Categories
Food Processing Strategy

10 major reasons of business failure in food processing sector

When it comes to business, food processing seems to be an obvious choice for most of the entrepreneurs. There could be a considerable number of reasons for this apparent choice. Some of the prominent ones could be:

  1. Our exposure to a range of food available in our vicinity and our food consumption habits.
  2. Media speaks a lot about food losses and food wastage in the developing and developed world.
  3. A latent and unsatisfied demand because of demand-supply mismatch.
  4. Entry of new product lines or brands in the market on a regular basis.

Despite of so much of an unmet demand and huge requirements of food for consumption, it’s difficult to understand why food processing or food related businesses fails. During the research, there were some interesting facts which came across and 10 major ones are discussed below with the list of companies who were failed in the process:

1. Raw material availabilityAngas Parkwas was active in the dried fruit processing business with its operations in the souther Australia. Due to decrease in the number of big dried fruit growers, they were forced to produce less, which further led to the closure of the unit.

2. Cheaper imports:

McCain Foods (Australia)was forced to close its potato processing plant because of cheaper imports of finished products. Input costs (potatoes, labor and electricity) were steadily increasing for potato processing and that led to surplus capacity and higher unit costs compared to the imported products. Losing competitiveness on unit economics and low prices of imported products made McCain unit unviable to sustain in the long term.

Rol-Land Farms Group (US)group was active in mushroom processing business in Freetown, US. Increased labor and raw material costs with fall in margins due to market competition made mushroom  processing unprofitable, further leading to the closure of plant.

3. Regulatory environment: Heinz was manufacturing tomato ketchup, baby foods, BBQ sauce and other products in Ontario, Canada. Canada passed more stringent water and labor regulations leading to spike in prices of raw material. Neighbouring countries with less stringent norms like Chile and US had cost competitiveness over the domestic produce. This made Heinz products unviable and led to the closure of a 104 year old plant. Though this blow made Canadian authorities to think of a national food strategy to ensure Canadians have access to fresh Canadian products but it was too late.

4. Margins: Morrisons, Bos Brothers Fruit & Vegetables BV (a part of WM Morrisson Supermarket, the Netherlands) was into international trade in fruit, vegetables, flowers and plants. They were forced to terminate the company because of stiff competition from discounters like Aldi and Lidl.

5. Violence:

Stanfilco (the Philippines) was managing a 1000 acres banana plantation in the Philippines. Multiple violent incidents from armed lawless groups lead to the decision of closure of operations.

Nakashin Davao International (a Japanese company) closed down its frozen fruit operations in Davao city (the Philippines). The reason for the closure was labor agitation. Workers were demanding reinstatement and regularisation which was not acceptable to the company.

6. Consumer demand:

Ready Pac Produce Inc. (US) closed down the Salinas Valley Plant because of slow down in consumer demand for iceberg lettuce.

Treehouse Foods, Inc. (US) closed two of its plants at Azusa (California) and Ripon (Wisconsin). Declining consumer demand led to the discontinuation of the manufacture of sugar wafer products (bars, cookies and snacks).

7. Centralisation: Companies are more interested to manage fewer plants because of higher economies of scale. This concept leads to centralisation of operations with higher capacities. Saputo (Canada) closed down three of its milk processing facilities in eastern Canada and Saputo (Germany) closed down its cheese manufacturing unit in Quebec, Germany to increase capacity utilisation at other units. The efforts were meant to pursue additional efficiencies and lower costs. The process created more centralised operations with higher efficiencies.

8. Capacity underutilisation: . Economic unviability of the plant due to under-utilized capacity lead to the closure of Del Monte Foods (US) vegetable production and canning facility in Sampson County.

9. Single customer: Lonrho Fresh (South Africa) was into cut fruit and vegetable business and working on very thin profit margins. 70% of its sales were dependent on single retail player’ Pick and Pay’. Losing out some big business from their biggest customer, ‘Pick and Pay’ made the business unviable for Lonrho Fresh.

10. Dependability on subsidiesTINE (Norway) decided to close its facilities of Jarlsberg Cheese in Norway as export subsidies in Norway are being phased out by 2020. Increase in domestic competition and loss of export subsidies were expected to make TINE operations inefficient in Norway.

Above examples illustrates the importance of supply, demand, efficiencies, diversification, human resource, subsidies, trade, trends, consumer health and other critical factors in determining the viability of a unit.

For running a food processing plant, everything has to be well organised and planned, otherwise a single problem could make you out of the business.

