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February 28, 2015

What the Loss of the Costco Co-branding Partnership Means for American Express

Kendrick SandsAnalyst Insight by Kendrick Sands - Senior Consumer Finance Analyst

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American Express recently reported that its Costco exclusivity agreement that had been in place for 16 years would come to an end in 2016. Both Costco and American Express cited an impasse on terms that would make it “economical” as the justification for the termination. A similar agreement was cancelled in Canada last year between the two companies and could provide some insight into what the future relationships between Costco and American Express will look like going forward in the US. Co-branding presents a sizable opportunity for card networks and issuers beyond immediate revenue from payment volume. The loans and access to a particular consumer segment can provide an initial contact point for additional financial service cross-selling. However, in an increasingly competitive environment for co-branding partnerships among networks, the share of profit created from the programs may continue to shift toward retailers.

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February 27, 2015

Starbucks Subscription Reserve Coffee is One More Step in its Third-Wave Evolution

ElizabethFriendAnalyst Insight by Elizabeth Friend - Senior Consumer Foodservice Analyst

Starbucks’ recent performance has been very strong, but that hasn’t prevented the company from seeing the writing on the wall. Scores of super-premium, third-wave coffee competitors are rising up in all of the most important developed markets. To keep them at bay, Starbucks is taking consistent steps toward staying ahead of evolving consumer preferences.

In its most recent move, Starbucks has added a subscription-based service for its small-lot Reserve brand coffee, promising delivery of the rare beans within days of roasting at its new Seattle Roastery and Tasting Room. In one fell swoop, the service provides a small but stable revenue stream, solves a distribution issue, and most importantly, helps to cement Starbucks’ new branding as a purveyor of third-wave coffee—offering the quality of coffee typically found at an independent coffee shop, with the benefits and services of a massive global chain.

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Alcoholic Drinks 2015 Preview for Wine: 3 Key Trends

Spiros_MalandrakisAnalyst Insight by Spiros Malandrakis - Senior Alcoholic Drinks Analyst

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  1. Lighter, transparent, casual and in the mix: Still Wine Moving On: Initiatives favouring moderation in terms of abv content and questioning the gospel of oak maturation, launches reassessing the decades long myopic scoffing of sweeter styles , a progressive inclusiveness of experimentation and mixers and a hesitant embrace of convenience and the category’s side-lined casual nature will be the key themes in the short to medium term. The catalyst will be the proliferation and expansion of the social media universe democratising the reviewing, comparing and buying processes. From flavoured wines to Wine Raves and from smartphone apps to radical packaging designs, a belated New Dawn for still light grape wine is now upon us. The epicentre for growth will shift back towards the US as the Chinese macro and legislative headwinds take their toll.

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February 26, 2015

Organic and On-the-Go, Recipes for Soup's Recovery?

Raphael_MoreauAnalyst Insight by Raphael Moreau - Food Analyst

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With the launch of an organic soup range under the Campbell’s brand in the US in February, Campbell Soup Co is seeking to focus on premium soup, moving away from its core ranges of canned/preserved soup, and attempting to appeal to a younger audience. Almost concurrently, under its Plum Organics brand, the group also introduced an organic soup range, adopting a similar strategy to other baby food manufacturers in extending its reach beyond baby food and into children’s food to widen its target audience.

As the two organic ranges, already announced in August and October 2014, respectively, were introduced almost simultaneously in February 2015, they may struggle to each succeed in establishing their presence in their adjacent niches. The Plum Organics brand may also suffer from too much diversification, which could result in further dilution of its image, until recently rooted in baby food.

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Overview of World’s Chocolate Powder Drinks Market and Toddy’s Evolution

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

The global chocolate powder drinks market is forecast to see a net growth of around US$800 million in 2014-2019, contrasting to malt-based drinks’ US$500 million. However, considering the potential growth and compared to the possible sales from coffee and tea anticipated, chocolate powder drinks is definitely a niche category and mostly neglected by major hot drinks manufacturers, despite the fact that they may have a couple of hot chocolate powder drinks brands as a complementary product. Euromonitor International’s latest data show that Nestlé continues to be the world’s market leader in chocolate powder drinks, accounting for over one third of retail value sales in 2014. Mondelez and PepsiCo are placed in second and third position, competing with each other closely.

In terms of geographic growth, Brazil, the largest market for chocolate powder drinks, is predicted to generate around US$340 million sales in 2015-2019, top of all major growth markets. Meanwhile, PepsiCo’s Toddy is evolving to become a major brand in Brazil’s food and beverages market. This article gives an overview of the global market and discusses the state of play of major brands, with particular emphasis on Toddy.

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February 25, 2015

LEGO Tightens Its Grip on Global Construction Toys

Utku_TanselAnalyst Insight by Utku Tansel - Head of Toys and Games Research

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As highlighted in our recent global company profile, LEGO, the world’s third biggest manufacturer of traditional toys and games, continues its dynamic expansion bolstered by the success of 2014’s The LEGO Movie. The world’s leading construction toys manufacturer was among the most dynamic toymakers in the world over 2009-2013, more than doubling its sales.

