Upstart brands gain ground as Nike’s powerhouse labels face setback, analysts warn

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December 23, 2023

Nike is starting to witness a decline in market share, as noted by analysts on Friday. The sportswear giant is facing competition from emerging sneaker brands such as On and Hoka. Following a downward revision in its annual sales forecast, Nike experienced an 11% drop in its stock value. To counter this trend, analysts recommend that Nike invest in revitalizing its styles and introducing more innovative designs.

Attributing the subdued forecast to prudent consumer spending, the primary manufacturer of the Air Jordan 1 shoe announced on Thursday a $2 billion cost-saving initiative. This signals a strategic shift towards prioritizing profitability over mere sales growth.

Continue Exploring: Nike adapts to shifting market dynamics: Yearly sales outlook revised, shares drop 11%

European competitors Adidas and Puma both saw declines of 5% and 7%, respectively, in their closing stock prices. Simultaneously, shares of Lululemon and Under Armour experienced drops of around 1% and 4%.

“Nike needs increased and improved marketing investments while HOKA, On and Lululemon are scaling further with increased customer acquisition and retention,” TD Cowen analysts said after downgrading the stock to “market perform” from “outperform”.

Additionally, Nike announced that it anticipates incurring employee severance costs ranging from $400 million to $450 million in the ongoing quarter. However, the company did not provide details on the exact number of jobs that would be affected.

With 83,700 employees as of the end of May this year, the company did not promptly respond to an inquiry regarding comments on the impending job cuts. It’s worth noting that in 2022, Nike had a workforce of 79,100 employees.

The company unveiled plans to simplify its product assortment, increase automation, and scale product innovation in the women’s and Jordan categories, as well as on products priced below $100, particularly in the running category.

“I think it makes sense for them to focus on fewer number of products that can resonate stronger with consumers. And doing so will help them not only manage their inventory, but also their profitability,” Raymond James analyst Rick Patel said.

A minimum of six brokerages reduced their price target on Nike, and two downgraded the stock.

“While we think this (cost-saving plan) is a positive shift, it will take time to scale newness and innovation, and a soft macro will further pressure results in the meantime,” Piper Sandler’s Abbie Zvejnieks said. The brokerage cut its price target to $107 from $112.

Trading at $109.35, Nike shares, which have experienced a roughly 5% increase this year, carry a forward price-to-earnings ratio for the next 12 months of 30.01. In comparison, Adidas has a ratio of 44.48, a common benchmark for valuing stocks.

Confederation lauds Gujarat’s move to allow liquor sales in GIFT City, hails decision as progressive for state economy

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December 23, 2023

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The confederation of alcohol beverage producers in India on Saturday said they welcomed the Gujarat government’s decision to allow liquor sale in GIFT City.

The Confederation of Indian Alcohol Beverage Companies described the decision as “progressive,” stating that it would significantly enhance the state’s economy and attract global companies.

On Friday, the Gujarat government allowed the sale and consumption of alcohol in some form in the Gujarat International Finance Tec-City (GIFT City) area.

A Liquor Access Permit will be given to all the employees or owners working in GIFT City through which they will be able to consume liquor in hotels/restaurants/clubs offering “Wine and Dine”, the official order of the state government said.

“The true significance of this step lies in the underlying acknowledgement that alcohol is an essential part of relaxation and social bonding in the modem world. This move sends a strong signal to the world that the GIFT City is a modern liberal place, ready to do business like other major global centres,” said Vinod Giri, Director General of the confederation.

“It will not only give a major boost to the hospitality sector within the GIFT City but also attract major companies and quality workforce from across the globe. We will see a major boost to business and job opportunities post this move. It will give a fillip to the liquor industry as well as help the government to earn tax revenues. This move will go a long way in further boosting the state’s economy,” Giri added.

Talking about Bihar, which is a dry state, Giri said the stringent prohibition of alcohol consumption destroyed industry and enterprise in Bihar.

