapidly, reaching a bonanza about two years ago. Entry of more companies into the field, plus a period of adjustment to the new capacities has meant that pod making machine sales are now less heroic, although the manufacturers are not frowning.
THERE ARE TWO MAJOR POD STYLE SYSTEMS--
The leading is based on the lily patents, but made open to any company joining the ESE Consortium. Both large and small roasters and brewing machine manufacturers have adopted this dominant, but by no means universal system. The second system is the 1-2-3 Spresso pod, with its characteristic cardboard collar and a gravity-based, coin-feed like pod brewer.
While these two very different systems have steadily expanded, a very large number of roasters do not conform to either.
POD CONSUMPTION IS NOT POSSIBLE TO FIGURE--
Due to the multitude of roasters producing their own brands, and the great number of contract pod manufacturers producing for marketers. Consumption figures that do appear are generally assumed to be inflated. One might accept an annual pod disappearance of between 6 and 8.5 billion units a year in recent times with a growth rate of 20% a year. Consumption grows, no doubt as to that, what ever the number might be.
BREWERSRANGE LIKE CATTLE IN OPENRANGE--
And so widely it is impossible to categorize them other than by price, system, design, etc. The most expensive are those that crossover, are in essence traditional espresso brewers, but which can adapt to pods or are in fact pod dedicated despite their classic look. Some even have levers for decorative/market niche appeal.
But most pod brewers for home have taken off into new worlds of design, with very imaginative looks and in a rainbow of colors. Professional models maintain more traditional looks.
The ultimate consideration, however, is that pods hard, pods soft, are now driving the coffee industry.
All of McDonald's Corp.'s U.S. locations should be able to offer espresso drinks by the middle of next year, with a new line of smoothies and frappes on all menus by 2010, the company said Tuesday.
At a Bank of America investor conference, Chief Operating Officer Ralph Alvarez said the company is working to renovate its drive-throughs in the U.S. to accommodate making the new drinks.
"We're going through the process of making those changes," Alvarez said.
The espresso drinks, which include lattes and mochas offered with a choice of milk and flavorings, are being added to menus across the country. The drinks began appearing early this year after being tested in more than 800 stores. The chain said in November that they would expand the drinks to all U.S. stores by early 2009.
The company branched out into espresso drinks after launching a premium drip coffee that proved to be a strong seller.
Alvarez said the new smoothies and frappes will be offered once the espresso drinks have been added to all locations in the middle of next year. He suggested it may take until 2010 for those drinks to come to all locations.
"It's a staggered rollout," he said.
Alvarez said the chain is hoping customers will begin coming to McDonald's specifically to buy beverages and not just have them as a complement to a meal.
McDonald's shares rose 71 cents to $64.43 in afternoon trading.
I had the opportunity to visit the State of Yucatan a couple of weeks ago and was I impressed. I had the great opportunity to meet the governor of Yucatan; Gobernadora Ortega is one of the finest governors of a state that I have met. She is for the people of her state and the country of Mexico and she should go far in the government of Mexico.
We are working on a factory to be built in Yucatan and it is an ideal area, safe and great labor available.
Many people do not understand nor realize how convenient Mérida and Progresso, which is on the Gulf of Mexico, is a great place to visit and do business with.
Each government official I met was very responsive and it wasone of the most productive business trips that I have taken as I was only there for two days of work.
Please visit the Governors web site and you will get an insight as to Yucatán and what is happening. http://ivonneortega.com/
Global bottled water consumption advanced 6% to 206 billion litres in 2007, according to the new 2008 Global Bottled Water report from leading drinks consultancy Zenith International. Growing demand for pure water in emerging markets outweighed the impact of poor summer weather in the most developed market of West Europe.
Asia/Australasia reinforced its position as the largest regional market with a 26.5% share, achieving a 10% increase on 2006 volumes. Africa and East Europe also recorded gains of 14% and 10% respectively. These two regions, however, hold the smallest overall shares. Volumes climbed in all other regions except West Europe, which dipped by 0.2%.
"Media debate about the environmental impact of bottled water will have had some impact in the United States and West Europe, but last year’s wet summer was of greater consequence in West Europe," commented Zenith Market Intelligence Director Gary Roethenbaugh. "The resilience of the global bottled water market shows that consumers continue to believe in the benefits of its purity and convenience."
Other points highlighted by the Zenith report include:
Consumption per person reached 30.8 litres in 2007, up 1.4 litres on 2006.
The United States and China were the two largest national markets, with Indonesia and Mexico maintaining their lead over Italy in 5th place.
Still water continued to outpace sparkling water, reaching 86% of total volume.
Bulk sizes above 10 litres accounted for 36% of overall consumption.
The world’s top four bottled water companies - respectively Nestlé, Danone, Coca-Cola and PepsiCo – maintained their 2006 combined volume share of 33%. Danone and Nestlé each own three of the top 10 brands by volume. The top five global brands in volume terms were Aqua from Danone, Pure Life from Nestlé, Aquafina from PepsiCo, Electropura also from PepsiCo and Poland Spring from Nestlé Waters North America. Coca-Cola and PepsiCo each have two brands in the top 10.
