Hospitality Ireland presents a round-up of global drinks, food and restaurant news.
Remy Confident On Outlook After Firm Flags 'Exceptional' First Half Profit Growth
Remy Cointreau said on Friday October 22 that it was growing increasingly confident about its full year outlook after second-quarter sales beat expectations on the back of strong demand for its premium cognac in the United States, China and Europe.
Finance Chief Luca Marotta told analysts he was now "relatively comfortable" with a consensus for full year 2021/22 current operating profit growth of 21%, up from a "mid-teens" forecast in July.
Marotta was speaking after the maker of Remy Martin cognac and Cointreau liquor forecast "exceptional" current operating profit growth in the first half of its 2021/2022 fiscal year, which began in April, with sales up almost a quarter in the three months to end-September, albeit from a low base last year during the pandemic.
"Remy Cointreau reiterates its confidence in its ability to outperform the exceptional spirits market and anticipates strong growth in sales, mainly driven by the performance in the first half," the company said in a statement.
It has already said it plans to substantially increase marketing spending during the second half.
By 0928 GMT on Friday October 22, Remy shares were up 1.6% at €176.30.
"We believe the group is well placed to continue to surprise to the upside on earnings through the remainder of the year," Citi analysts wrote in a note.
Second quarter sales totalled €352.2 million - a like-for-like rise of 23.7%, which beat analysts' expectations for a 20.8% growth - reflecting a strong demand rebound in bars and restaurants as COVID-19 restrictions eased around the world, and resilient at-home consumption.
Cognac sales alone reached €265 million, a like-for-like rise of 26.9%, which notably reflected a very strong performance in China during the Mid-Autumn Festival.
Marotta said the group was quite optimistic about prospects for Chinese New Year celebrations in February, but in the United States, where cognac demand was underpinned by a thirst for premium spirits, the low inventory levels were leading to supply tensions.
Group sales grew 52% in the first half on a like-for-like basis, including a 55.2% jump for cognac.
Larger rival Pernod Ricard on Thursday October 21 said solid sales growth could moderate in the 2022 fiscal year, after strong demand in China, the United States, India and Europe helped it post above-forecast sales in its first quarter.
Beyond Meat Shares Bleed On Bleak Revenue Forecast As Retail Demand Dips
Beyond Meat Inc on Friday October 22 cut its third-quarter revenue forecast, blaming a host of factors including a drop in demand from grocery stores and a labor shortage that led to delays in restocking shelves, sending its shares down 15%.
The company, which gets the bulk of its revenue from retailing, has suffered from a weakening trend of people stockpiling faux meat burgers and sausages at home as they started dining out.
It also said new orders from a distributor servicing one of the company's large customers did not materialize, while severe weather caused damage to inventory stored at one of its facilities.
Beyond Meat's forecast cut comes a few months after the company said its restaurant customers were placing more conservative orders due to uncertainty over to the Delta variant of the coronavirus.
The red-hot faux meat startup is also facing other challenges including growing competition from Impossible Foods and others, and surging raw material prices.
Beyond Meat said it now expects third-quarter net revenue of about $106 million, compared with its prior forecast of $120 million to $140 million.
Beyond Meat, which fell 13% this year up to last close, is due to report its full third-quarter results on Nov. 10.
"Containergeddon" Drives Sugar, Rice Shippers Back To Bulk Vessels
Food traders are switching from containers back to dry bulk vessels to transport refined sugar and rice, hoping to avoid shipping delays caused by container shortages and port congestion that the industry is calling "containergeddon", according to traders.
Container-based transportation has been hit by sky-high costs and delays amid booming shipping demand, while container terminals at ports struggle to deal with the flow.
Commodities such as refined sugar, coffee, rice, cotton and cocoa have moved from dry bulk vessels to containers in the past since the large boxes were more practical and offered good quality control. But now shippers are moving back, at least temporarily.
"Around 80% of the trade on refined sugar was done using containers before the pandemic. This has now fallen to around 60%," said Paulo Roberto de Souza, Chief Executive of Alvean Sugar SL, the world's largest sugar trader.