Categories
Milk

Consumer preference for Milk in Europe and America

Americans prefer chilled milk, while Europeans store their milk outside the refrigerator. The difference arises due to different taste/ flavor preferences of consumers and the pasteurization technologies used by dairy industry in these two geographies. Pasteurization, here means, heat-treatment process that destroys pathogenic microorganisms in certain foods and beverages.The treatment also destroys most of the microorganisms that cause spoilage and so prolongs the storage time of food.

In the U.S. and Canada, milk manufacturers use high-temperature short-time pasteurization, or HTST. HTST is efficient but results in milk that expires relatively quickly—usually within a week and requires storage in a refrigerator. That’s because the temperature used (about 161°F for 15 seconds) is enough to kill most bacteria, but some will proliferate if the milk hangs around long enough.

In Europe, another technique called ultra-heat-treated pasteurization, or UHT, is used. Milk is exposed to higher temperatures of 284°F for three seconds, decimating virtually all the bacteria and making it shelf-stable for a couple of months if left unopened. (Once opened, it has to be refrigerated.) Because it’s “cooked” at high heat and burns off some of the sugar, UHT milk also has a slightly different flavor.

Read more at MentalFloss

Categories
Intellectual Property Rights Trade

Famed Kashmiri saffron granted Geographical Indication (GI) tag

As per the documents, the Geographical Indication Registry has approved the GI tagging on the Kashmiri saffron, symbolizing its exclusivity in the international market. Directorate of Agriculture has been declared as a registered proprietor of the GI of saffron. In Kashmir, saffron cultivation is done on 3,715 hectares of land. GI tagging will set apart the high-quality Kashmiri saffron from the cheaper varieties of Iran, Spain, and Afghanistan.

Kashmiri saffron is of superior quality because of the higher concentration of crocin, a carotenoid pigment that gives saffron its color and medicinal value: Its crocin content is 8.72% compared to the Iranian variant’s 6.82%, which gives it a darker color and enhanced medicinal value.

Kashmiri saffron, known for its quality and aroma worldwide, has been witnessing an invasion by cheaper Iranian saffron. Iran is currently the largest producer of saffron in the world, cultivating over 300 tonnes every year on 30,000 hectares of land. Due to the bulk market capturing by the Iranian saffron, the price of Kashmiri saffron dropped by 48% after 2007.

Read more at TheKashmirMonitor

Categories
Investments Strategy

Brand divestment: Hershey’s plans to sell KRAVE, Scharffen Berger and Dagoba

Hershey is looking to divest its high-flying jerky brand KRAVE along with its artisan chocolates Scharffen Berger and Dagoba, Hershey CEO Michele Buck told analysts. KRAVE, a high-end jerky and meat snack company that Hershey acquired for $220 million in 2015, had failed to meet company’s expectations.

These are great brands that continue to resonate with consumers, but they require a different go-to-market model. These brands are are far more niche with much smaller market shares.

Hershey is best known for its mainstream brands that resonate with a broader segment of consumers. It makes sense for Hershey to focus its attention in areas where it has far more expertise and can promote and innovate the brands to ensure they resonate with a broader-range of consumers. The company needs to better prioritize its resources moving forward.

Read more at NOSH

Categories
Fisheries

Fish skin leather: artisans and designers are breathing new life into the tradition

Fish skin leather used to be commonplace in many cultures. As practical and pervasive as the material was, the practice of making fish skin leather faded in the 20th century. Its loss is intertwined with colonialism and assimilation. Now, it’s making a comeback. Fish skin leather is also emerging as a commodity in the world of fashion; in recent years, the material has caught the eye of designers who want to incorporate it into luxury items.

Commercial interest in fish skin leather is partly a result of consumers’ environmental and ethical concerns about the global leather supply chain. Most conventional leather like snakeskin and alligator skin is produced using harsh chemicals, such as chromium salts, which cause respiratory ailments and persistent skin ulcers in tannery workers.

Making fish skin leather is a gentler process than making conventional leather. It requires fewer harsh chemicals. Fish skin is a byproduct of the food industry that often goes to waste. Every tonne of filleted fish amounts to about 40 kilograms of skins. Fish skin leather is thin but remarkably strong because its fibers crisscross.

The revival of fish skin leather is more than the rediscovery of a craft. In a time of environmental crises, using local resources to their full extent may be an idea worth reviving.

Read more at Hakai Magazine

Categories
Veterinary

Modern Animal, a California startup ready to disrupt Veterinarian business

Modern Animal calls itself a new kind of veterinary clinic for animals and their humans. Steve Eidelman, founder and CEO of Modern Animal, is out to disrupt the veterinary business. Eidelman explains, “We have a system that’s broken, not supporting the consumer in a way all these other industries are. We don’t have a thriving profession”. The average clinic looks ugly, it stinks, wait times are long the staff usually isn’t friendly and the phone is ringing nonstop. The customer experience is not particularly good in a veterinary clinic, and even worse, working as a veterinarian is fraught with difficulties. That’s a threat to all animals in the long term.