Providing detailed forecasts by country for the next five years, Zenith predicts bottled water consumption will rise a further 32% to 272 billion litres in 2012.
The costs of the new food labeling system, taking effect next month under the Mandatory Country of Origin Labeling (M-COOL) regulation, could effect consumers, if retailers and suppliers choose to ignore them.
M-COOL, part of the 2008 Farm Bill, requires large food retailers to display labels showing the country of origin for products like meat, fruit and vegetables.
The estimated the total cost of the legislation to retailers, packers and producers will exceed $2.5 billion, according to US Department of Agriculture (USDA). Experts say consumers will likely feel the impact with a price increase of $0.04 to $0.07 per pound for meat.
Once a reaction against large scale food processing and ever-larger supermarkets disconnected from the land, the natural/organic marketplace is now a key component of many divergent corporate interests. Investment bankers, consumer packaged goods giants and large retailers all are participating in, as well as changing the face of the marketplace for natural/organic food and beverage products.
Natural and Organic Food and Beverage Trends in the U.S.: Current and Future Patterns in Production Marketing, Retailing, and Consumer Usage, 2nd Edition begins by detailing the rise of the natural and organic producers and retailers. With this background, the report examines the market situation where a growing number of manufacturers, retailers and consumers seeking natural/organic food and beverages comprise a cultural shift, a ‘green’ mega-trend that is impacting every area of the food and beverage business.
In addition to establishing these facts, the report examines the market size for natural/organic food and beverages and through the research into retail distribution, manufacturer analysis and consumer trends, provides sales projections through 2013.
This report will serve as a scoreboard tracking the current flux in the natural/organic food and beverage marketplace as both established players and relative newcomers seek to either expand or enter the market. It looks at the various ways both conventional and natural manufacturers and retailers are gaining share as well as how the established natural/organic leaders are shaping the way for their conventional followers.
The current market leaves no doubt that these efforts will continue and sales will grow. However, as failures indicate, the road isn’t necessarily an easy one. From the March 2007 sale of the always struggling Wild Oats Market, to the September 2007 closing of Supervalu’s natural format Sunflower Markets, along with numerous losing ‘me-too’ efforts from manufacturers such as Nabisco, Ragu and Kellogg’s, lots of money has been lost in seeking to capture natural/organic consumers’ loyalties.
The varying degrees of success and failure indicate that current efforts from all players, whether the large CPGs, natural industry leaders, small owner-operated shopkeepers and even the world’s largest mass merchants, are far from static.
One lesson to be learned, that is both obvious and elusive, is that innovation and integrity are both critical to this market. This report shows how successful companies have created a mirror representing the values and demands of natural/organic consumers.
Report Methodology
The information presented in this report was obtained from primary and secondary research. Primary research included interviews with industry participants as well as on-site store examinations and reviews of websites, blogs and readers’ comments posted on these sites. Secondary research and data gathering included extensive examination of the trade, business and popular press, websites as well as company annual reports and various trade association publications.
Packaged Facts market size estimates are based on Information Resources, Inc. (IRI)
InfoScan Review and on SPINS data. New product introduction figures are published with permission of Datamonitor’s Productscan online service.
The analysis of consumer behavior and demographic data is based on two source: Simmons Market Research Bureau and BIGresearch.
Move over, humble cup of joe. McDonald's, purveyor of hamburgers and french fries to the masses, is now serving up lattes, cappuccinos and mochas.
The fast-food chain is launching a new McCafe brand of designer coffees, which will be offered out of a separate area in most restaurants and by drive-thru.
McDonald's has been testining its McCafe concept for several years in select spots around the country. San Diego County will be among the first markets to get McCafes – about 89 out of 118 local McDonald's are expected to have them by the end of the month – with a national rollout to follow next year.
The fast food chain hopes to capture a piece of the gourmet coffee business that Starbucks has dominated for years, even as the ubiquitous Seattle-based coffeehouse chain is struggling with sagging sales after an aggressive expansion.
Despite Starbucks' slump, sales of coffee-based beverages remain strong. In 2006, the latest figures available, retail sales of coffee in U.S. restaurants, coffee shops, convenience stores, supermarkets and other retail outlets totaled $29.2 billion, according to the National Coffee Association.
Last year, 57 percent of the nation's estimated 150 million coffee drinkers drank the brew every day, and on average quaffed about 3.3 cups of coffee daily. That's the highest percentage of coffee consumption since 1984, according to the association.
McDonald's getting into the act with affordable specialty coffees could help expand the market, according to some analysts.
“Assuming the quality is acceptable to a larger base of consumers, it can and should be successful because we have a lot of coffee drinkers,” said Ron Paul, president of Technomic, a Chicago-based restaurant industry consulting firm. “But the key issue is whether they can get enough customers who want to make McDonald's their morning destination for coffee”
Starbucks, facing the challenge of selling pricey coffee in a cooling economy, is taking the competition from the largest restaurant chain in the world seriously.
