Over the next while there will probably be a number of posts showing that smaller alternatives to the multinational food companies, are where growth is happening at present. An interesting question is does this also bring the “try it quickly and fail” approach used in the computing industry to the Food Industry?
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Here again we have the demonstration that the US brewing industry has moved from supplying only the bland beer that was the consequence of centralisation and wide distribution. The consumer really wants more interesting, flavoursome local beers whose brewing value chain can unluckily (luckily actually) not be scaled up in the multinational brewing system.
You have probably read of the recall of 550 million eggs in the USA because of a risk that they could carry salmonella. The article explains in some detail how it happens that eggs, which appear to be well packaged in a pretty impervious shell, come to contain salmonella.
A recent article in the world street journal showed the picture below which represents the change in expenditure in the US in the third quarter of 2008.
I post this because although a food processing business might not be supplying this market directly, these changes must surely have some relevance even if only as a confirmation of an amazing economic downturn.
What this shows that compared to the previous quarter, the expenditure on alcoholic beverages dropped 10.9% or the equivalent of almost 44% over a year – given that the 4th Quarter includes the festive season and Christmas it is unlikely that season variations would make the annual figure smaller.
However the U.S. Department of Commerce’s inflation and seasonality corrected data shows a 13.8% per year decrease for the 4th quarter of 2008.
What is also interesting is the trends the data shows. When people are short of money they spend less on non necessities such as chocolate, pet food and alcohol as well as expensive foods such as beef. The reduction in cereals probably reflects breakfast cereals rather than wheat, maize etc.
The company is clearly an e-commerce company which has built a management team of Nigerians who are able to drive both the food product and the sourcing issues of the company.
As many of these foods are common to other West African countries the market is surely wider than Nigerians in the US. Then there is also an opportunity to apply the business model to other National Foods and set up stores for other groups.
The company is NY based and prices need to be judged by those who know the foods not me. As examples yam roots sell for $2.30 / lb, garri around $1 / lb, dried shrimp $12 / lb and palm oil $25 / gall.
from: Earth2Tech (click image for full story online)
Jeff Broin of ethanol producer Poet said the following
8). In the great debate over how much corn ethanol is affecting food prices, what do you think about some newer reports that have said biofuels have affected food prices significantly?
Every study depends on the assumptions of its author, and the opponents of renewable fuels have been able to generate a few that say what they want. Almost every independent study I’ve seen has said that ethanol production has had a very small impact on the consumer’s price for food, especially in comparison to the impact of rising energy prices.
A study from the Agricultural and Food Policy Center at Texas A&M said, “The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil.” Just do the math. A semi can haul 4,200 boxes of corn flakes at a time, and with 10 ounces of corn in each box, that’s a total of 46.9 bushels of corn. At a $6 bushel, the corn in all 4,200 boxes has a value of $281.40. To haul those boxes 1,500 miles, however, would cost $881.25 with diesel priced at $4.70 per gallon. That means it takes 21 cents of diesel per box to get it to the store, yet the value of corn in that box is less than seven cents. What do you think is the real driver of higher food prices?
But this study surely has nothing to say about biofuels not pushing up the price of food? In fact what would the fuel cost have been if the truck was run on biodiesel?
Its also flawed in that the calculation is for $100 crude & $ 4.70 / gallon diesel – even at $50 crude and the corresponding diesel price of $ 2.86 / gallon (extrapolated from GasBuddy data) the diesel cost is still 13 cents. This is a of food retail and consumer demands not fuel costs!
from: GasBuddy (click image for full story online)
Lets not even start calculating the packaging cost and the wholesale and retail margins!