According to Souza, the change is only not bigger because there are not a lot of small vessels available in the market.
Data from shipping agency Williams regarding port movement in Brazil, the world's largest sugar exporter, shows that volumes of refined sugar transported using containers fell 48% in June and July (latest data available) compared to the previous year.
Bob Cymbala, owner at food trader A&J Global USA, based in Vancouver, said that some clients are turning down offers due to high prices for container freight, looking for shipping alternatives instead.
One of his clients, a rice exporter in India, is looking to use a dry bulk cargo to ship to Western Africa a volume of rice equivalent to 10 full containers.
Coffee exporters are not considering a change away from containers yet, besides the difficulties, mostly due to concerns over quality. They say containers, with proper lining, better preserve coffee characteristics such as smell and taste.
Just Eat Takeaway.com Shareholder Cat Rock Urges Sale Of GrubHub
Investor Cat Rock, one of the largest shareholders of online food ordering company Just Eat Takeaway.com, on Monday October 25 urged the company's management to consider the sale of its U.S. arm GrubHub.
Cat Rock, which holds a 6.5% stake in Takeaway, said selling or spinning off the unit would improve the valuation of Takeaway, which has lagged peers over the past year.
Amsterdam-based Takeaway, Europe's largest meals ordering company, only completed its $7.3 billion acquisition of GrubHub in June. Cat Rock did not call for the sale of GrubHub's significant Canadian and Australian operations.
"A deeply depressed stock price poses a real risk to [Takeaway's] business, limiting its financial and strategic flexibility, inviting competitors to invest in its markets, and leaving the company vulnerable to takeover bids well below its long-term intrinsic value," Cat Rock founder Alex Captain said in an open letter addressing company management.
Takeaway said in response that it had only acquired GrubHub four months ago. "While Grubhub has some specific challenges today it is a large and growing business with good underlying profitability," the company said.
At an Oct. 21 meeting with investors Takeaway CEO Jitse Groen outlined his strategy for defending market share in the U.S. by investing where the company is already strong, particularly in New York City where it is the biggest player.
Cat Rock's Captain, a long-time shareholder, argued that Grubhub's origins as a meal ordering platform left it at an logistical disadvantage to delivery-based competitors such as DoorDash and Uber. However Grubhub would be highly valuable to Amazon, Walmart or Instacart he said, and urged action by the end of this year.
Takeaway founder Groen, who is the company's second-largest shareholder with a 7.3% stake, told investors last week that he believed there would "over time inevitably be consolidation" in the U.S. delivery market and Grubhub would participate.
In a note analysts at Credit Suisse agreed with Cat Rock that a sale "could add value" but a sale by year end would be a difficult timeline to meet.
Starbucks Eyes Faster India Expansion With New Store Formats
Starbucks aims to hasten its India expansion with smaller stores and drive-through outlets, the CEO of its local partner said on Monday October 25, signalling the American coffee chain's bullish plans as the COVID-19 slowdown abates in the country.
Launched in India in 2012, Tata Starbucks - a joint venture between Starbucks and India's Tata Consumer Products - operates 233 outlets across 19 Indian cities.
Both the partners "are driving Tata Starbucks to be far more aggressive in store openings, new formats, and in entering new cities," Sunil D'Souza, CEO of Tata Consumer Products, said in an interview on Monday.
"All we've got to figure out is how quickly we can scale," said D'Souza. "We have got a window of opportunity because the competition is on the back foot."
India is one of Starbucks' fastest growing markets globally. The market for coffee shops in the country has surged even as tea remains a more affordable and popular beverage.
Despite this, a fascination for coffee brands like Starbucks and Costa Coffee remains high. Most Starbucks outlets in India are large-format and designed with rich wood-panelled decor.
The company is now exploring smaller sized outlets as they can be opened faster and it is experimenting with concepts like drive-throughs after opening one in northern India last year, D'Souza said.