“We just hope that the Bihar government takes cues from Manipur and now Gujarat to start dismantling prohibition. Constricting measures like prohibition has no place in a modern, self-aware, liberal world,” Giri noted.

The Confederation of Indian Alcoholic Beverage Companies (CIABC) is the apex body of the Indian Alcoholic Beverage Industry. Its members include major Indian companies that manufacture and market their product range in India and abroad.

It represents the wide and inclusive interests of the Indian industry.

Jalandhar’s culinary landscape to transform with new modern food street hub

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December 23, 2023

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Soon, the residents of Jalandhar will have the opportunity to savour modern and hygienic street food at a single location, as the administration has commenced the process of identifying a suitable spot for establishing a contemporary Food Street hub. Leading a meeting on December 22, Deputy Commissioner (DC) Vishesh Sarangal has directed the Jalandhar Municipal Corporation (JMC) to furnish a detailed report outlining the location and other necessary requirements for the establishment of the Food Street hub.

He mentioned that the Food Street will be established in a clean, well-ventilated, and pollution-free zone. He further noted that it will be a designated vending area officially sanctioned by the municipal corporation.

He mentioned that the area would have access to shared amenities such as clean water, parking, lighting, sanitation, and waste disposal systems. Additionally, he stated that street food vendors would receive training from the Ministry of Skill Development and Entrepreneurship. Sarangal emphasized that every street food vendor, assistant, or food handler would undergo fundamental hygiene training. Furthermore, they would receive support in obtaining licenses and registration from the FSSAI.

Joint Commissioner Puneet Sharma mentioned that a team of officials had been constituted to identify a suitable location for the Food Street hub, and a report would be prepared in this regard.

The development is viewed as an effort to appease vendors who have been expressing their dissatisfaction with the police, the JMC, and the district administration.

Earlier, a significant number of roadside vendors and pushcart owners had gathered outside the District Administrative Complex to protest against notices served by the Police Commissionerate. The notices directed them to remove their carts from footpaths and roads citing traffic concerns. Vendors alleged that the move was adversely impacting their livelihood.

PepsiCo to establish mega snack production site in Vietnam with $90M investment

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December 23, 2023

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PepsiCo plans to allocate approximately $90 million towards the establishment of a new snack production facility in Vietnam.

The upcoming facility will be constructed within the expanded Dong Van I Industrial Park in Ha Nam province, spanning an area of 80,000 square meters. The initiative aims to deliver over 23,000 tonnes of PepsiCo snack brands annually to both the Vietnamese and Cambodian markets.

The construction is slated to begin in early 2024 and is projected to conclude by the latter half of 2025.

The proprietor of the Doritos brand has a workforce of approximately 13,000 individuals spread across 14 plants and distribution centers in Vietnam.

Nguyen Viet Ha, general manager of PepsiCo Foods in Vietnam, said, “Despite the general economic difficulties after the Covid-19 pandemic, PepsiCo Foods Vietnam has made remarkable strides. We hope that the new factory project will contribute to promoting economic development, help Vietnamese people through difficulties, and bring long-term benefits to society.”

In a released statement, the company specified its commitment to invest in ingredient sourcing in Ha Nam and northern provinces. This initiative aims to enhance its potato contracting system through the implementation of “regenerative agro practices and digital technology.”

In March, PepsiCo rolled out its Greenhouse accelerator program in the Asia-Pacific (APAC) region, marking the fourth geographic area where the U.S. food and beverage giant has rolled out this initiative.

The program, initially launched in Europe in 2017 and later extended to North America in the subsequent year, aims to assist entrepreneurs whose products advocate for sustainability and the circular economy.

The Greenhouse accelerator is set to provide ten selected candidates with $20,000 along with access to a business development program, facilitating the acceleration of their venture’s growth.