This month, Starbucks began offering an expanded menu of breakfast foods, focusing on beverage and food pairings and portability. Some stores are pushing various new combinations, such as oatmeal with a vanilla latte, or a apple bran muffin with regularoffee.
And Starbucks also added a “protein power plate,” featuring a hard-boiled egg, bagel, peanut butter and cheese, to its menu.
“Our customers have told us they want delicious choices that offer real nutrition, including whole grains, fruit, and lean protein to help fill them up and give them energy to make it to lunch,” said Katie Thomson, a senior nutritionist for Starbucks.
Paul said McDonald's isn't likely to lure Starbucks' customers, but rather convert regular McDonald's coffee drinkers into spending more for their breakfast beverage.
Though prices can vary among McDonald's franchises, McCafes are expected to start at around $2.39 for a small specialty coffee. In contrast, a small, regular McDonald's coffee costs about $1.69.
“Given McDonald's extensive breakfast menu, the McCafe concept can be successful,” Paul said. “But I don't think it's a threat to Starbucks.”
McDonald's executives say McCafe is a response to consumer demand for more sophisticated products.
“It's a new business opportunity that is grounded on what our customers are asking for,” said Max Gallegos, McDonald's marketing manager for Southern California. “Consumers are very savvy, and our customers are no different than any other – they want fresh, quality coffee products, with the convenience of McDonald's as an added benefit.”
Research is revealing astounding links between diet and cognitive function, but a massive gulf still separates what happens to, for example, DHA-eating rats and what supplemental DHA will do in an unsuspecting, food-purchasing individual. That’s why Ram Chaudhari, Ph.D., senior vice president, R&D, Fortitech Inc., Schenectady, NY, is leery of promoting any one food or nutrient as a certifiable “brain food.”
“No single nutrient will have a full impact,” he says. “There are always other metabolic processes going on simultaneously, so you’ve got to have other nutrients carried along with them. We have different situations with different consumers, so we cannot apply the same components, at the same dosages, to every population. It’s just not going to work that way.”
Marketing meets FDA
Marketers, take note: Resist the temptation to tout your products as the greatest development since SAT cram courses. If Chaudhari’s advice isn’t enough, just consider FDA’s eagle-eyed oversight. For, while manufacturers can make three types of product claims, the government exercises some regulatory enforcement over each of them.
The toughest claim to earn is for disease-reduction, which requires scientific backing sufficient to warrant FDA approval. An example with respect to brain foods is the qualified health claim that FDA grants for phosphatidylserine: “Consumption of phosphatidylserine may reduce the risk of [dementia/cognitive dysfunction] in the elderly. Very limited and preliminary scientific research suggests that phosphatidylserine may reduce the risk of [dementia/cognitive function] in the elderly. FDA concludes that there is little scientific evidence supporting this claim.”
As the language makes clear, it’s hardly a ringing endorsement. And yet, notes Jeff Bernfeld, executive director, marketing, Martek Biosciences Corporation, Colombia, MD, “it can take decades to get a health claim that’s not completely couched in language that makes you wonder, ‘Why even bother?’” So we move to the next category of claim: the nutrient content statement. “That’s when you see packages saying that a food is a good source or excellent source” of some nutrient, he says. While making such a statement entails less scrutiny, whether manufacturers go even that far often depends on how much value they think a nutrient content claim adds to the consumer’s perception of the product. After all, he notes, a nutrient content claim doesn’t tell the consumer what the nutrient does.
Considering structure-function
That’s what structure-function claims are for. These describe how a food affects the body’s normal structure or function. And pairing such a claim with a corresponding nutrient content claim may be the best route to grabbing consumers’ attention. As Bernfeld says, while no savvy marketer would rely solely on nutrient content claims alone, “if you had a nice line on your packages that says, ‘Contains DHA omega-3 fatty acid—an important component of brain health,’ and you said that the product was an excellent source of DHA omega-3, that could be compelling.”
Sometimes these claims seem to be an exercise in creative writing. FDA offers guidelines as to the appropriate type of language: “No specific adjectives constitute a disease claim. Therefore, words such as ‘restore,’ ‘support,’ ‘maintain,’ ‘raise,’ ‘lower,’ ‘promote,’ ‘regulate,’ or ‘stimulate’ might create an implied disease claim if, in the context they are used, they imply an effect on disease. Similarly, words like ‘prevent,’ ‘mitigate,’ ‘diagnose,’ ‘cure,’ or ‘treat’ would be disease claims if the context of their use implied an effect on a disease. “Supporting brain health” might pass muster, but “preventing the onset of Alzheimer’s” would likely raise the FDA’s ire.
Still, structure-function claims are the least-regulated of the bunch, so it’s ultimately up to the manufacturer to vet that they’re actually valid for the nutrient and structural/functional benefits in question. If you want to stay in FDA’s good graces, just remember to notify the agency within 30 days of using the claim; print the disclaimer, “These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease” on the package; and have plenty of data on hand to defend your claim should anyone challenge it.
Ronald S. Hari is President & CEO of Capico International, with over three decades of experience in the bakery and food service industry.
Visit www.capico.net for additional information
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