Tata Starbucks registered 128% revenue growth in the quarter ending September, during which it opened 14 new outlets.
"Am I happy with 14? Absolutely not. The target's much more" D'Souza said, adding the aim was to open some 40-50 outlets this year.
Tata Consumer Products' consumer goods portfolio includes its eponymous salt and tea brands and other staples. It also owns the popular tea brand Tetley.
Recent inflationary pressure, driven by a surge in crude oil prices, has hit Tata and other competitors such as the local units of global consumer giants Unilever and Nestle as freight and packaging costs have surged.
Flagging concerns about higher raw-material costs and energy prices, D'Souza said Tata Consumer Products will look to control marketing and other costs to offset the impact.
"At least in the short to medium-term ... we've got to live with it," he said, adding the company would look to raise prices slightly to boost margins, while cutting package sizes.
Even as such concerns weigh, Tata Consumer Products wants to increasingly focus on catering to Indians in rural areas, after long focusing on urban centres.
The company will increase its distributor network by around 20% in rural areas, where it plans to promote existing affordable brands, and launch new ones, D'Souza said.
Lower Appetite For Burger King, Staff Crunch Hit Restaurant Brands' Sales
Burger King and Tim Hortons are struggling with a staffing crunch and the Delta variant keeping coffee-loving office workers at home, causing parent Restaurant Brands International Inc to miss estimates for quarterly revenue on Monday October 25.
U.S.-listed shares shed 4.4% as same-store sales at its Burger King, Tim Hortons and Popeyes chains came in below expectations in the third quarter.
Restaurant Brands also faced stiff competition from McDonald's Corp and Wendy's Co doubling down on marketing and launching new menu items.
Wendy's launched a new 'Big Bacon Cheddar Cheeseburger' and reformulated its french fries to keep them crispy for longer earlier this year, while McDonald's collaborated with boy band BTS and rapper Saweetie to draw customers.
"We saw a continued gap relative to our peers. We're keenly aware of this gap," Chief Executive Jose Cil told analysts while discussing Burger King's results. "We also see clear opportunities across operations, digital, menu and image that can work together to reclaim market share."
Analysts said marketing behind some Burger King products had been lackluster, with the brand singled out as the biggest drag on Restaurant Brands' performance.
But some analysts said Burger King can see a revival, like Domino's Pizza Inc did around 2010, if its new operating chief and president overhaul marketing.
Restaurant Brands, whose hand-breaded chicken sandwich is considered a labor-intensive product, has also struggled to adequately staff its restaurants, particularly for night shifts at its Popeyes chain.
The company had to reduce operating hours and limit service modes at select restaurants, and CEO Cil said it would take time for the staffing situation to improve.
Many hourly workers have turned to higher-paying jobs in warehouses and other businesses.
Total revenue rose 11.8% to $1.50 billion, missing estimates of $1.53 billion. Adjusted per-share earnings was 76 cents, versus Refinitiv IBES estimate of 74 cents.
Naomi Osaka-Backed Sweetgreen's Revenue Surges Ahead Of NYSE Listing
Tennis star Naomi Osaka-backed Sweetgreen Inc's quarterly revenue surged by nearly three-fourths, according to a filing for an initial public offering (IPO) by the salad chain that was made public on Monday October 25.
Plant-based food companies have shot to prominence in recent years on interest from millennials and generation Z consumers who are willing to spend more on healthy and environment-friendly options.
Sweetgreen, which had confidentially filed for a listing on the New York Stock Exchange in June, reported revenue of $95.84 million in the quarter to Sept. 26. Its net loss narrowed to $36.9 million, from $86.9 million a year earlier.
The California-based company, whose other investors include T.Rowe Price, Lone Pine Capital and D1 Capital Partners, was founded in 2007 and has 140 restaurants in 13 states and Washington, D.C.
It was valued at $1.8 billion after a funding round earlier this year, according to reports.
Plant-based retail sales in the United States soared 27% in 2020 to $7 billion, according to a report by the Good Food Institute and the Plant-Based Foods Association.