Successful startups enrolled in the program will have access to PepsiCo executives who will offer assistance in areas including corporate structuring, fundraising, product development, supply chain management, and customer acquisition throughout the duration of the program.

Berlin’s KoRo secures backing from Triodos Fund, positioning itself for further European expansion

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December 23, 2023

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The Triodos Food Transition Europe Fund recently acquired a minority equity stake in the Berlin-based food brand KoRo as part of the company’s Series B extension round.

This investment is in line with KoRo’s goal to establish itself as Europe’s premier brand for transparent, high-quality, and reasonably priced food. Among the investors participating in KoRo’s Series B extension round earlier this year were Five Seasons, HV Capital, Partech, SevenVentures, Haub Legacy Ventures, and Associated British Foods.

Established in 2014, KoRo originated as an online store, launching with detergent as its first product. The company’s initial vision focused on delivering products online at equitable prices, emphasizing larger volumes, straightforward design, and the removal of intermediaries from the supply chain.

Today, KoRo has evolved into a company valued at over €100 million, specializing in food and serving more than 1.4 million customers across 17 countries. While maintaining its online presence, KoRo is expanding into retail and is currently available in over 9,000 stores.

KoRo stands out with its emphasis on cost-effective bulk packaging and a wide variety of snacks. Noteworthy offerings encompass the date and hazelnut spread, alongside numerous other food products.

Committed to sustainability, the company offers the majority of its products in bulk packages to reduce packaging waste compared to traditional retailers. KoRo aims for a short supply chain, minimising intermediaries, and offers a variety of snacks with no added sugar.

According to KoRo’s analyses, their snacks contain, on average, 29% less sugar, 41% more fibre and 29% more proteins than established alternatives. Over 50% of their assortment is vegan, and more than half of their products are organic.

KoRo says it is positioned for further growth, with plans to expand its online and retail presence across Europe in the coming years. The company aims to strengthen its brand and enhance logistical operations to meet the growing demand for sustainable, high-quality food.

KoRO CEO, Florian Schwenkert, said, “With this new investment, we can further strengthen our foundation and foster sustainable future growth. This will not only prepare us for exciting challenges, but also give us the freedom to drive innovation at both sustainability and product level.”

KoRo CFO, Daniel Kundt, added, Despite the uncertain economic situation, we will be able to reach sustainable growth and a turnover of over €100 million in 2023. This emphasises that our products and business offering precisely align with customers’ demands for high-quality food and transparency and that the need was not just a passing trend.”

Fund manager, Adam Kybird, commented, ‘We are very happy to welcome KoRo to our portfolio. KoRo’s commitment to more sustainable and quality food at affordable prices makes them stand out in the market. We see this as a great opportunity to enable more people pursue a diet with a lower impact for our planet. We look forward to contributing to KoRo’s growth and vision in the years ahead.”

New Zealand dairy giants Synlait and A2 Milk Co. navigate rocky waters amidst fresh pricing dispute

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December 23, 2023

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The already strained relationship between New Zealand dairy companies Synlait and A2 Milk Co. faces an increased risk of deterioration after it was revealed that a pricing dispute has been added to the existing contract row.

The ongoing contractual dispute, wherein Synlait contests A2 Milk’s authority to terminate an exclusivity of supply arrangement, has progressed to arbitration. However, in a stock exchange announcement on December 22, Synlait disclosed a fresh point of contention between the two companies.

It said, “Synlait recently entered a good faith negotiation period under the NPMSA [the Nutritional Powders Manufacturing and Supply Agreement] regarding a separate issue between the parties about pricing regarding products manufactured by Synlait for The A2 Milk Co.

“The resolution of this matter is important because it could impact the margin for certain products manufactured under the NPMSA historically and going forward.

“Synlait advises that the good faith negotiation period under the NPMSA expired yesterday. Synlait wants the matters resolved and will refer the pricing matters to a confidential binding arbitration.”

No specific information was provided regarding the precise nature of the pricing matter mentioned by Synlait.