Modern Animal proposes to fix all those shortcoming with its first clinic in West Hollywood. It doesn’t look like any veterinary clinic you’ve seen. The Modern Animal clinic is literally transparent, with pet owners able to see all the way from the street to the back of the clinic. Modern Animal requires a membership costing $100 a year. That membership gives the pet owner full access, including 24/7 access via telemedicine.

“Does an animal need this? No, but you do.”

Read more at Forbes

Categories
Policy

European Commission announces exceptional measures to support the agri-food sector

The Commission is taking swift action and proposes additional exceptional measures to further support agricultural and food markets most affected. The package includes measures for private storage aid (PSA) in the dairy and meat sectors, the authorisation of self-organisation market measures by operators in hard hit sectors and flexibility in fruits and vegetables, wine and some other market support programmes.

Exceptional measures announced as a further response to the Coronavirus crisis include:

  1. Private storage aid: the Commission proposes to grant private storage aid for dairy (skimmed milk powder, butter, cheese) and meat (beef, sheep and goat meat) products. This measure will lead to a decrease of available supply on the market and rebalance the market on the long-term.
  2. Flexibility for market support programmes: the Commission will introduce flexibility in the implementation of market support programmes for wine, fruits and vegetables, olive oil, apiculture and the EU’s school scheme (milk, fruits and vegetables). This will allow the reorientation of funding priorities towards crisis management measures for all the sectors.
  3. Exceptional derogation from EU competition rules: applicable to the milk, flowers and potatoes sectors, the Commission will authorise the derogation from certain competition rules. For example, the milk sector will be allowed to collectively plan milk production and the flower and potatoes sector will be allowed to withdraw products from the market.

Such agreements and decisions would only be valid for a period of maximum six months. Consumer price movements will be monitored closely to avoid adverse effects.

Read more at European Commission

Categories
Uncategorized

Save more, spend less to be shoppers’ new mantra

Shoppers are likely to cut back sharply on discretionary spending after the lockdown, sacrificing outings to malls, restaurants, and salons to save up for immediate needs such as health and hygiene products. The online survey was conducted by Nielsen between 10 April and 14 April among 1,330 people in 23 cities. The findings indicate that the future is tilting toward home-cooked meals rather than eating out. Hygiene has become a big issue with increased awareness and is likely to remain the trend once the pandemic is over. Even if normalcy returns and the lockdown is relaxed, people will not be comfortable in crowded places, including airlines, restaurants, clubs, and metros. The importance of preventive healthcare will grow in consumer priorities because of the covid-19 pandemic. E-commerce has seen exponential growth and this will continue. However, after the coronavirus outbreak and the ensuing lockdown, kirana stores have made a comeback.

Read more at LiveMint

Categories
Uncategorized

The Supply Chain for Food Is Stressed

The spread of the virus through the food and grocery industry is expected to cause disruptions in production and distribution of certain products as panicked shoppers test supply networks as never before. Industry leaders acknowledge shortages could increase, but they insist it is more of an inconvenience than a major problem. People will have enough to eat; they just may not have the usual variety. The food supply remains robust, they say, with hundreds of millions of pounds of meat in cold storage. You might not get what you want when you want it. Consumers like to have a lot of different choices, and the reality is in the short term, we just don’t have the labor to make that happen.

Laborers who were once considered unskilled are now “essential employees,” even heroes to some, because they are providing the nation with food and other crucial supplies.

Read more at The New York Times

Categories
Uncategorized

The Farm-to-Table Connection Comes Undone

Farm-to-table — the term has become a fixture in the culinary lexicon — started in the 1970s, when Chez Panisse and a handful of other restaurants hatched what then seemed like a radical notion: Build menus from food grown by nearby farmers who are thoughtful about everything from the seeds they select and the soil they grow them in to the communities they feed. That idea grew into a pipeline connecting farmers, ranchers and chefs that in 2019 had generated $12 billion in income for small-scale producers including cheesemakers and vintners.

A direct pipeline to chefs that took decades to build has been cut off by the coronavirus, leaving small farmers and ranchers with food they can’t sell. Small farmers across the country who spent decades building a local, sustainable agricultural system, are staring at their fields and wondering what to do now that the table has been kicked out from under the modern farm-to-table movement. All of that market is gone, and no one knows what’s going to happen or how people’s behaviors are going to change.

Read more at The New York Times