The rising interest in sustainability-focused startups has also prompted Hollywood star Jessica Alba's Honest Co and Oprah Winfrey-backed Oatly Group AB to tap the public markets.
Plant-based burger maker Impossible Foods is looking at several ways to go public, Reuters reported in April.
Goldman Sachs & Co, J.P. Morgan, Morgan Stanley and Allen & Co are among the underwriters for Sweetgreen's IPO.
Uber, Carrefour Expand Partnership To Speed Up Deliveries In Paris
U.S.-based ride hailing app owner Uber Technologies and Europe's largest retailer Carrefour are to launch a new rapid grocery delivery service in Paris, extending their 18-month partnership, the two companies said on Tuesday October 26.
Carrefour Sprint will offer a 15-minute grocery delivery service to Parisians exclusively via the Uber Eats mobile app from nine "dark stores" - shops closed to customers where workers prepare orders for delivery - operated by Carrefour's partner Cajoo.
Earlier this year, the French retailer agreed to take a minority stake in the newly founded start-up Cajoo, which operates "dark stores" across the country.
Established retailers and food deliverers face intense competition from a crop of newer, well-funded start-ups running networks of "dark stores" that can dispatch groceries ordered on a smartphone app to the doorstep within minutes.
"Over the past 18 months people have increasingly come to expect quick and reliable delivery ... in Europe alone we've seen a triple-digit increase in demand for grocery delivery," Eve Henrikson, Regional General Manager, Uber Delivery EMEA, said in a statement.
Uber and Carrefour are already offering 30-minute deliveries in France from Carrefour's almost 2,000 shops available on Uber's app under a deal agreed last year.
Both companies have also separately struck deals to speed up delivery with other market players like Britain's Deliveroo and France's supermarket chain Casino.
Uber and Carrefour plan to expand the 15-minute service to other major French cities such as Lyon, Bordeaux, Toulouse, Lille and Montpellier in coming weeks, they said.
Russia Suspends Champagne Label Law Until Year-End - French Minister
Russia has agreed to suspend until Dec. 31 a new law that forces French champagne makers to label their bottles as sparkling wine, French Deputy Trade Minister Franck Riester said on Tuesday October 26.
"After many discussions, Russia is establishing a moratorium on the implementation of its wine law until Dec. 31. We will continue our efforts to protect our exporters in the long term," Riester said on Twitter.
The law required foreign producers of sparkling wine to describe their product as such in Cyrillic characters on the back of the bottle - though not on the front, where they can use the term champagne. Makers of Russian "shampanskoye" may continue to use that term alone.
The law led the French government to threaten action at the World Trade Organisation.
Champagne producers welcomed Russia's decision to suspend its new wine law.
Champagne industry group CIVC said in an emailed statement it was monitoring further talks between Russia and France by the end of the year for a full recognition of the Champagne appellation in Russia.
CIVC had asked its producers to boycott Russia following the introduction of the law in July but producers said last month they had decided to resume exports.
Campari To Raise Drinks Prices In 2022 To Offset Surging Costs
Italy's Campari plans bigger than usual increases in drinks prices next year to offset surging costs for logistics and raw materials including glass, alcohol and sugar, its top executive said.
On Tuesday October 26, the maker of Aperol and Campari bitters reported a 12.8% yearly rise in like-for-like sales in the July-September period as consumers went back to drinking and dining out and splurged on aperitifs.
Adjusted operating profit, or earnings before interest and taxes (EBIT), came in at €137 million, up 16% on the same period of last year when excluding foreign exchange, acquisitions and divestitures.
The group's best-selling aperitif Aperol, which is the key ingredient for the Aperol Spritz cocktail, posted a 15.5% rise in third-quarter sales.
The group, however, flagged risks coming from rising costs and alerted investors about potential bottlenecks slowing down spirits shipments towards the United States and Asia.
"We normally raise prices every year... in 2022 we plan to have more robust increases than usual, given higher costs on all raw materials," said Campari CEO Bob Kunze-Concewitz in a phone interview with Reuters after Q3 results.