In October, the companies mutually decided to pursue arbitration to address the termination of the exclusivity contract.

Continue Exploring: New Zealand’s A2 Milk and Synlait locked in dispute over contract termination

Synlait stated that the assessment will also consider whether the obligation to secure a minimum annual volume of product and specific priority arrangements benefiting The A2 Milk Co. under the NPMSA will no longer be in effect if the exclusivity provision under the NPMSA is determined to have been validly revoked.

The initial disagreement arose when A2 Milk, Synlait’s second-largest shareholder holding a 19.8% stake, issued written notice in September to terminate the exclusive manufacturing and supply rights previously granted to the company.

The rights encompassed stages 1 to 3 of A2’s infant-formula products, including A2 Platinum, intended for sale in China, Australia, and New Zealand.

It stated that the exclusivity agreement was terminated “because Synlait’s performance during FY-23 in terms of full and timely delivery fell below the threshold necessary for Synlait to retain such exclusive rights.”

In its latest announcement, Synlait disclosed that discussions between the companies also involve claims related to expenses linked to product services, costs of surplus or damaged packaging materials, expenses tied to new product development, lost profits due to delayed deliveries, and allegations of failure to share cost savings arising from the utilization of third-party ingredients.

The parties are taking part in negotiations to attempt to resolve these matters.

Synlait said that it remains of the view that “together both companies stand the best chance of weathering the China market dynamics”.

It continues to hold the Chinese regulatory State Administration for Market Regulation (SAMR) license which is attached to Synlait’s Dunsandel manufacturing facilities.

The license, which lasts until 2027, is for A2 Milk Co.’s Chinese-labelled infant-formula products.

Responding to Synlait’s latest statement, A2 Milk Co. said it “remains confident” in respect of all of the issues currently in arbitration.

It added, “The company is also confident in its position overall in relation to the ‘new pricing and other matters in dispute’, as noted in Synlait’s announcement and which largely relate to matters initially raised by A2 Milk Co.”.

Equinox exits Salpa & Cherubini as Apheon takes control with strategic vision

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December 23, 2023

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Salpa & Cherubini, the producer of Italian ice-cream sandwiches and biscuits, has experienced a shift in majority ownership.

Luxembourg-based private-equity fund, Equinox, has divested its 63% share in the Perugia-based company to the pan-European investment firm Apheon for an undisclosed amount.

Established in 1934 by the Cherubini family, Salpa & Cherubini is the owner of Break & Go, a brand specializing in ice-cream sandwiches, and operates the gluten-free biscuit line known as Kèlinea. Additionally, the group supplies its products to major food corporations such as Nestlé and Unilever.

The Cherubini family will retain ownership of the remaining 37% stake.

A company statement said that “Apheon’s entry into the capital will allow Salpa to further accelerate growth in the US, a market of strategic importance for the company”.

Maria Rita Cherubini and Abramo Cherubini said, “We thank the Equinox team for the successful collaboration over the last few years and recognise in Apheon a partner capable of offering strategic guidance and capital for a new phase of growth.

“We appreciate Apheon for its local, yet global approach and for its knowledge of the food industry and food ingredients. Thanks to this partnership, we will be able to continue to grow and enter new markets, innovate and reach new goals. This is the beginning of a new chapter for set sail and we are excited to embark on it with Apheon.”

Salpa & Cherubini possesses three manufacturing facilities in Italy, covering an approximate area of 90,000 square meters, and has a workforce of approximately 250 employees.

Massimiliano Monti, a partner at Equinox, said, “It has been a privilege to have contributed to the development of the company over the last three years and to have supported the Salpa management team in achieving the great organic growth which has laid the foundations for the next phase of expansion of the business.

“We have identified Apheon as the ideal partner to accompany the family and the company in this exciting journey which aims to extend Salpa’s leadership position on a global scale.”

