Why You Need to Watch These 3 Organic Food Industry Players
Some of the biggest names in British retail will be attending this weekend’s consumer food show dedicated entirely to halal produce, with supermarkets including Tesco, Morrisons, Sainsbury’s and Asda sending buyers, along with high-end department store Harrods. “Business can appreciate the sheer size of the market, and it has largely been neglected,” said Imran Kausar, a former doctor who founded the Halal Food Festival. Strict guidelines Translated as “permissible” or “lawful,” halal food is cuisine prepared according to Islamic guidelines. These state that the animal faces no undue stress up until the point of slaughter, which must be conducted by a Muslim. A sharp knife is used to cut the animal’s throat, after which the blood is drained. According to Bryan Roberts, director of retail insights at Kantar Retail, the existence of the Halal Food Festival suggests the produce is becoming more mainstream, with brands and retailers looking to boost their halal offerings. Among the major retailers, Tesco and Asda are ahead of the curve when it came to halal food, Roberts said. These supermarkets offer a range of halal products, and even have halal butcher counters in some stores, operated by third parties. Tapping the market Well-known food brands including Kellogg’s, Kingsmill, Hellmans, Krispy Kreme and McCain have also tapped the sector, all certifying halal products under the U.K.’s Halal Food Authority (HFA). The market is already significant in Britain, with the Halal Monitoring Committee putting its value at between 4.2 billion-5 billion in the U.K. alone. This gives it a share of around 5 percent of the U.K.’s total agricultural food market, which the U.K. Department of Environment, Food and Rural Affairs valued at 96.1 billion in 2011. But the sector in Britain could be about to shift,according to Saqib Mohammed, the acting chief executive of the HFA.
These two are following different strategies Hain Celestial has been in an aggressive acquisition mode as it looks to grow at a rapid pace in the organic- and natural-food market. Through its acquisition of Premier Foods last year, Hain quickly positioned itself in the top 40 food and beverage suppliers in the UK. Last December, it acquired the BluePrint Juice brand, which is sold at a number of national, natural, and gourmet retailers. In May, it purchased Ella’s Kitchen Group, a maker of organic baby food with 80 products offered in the United Kingdom, United States, and Scandinavia. Sales of organic food in the United States increased from approximately $1 billion in 1990 to $11 billion in 2004 and $27 billion in 2012.This trend is expected to continue at a decent pace going forward, as mentioned earlier, and Hain is positioning itself to capture a big share of the market through acquisitions. Meanwhile, Whole Foods Market is trying to shed its image of serving the rich. It has announced plans for an 18,000 square foott store in Englewood, one of Chicago’s most impoverished neighborhoods. If its low-cost stores manage to do well, one can expect to see many other under-served communities in the rest of the country get Whole Foods stores. It currently has 351 stores spread throughout the United States, Canada, and the U.K. Whole Foods is also planning to take its store count to 1,000 in the U.S, which would be around three times its current store presence. Thus, it is not surprising that analysts estimate Whole Foods’ earnings to grow at a CAGR of 19% over the next five years, while the overall industry’s earnings are expected to grow at 15% over the same time frame. Valuation 14.70% Source: Yahoo! Finance All three stocks appear expensive on a trailing P/E basis. However, all three companies expect to grow rapidly and that’s why the forward P/E comes down substantially.
Food franchisees face low pay, long hours
Shutterstock.com Enlarge Image Thinking about investing in a fast-food franchise? Dont bite off more than you can chew. Despite their complaints, a majority of food franchisees69%said theyd do it all over again, though thats a lower percentage than the 72% of all franchisees (not just food operators) who said they dont regret their decision. We survey tons of franchisees: Theyll bash their franchiser on training and leadership, but when you ask them, Would you do it again? the majority of them say, Sure, said Eric Stites, chief executive of Franchise Business Review. Its that love-hate thing. Food franchisees earned an average of $82,000 in 2012, according to the survey, but that average masks wide disparities: 50% of the food operators surveyed said they earned less than $50,000, while 25% earned more than $100,000. Restaurant operators also tend to work long hours: 68% of franchisees surveyed work 40 or more hours per week, 59% work evenings at least a couple of times a week, and 47% almost always work weekends (that compares to 35% of franchisees in all industries). One franchisee quoted in the report said restaurant owners should expect to work 10- to 14-hour days. Read the report. Not an easy path to success Investing in a food franchise can also take substantially more start-up capital than other types of franchises, thanks to real-estate, equipment and supply costs, plus other expenses. Still, the initial investment can vary from as low as $34,500 to as high as $4 million, depending on the type of restaurant, the report said. While starting any type of franchise may be easier than launching an independent small business, franchising is not really an easy path to success, Stites said. Key mistakes to avoid The surveys finding that satisfaction is lower among food franchisees than other types of franchisees is not unusual, Stites said. The food sector is a little bit more complicated a business to run, he said, noting that its often very employee heavy, plus entails dealing with fluctuating food prices, the potential for food spoilage and other challenges. On top of that, youve got probably some of the slimmest profit margins of any business, he said. Franchisees without prior restaurant experience may be in for a rude awakening.
28, 2013 By Friederike Heine, SPIEGEL The “Ammer” beer tent is serving a chicken fricassee, but replacing the meat with soy cutlets. Tobias Hase/picture-alliance/dpa/AP Photo For some 200 years, Oktoberfest has been all about copious amounts of beer and meat. But, this year, organizers are breaking with tradition and reaching out to visitors with dietary restrictions by offering vegan dishes and even vegan wine. With its dozens of oxen spit roasts, enough rotisserie chickens to feed an army and pork sausages as long as a forearm, Bavaria’s Oktoberfest is a meat lover’s nirvana. In fact, last year’s festivities saw a total of half a million chickens, 116 whole oxen and 115,000 pork sausages being served up in Munich’s beer tents over a period of three weeks. But even in one of Germany’s most rigidly traditional regions, times are changing. In an attempt to cater to the changing food preferences of visitors, beer tent owners have put vegan dishes — and in one case, vegan wines — on their menus. “As the event becomes more international, people with special dietary requirements and different culinary tastes are becoming the norm,” says Wolfgang Nickl of Munich’s city council, which is responsible for organizing Oktoberfest. It’s not only foreign visitors who struggle with the meat-heavy menu, though. Vegetarianism and veganism are on the rise in Germany. About 800,000 of the country’s 7 million vegetarians forego all animal products, according to the Association of German Vegetarians (VEBU). “Whether it’s environmentalism, climate protection or health concerns, there is a growing awareness among Germans when it comes to the vegetarian agenda,” says VEBU spokeswoman Stephanie Stragies. An Inclusive Environment The Bachmaier family, who were inspired by their son’s experience as an apprentice in a Munich-based vegan restaurant, were the first to take the leap.