Shares in the Milan-based group turned negative after results and were down more than 4% at 1450 GMT on Tuesday October 26 as investors took profit on the stock after it had briefly touched an all-time-high of 13.10 euros.
Campari will raise prices in all its main markets, including the United States, Kunze-Concewitz said, adding that speciality beverages such as Aperol and Campari could see higher increases than drinks that are more exposed to competition, such as vodka.
"We have increased tequila prices twice in 18 months, and we will have to do it again in 2022," he said.
During a conference call on results Campari's top executives said the group expected costs of materials, production and logistic expenses to increase by 5% at constant volumes.
Other companies around the world have warned investors and consumers about rising costs and workers and raw materials shortages.
Campari said it was also busy working to reduce the impact of bottlenecks due to ocean freighter issues and truck driver shortages.
"In the United States we have experienced booming consumption but we have issues with deliveries both at ports and on the ground ... we are doing our best to reduce tensions in the supply chain," Kunze-Concewitz said.
The Campari CEO said the group would also take action to be more efficient and adjust the mix of the products sold to protect its profitability.
"We expect the positive brand momentum and favourable sales mix to continue in the last quarter, helping to partially offset the intensifying input cost pressure, particularly logistics costs, accelerated brand building investments, as well as structure costs phasing," he said in a statement.
WTO Panel To Examine Chinese Duties On Australian Wine As Relations Sour
The World Trade Organization said on Tuesday October 26 that it had agreed to set up a panel to examine China's imposition of duties on imported Australian wine, one of several disputes souring relations between the two countries.
The dispute settlement body, which met behind closed doors on Tuesday October 26, agreed to Australia's second request after its first attempt was blocked by China in September.
Trade tensions between Australia and its largest trade partner, already rocky after Australia banned Chinese telecoms giant Huawei from its 5G wireless network in 2018, worsened after Canberra called for an international inquiry into the origins of the coronavirus, which was first identified in Wuhan, in central China.
China responded by imposing tariffs on Australian wine and barley and limited imports of Australian beef, coal and grapes - moves described by the United States as "economic coercion".
Explaining the decision to seek a WTO panel, Australia's delegate voiced disappointment that China had not taken concrete steps to respond to its concerns, according to a summary of the meeting https://bit.ly/3bi7oSg published by the WTO.
Australia remained open to further discussions with China with a view to resolving the issues, it added.
"China regrets that Australia decided to further its panel request with regard to the dispute," China's delegate said in a statement to Reuters.
"China will vigorously defend its legitimate measures in the following proceedings and is confident that its challenged measures are consistent with relevant WTO rules."
WTO panels typically deliberate for six months before preparing its ruling. The outcome can then be appealed.
Heineken Sales Lower Than Expected After Vietnam Lockdown
Dutch brewing giant Heineken reported a steeper than expected decline in third-quarter beer sales on Wednesday October 27 after COVID-19 restrictions cut volumes in Vietnam, one of its top three markets, by more than half.
The world's second-largest brewer said it sold 5.1% less beer on a like-for-like basis than a year earlier, with Asia-Pacific sales down 37.4% as COVID-19 restrictions hit Cambodia, Indonesia, Malaysia and Vietnam.
The average estimate in a company-compiled poll of analysts was for a 2.3% overall decline, with the Asia-Pacific region down 25.6% and modest growth in Africa, the Middle East and Europe.
The maker of Europe's top-selling beer, Heineken, and Tiger and Sol lagers retained its forecast of full-year results finishing below those of pre-pandemic 2019.
Vietnam, consistently one of Asia's fastest-growing economies, suffered a record contraction in the third quarter as an outbreak of the Delta variant of the coronavirus led to a strict lockdown in the commercial hub of Ho Chi Minh City.