Among Apheon’s portfolio of food companies are Dolciaria Acquaviva, an Italian business-to-business frozen bakery firm, and Vanreusel, a company specializing in frozen meat-based snacks.

From Mumbai’s irresistible chaats to Hyderabad’s iconic biryani: Indian cities shine in global culinary rankings

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December 23, 2023

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Local cuisine serves as a delightful narrator, softly recounting the intricate tale of a city’s past, culture, and character. Every dish encapsulates the essence of regional customs, showcasing distinct flavours and a culinary legacy that has matured through the ages. Whether savoured at roadside vendors or renowned establishments, the local food panorama unveils the communal recollections, rejoicing in shared moments and the amalgamation of varied influences. The selection of ingredients frequently mirrors the area’s agricultural practices, climate, and trade history.

Whether it’s a comforting bowl of soup, a tempting street snack, or a distinctive dessert, regional cuisine captures the very spirit of a city. Through the culinary craft, both locals and visitors embark on a tasteful journey, discovering the stories of a city’s history, embracing its present, and relishing the unique essence that distinguishes it in the global culinary tapestry.

In recognition of the significance of local cuisine, Taste Atlas, the online guide for experiential travel, recently unveiled its ‘Best Food Cities in the World’ list, featuring Mumbai, Hyderabad, Delhi, Chennai, and Lucknow among the top 100. Mumbai and Hyderabad, representing India, secured positions at 35th and 39th, respectively, in the top 50. Delhi claimed the 56th spot, while Chennai and Lucknow secured rankings at 65th and 92nd. Delhi and Mumbai are celebrated for their diverse chaats, Hyderabad is renowned for its Biryani, Chennai for its delightful Dosa and Idli, and Lucknow is famed for its exquisite Mughlai dishes, including Kebabs and Biryani.

At the pinnacle of the rankings is Rome, Italy, celebrated for its robust and flavourful dishes crafted from fresh ingredients. Following closely are Bologna and Naples, securing the 2nd and 3rd positions, respectively. All three Italian cities are renowned for their culinary prowess in pasta, pizza, and cheese-based delicacies. Rounding out the top 10 are cities such as Vienna (Austria), Tokyo (Japan), Osaka (Japan), Hong Kong (China), Turin (Italy), Gaziantep (Turkey), Bandung (Indonesia), Poznan (Poland), San Francisco (United States of America), Geneva (Switzerland), Makati (Philippines), and more.

In the realm of regional cuisine, people relish indulging in Pav Bhaji, Dosa, Vada Pav, Chole Bhature, Kebabs, Nihari, Pani Puri, Chole Kulche, Biryani, and an array of chaats.

Coca-Cola’s Minute Maid diversifies portfolio: Enters alcohol market with innovative cocktails

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December 23, 2023

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The Coca-Cola Co. is launching a variety of ready-to-serve “flavoured wine cocktails” under CSD and juice brand Minute Maid.

The lineup, Minute Maid Spiked, marks the orange juice brand’s first venture into the alcohol category.

Minute Maid Spiked will come in three flavours: lime margarita, strawberry daiquiri, and piña colada. Each will be available in a 1.5-litre bottle with a 13.9% alcohol by volume (abv).

The ready-to-serve cocktail range is set to debut in the first half of 2024 and will be managed by Coca-Cola’s alcohol unit subsidiary, Red Tree Beverages.

Coca-Cola said that Minute Maid Spiked will initially be exclusively available in the US. The range will be distributed “nationwide” through retail outlets that “offer comparable wine products,” the company added.

When questioned about the wine sourcing for the range, the spokesperson stated, “The formula and ingredient information are proprietary to Red Tree, and we do not disclose this information.”

In July, Coca-Cola created the Red Tree Beverages subsidiary to further explore opportunities in the alcohol sector.

The company stated that the unit, referred to as a “firewalled subsidiary” of its primary operations, obtained a federal basic permit (mandatory for all alcohol distillers, importers, and wholesalers operating in the US) late last year.