LEGO’s global strength is founded on its dominance of the construction toys category, in which it held a 65% value share in 2013. Construction toys accounted for 94% of the company’s global toys and games value sales during the year, with games and puzzles responsible for most of the remainder. However, LEGO decided to phase out its LEGO Games board game product line in 2013, judging that it did represent a sustainable fit with the company’s core long-term operations.

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Craft Crisps: Is Savoury Snacks Ready for the Craft Movement?

Pinar HosafciAnalyst Insight by Pinar Hosafci - Packaged Food Analyst

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ChipsFlamegrilled Aberdeen Angus. Red Leicester & Carmelised Onion. Parmesan, Asparagus & Truffle. These may sound like dinner meals but in fact they are just some of the many intricate flavours the crisps category is flooding with. Even for the classic vinegar flavour, the descriptions are hymns of gastronomic hyperbole:  “Modena Balsamic”, “Chardonnay Wine”, “Somerset Cider” and “Aspall Cyder”. Not only their names but also their packaging is becoming more sophisticated and gourmet-inspired. Tyrells Hand Cooked English Crisps is perhaps the most well-known brand in Europe but there are many more out there, increasingly emphasising their hand-cooked potatoes and the place of origin the salt or vinegar is sourced from (eg Anglesey Sea Salt). Recently, PepsiCo has expanded into gourmet snacks through the launch of Market Deli – premium priced thick-cut crisps made from selected potato varieties bearing no sign of the company logo on the pack bar a small statement reading “from the Makers of Walkers”. Is this emerging craft movement a fad or likely to be the next big thing in savoury snacks?

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February 24, 2015

2015 Outlook for Emerging Market Economies


EMEs will face a diverging growth outlook in 2015, while continuing to lead the global growth momentum. Low fuel prices will benefit energy-importing countries thanks to savings to countries and consumers and narrow current account deficits, but it will depress the revenues of commodity-exporting emerging countries. Meanwhile, increased volatility in capital inflows and currency, and further geopolitical destabilisation in some countries/regions remain the major risks for EMEs.

Key points 

  • In 2015, annual real GDP growth in 25 key EMEs is forecast to increase by 4.4% (fixed US$ constant terms), marginally up from 4.3% in 2014. While growth is expected to pick up in some emerging countries thanks to falling oil prices and an improving US economy, fragilities in the global economy and existing weaknesses will affect other countries’ growth prospects;

  • Apart from global oil prices, China’s slowdown, the prospects of interest rate hikes in the USA and geopolitical risks are the major factors impacting the growth outlook of EMEs in 2015. China’s slower growth will have knock-on effects on commodity exporters, while a rise in interest rates in the USA will have immediate impacts on some emerging countries’ current account balances and currencies. Turkey’s current account deficit stood at 5.3% in 2014, down from 7.9% in 2013;

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Virtual Reality vs Augmented Reality

Matt HudakAnalyst Insight by Matt Hudak - Toys and Games Analyst

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As the video game industry continues to prepare for the arrival of virtual reality (VR) headsets in the next few years, a new headset device has just been unveiled that also has the potential to radically change the gaming landscape: Microsoft’s HoloLens. The new product is an augmented reality (AR) device akin to the Google Glass but is also radically different in many ways, capable of simulating three dimensional images in the real world. And while this product is likely some years away from entering the home it still gives rise to questions about the future of video games. Will we play in a virtual world or an augmented one?

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February 23, 2015

The Future of Ferrero: Possible Scenarios for the Confectionery Giant

Jack SkellyAnalyst Insight by Jack Skelly - Food Analyst

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Ferrero has been the subject of plenty of speculation this week, with much discussion regarding the future of the company. As a fiercely private, family-owned company, such conjecture is difficult to qualify.

However, there are a range of possible scenarios for the company. Across a series of reports, Euromonitor International will examine these scenarios, although, as with all predictions about Ferrero, they should be taken with a pinch of salt. Could Ferrero be acquired by another packaged food giant, which Nestlé was rumoured to be considering in 2013? Could the premium chocolate confectionery manufacturer actually look to consolidate its share by looking to acquire a rival? It is this latter question that will be the focus of this article, specifically with regards to Lindt.

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Recent Posts

What the Loss of the Costco Co-branding Partnership Means for American Express

Starbucks Subscription Reserve Coffee is One More Step in its Third-Wave Evolution

Alcoholic Drinks 2015 Preview for Wine: 3 Key Trends

Organic and On-the-Go, Recipes for Soup's Recovery?

Overview of World’s Chocolate Powder Drinks Market and Toddy’s Evolution

LEGO Tightens Its Grip on Global Construction Toys

Craft Crisps: Is Savoury Snacks Ready for the Craft Movement?

2015 Outlook for Emerging Market Economies

Virtual Reality vs Augmented Reality

The Future of Ferrero: Possible Scenarios for the Confectionery Giant