The city's lockdown started to ease this month, and though bars remain closed, Heineken Chief Executive Dolf van den Brink said there are signs of recovery in the Asia-Pacific region
European sales also disappointed, failing to deliver an expected uplift. Heineken said the weakness partly reflected poor summer weather in northern Europe, though it also faced logistics diruptions in Britain.
Rivals Anheuser-Busch InBev and Carlsberg provide updates on the third quarter on Thursday October 28.
Sodexo Eyes Earnings Acceleration With Post-COVID Recovery On The Horizon
French catering and food services group Sodexo said on Wednesday October 27 that it expects sales to accelerate in 2022 and will resume dividend payments after posting better-than-expected annual results.
The company, which operates in 56 countries, reported a 12.4% jump in annual core profit to €578 million, on revenues edging down to €17.4 billion - both slightly beating forecasts.
Sodexo cited the acceleration in cornavirus vaccination programmes across its markets as the driving force of restaurant reopenings. By the fourth quarter, the group reached 87% of its annual activity in 2019, it said.
The company remains confident in its capacity to continue the recovery momentum to pre-COVID levels, and expects organic growth between 15% and 18%, as well as an operating margin of close to 5% at constant rates for its 2022 fiscal year.
A boost in growth in the United States, the accelerated deployment of the new food model based on digital solutions and the active portfolio management will help Sodexo return to regular and sustained growth, it said.
Shares in the company jumped 6.6% at 0747 GMT on Wenesday October 27.
The caterer will pay a dividend of €2 for the year ended Aug. 31, including an exceptional €0.80 linked to the disposal programme, becoming the first leisure stock to resume dividend, Bernstein analysts said in a client note.
The COVID-19 crisis cost Sodexo a further €2 billion in revenue, Chief Finance Officer Marc Rolland said during a call with analysts.
"In China, we've recovered well. And in Brazil we've almost never lost because our sector exposure was very industrial and the factories were running in Brazil and we continued to operate throughout the pandemic," he said, adding the U.S. market still lags on back-to-office trend. Sodexo launched a search in July for a new chief executive to replace Denis Machuel, and aims to fill the post before the end of 2021.
"We are past the stage of the long list," interim CEO Sophie Bellon said on a call with journalists.
India Raids Liquor Companies In Price Fixing Probe - Sources
India's antitrust watchdog on Wednesday October 27 raided the offices of Associated Alcohols & Breweries and Som Distilleries as part of an investigation into alleged price fixing in liquor products, two sources with direct knowledge of the matter said.
The Competition Commission of India (CCI) officials were conducting search and seizure operations across several cities in a case about the companies allegedly violating anti-trust laws by colluding on prices while seeking necessary regulatory approvals from states, the sources added.
The investigation is looking at price fixing of so-called country liquor, or low-priced locally made alcohol, the sources added.
India has strict regulations for the alcohol sector. Most states individually regulate alcohol pricing and the companies need to submit and get prices approved every year by the local authorities.
Without directly commenting on the raids, a spokesperson for Som Distilleries said liquor prices were fixed by government officials and the company has no say over them.
"We are not the authority to fix the price ... This is a fully government controlled business," the spokesperson said in an email to Reuters.
The CCI did not respond to a request for comment, while e-mails and phone calls to Associated Alcohols went unanswered.
After Reuters published details of the raid, shares in Associated Alcohols fell approximately 3% but later recouped their losses.
Further details of the case and the raids were not available from the CCI as the agency typically does not make public information on its investigations.
Associated's website says it is the leading supplier of liquor to the government of Madhya Pradesh for sales in the state. SOM Group, which includes Som Distilleries, has a portfolio of brands that includes spirits and beer products.
Wednesday October 27's raids come just weeks after the CCI imposed a penalty of $102 million on beer giant United Breweries and $16 million on Carlsberg India in a price collusion case. Those companies were raided in 2018 as part of an investigation.
In September the CCI raided local offices of several vegetable seed companies including a unit of Germany's BASF in a case of alleged price collusion.
During such surprise raids, company documents and computer hardware are seized, while executives are questioned about their practices. An investigation could take several months to complete.
News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.