In a statement at the time, Coca-Cola said, “This allows it [the company] to engage further in its relationships with third-party alcohol companies that use The Coca-Cola Company’s brands in the alcohol space.

“Red Tree Beverages will not be distributing alcohol in the US, and neither will The Coca-Cola Company. The creation of Red Tree Beverages is the next logical step in The Coca-Cola Company’s evolution as it continues its deliberate and disciplined experimentation in alcohol in the United States.”

Coca-Cola maintains a limited portfolio of alcoholic beverage products, manufactured and distributed by third-party producers. This selection includes Topo Chico Hard Seltzer and Simply Spiked Lemonade (Molson Coors Beverage Co.), as well as Fresca Mixed (Constellation Brands).

Last year, the company partnered with Brown-Forman to launch a ready-to-drink Jack Daniel’s and Coca-Cola product. The RTD has since been rolled out globally to markets, including the EU and the UK.

In October, Pernod Ricard collaborated with Coca-Cola to create Absolut & Sprite, a vodka-based ready-to-drink (RTD) cocktail. The product is scheduled to be launched next year.

Continue Exploring: Pernod Ricard teams up with Coca-Cola for Absolut & Sprite cocktail release

Jewellery consumption set for 10-12% value growth in FY24, driven by soaring gold prices: ICRA

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December 23, 2023

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Jewellery consumption, in terms of value, is projected to grow by 10-12 percent in the current financial year, mainly attributed to the increase in gold prices, as reported on Friday. The rating agency ICRA has revised its forecast for the year-on-year (YoY) domestic jewellery consumption growth (in value terms) in FY24 to 10-12 percent from the earlier estimates of 8-10 percent, primarily driven by the rise in gold prices.

The consumption of jewellery is estimated to have risen by more than 15 percent year-on-year in the first half of FY24. This growth can be attributed to stable demand during ‘Akshaya Tritiya,’ a festival regarded as auspicious for purchasing precious metals, coupled with elevated gold prices.

Nevertheless, Icra anticipates the growth rate to moderate to 6-8 percent in the latter half of this financial year, due to sustained tepid rural demand amid persistent inflation.

Following a period of volatility from December 2022 to April 2023, gold prices exhibited relative stability in the first half of FY24, marking a 14 percent increase compared to the average prices from the corresponding period in the previous year, as mentioned in the report.

The heightened price levels aided in the revenue expansion of the majority of jewellery retailers, despite subdued volume growth, according to the statement.

The current tensions in the Middle East and the evolving global macro-economic conditions may contribute to maintaining elevated gold prices in the short term.

The spike in gold prices since early October 2023 and persistent inflationary headwinds remain key risks to demand, it stated.

“Jewellers of the organised market is projected to record a healthy revenue expansion of 15-18 per cent YoY in FY24 on the back of their planned retail expansions and a gradual shift in consumer preferences towards branded jewellers. The organised jewellery retailers are expected to outperform the industry over the medium term supported by tailwinds from accelerated formalisation of the industry,” Icra Vice President and Sector Head Sujoy Saha said.

Icra has projected some moderation in FY24 in the operating margins of organised players owing to the front-loaded operating costs for planned store additions and increased advertising expenditure in the face of rising competition.

Nevertheless, the benefits of economies of scale are likely to support the operating margins, which are estimated to hover in the range of 7.5-8 per cent in the near to medium term.

Despite the projected increase in debt levels to fund the inventory for new stores, the debt protection metrics for the players are estimated to remain comfortable.

“The organised jewellers had recommenced their retail expansion in FY23, after a brief hiatus in FY21 and FY22, with the store count estimated to have risen by more than 20 per cent during the year. The momentum is likely to continue over the near to medium term with an estimated increase in store count by 18-20 per cent YoY in FY24, supporting their revenue growth,” Saha added.

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