Analyst Insight by Pinar Hosafci - Food Analyst
Agro Farma is in financial trouble. The company, known for its Greek yoghurt brand Chobani, has recently struck a deal for a US$750 million loan from private equity firm TPG. Its recently purchased Idaho plant has not generated the required revenue to cover its set-up costs, which has also been reflected in the company’s overall performance. In 2013, Chobani’s retail value sales grew by less than 20%, a 10th of the 200% CAGR registered over 2008-2012. This should come as no surprise given the saturating yoghurt market in North America, which is expected to stagnate in volume terms over the next five years. Given that the US accounts for 90% of Agro Farma’s global sales, the company must focus on expanding its product range in the short term and moving beyond the US in the medium term if it is to survive in the increasingly competitive yoghurt market.
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Packaged food currently accounts for Mondelez’s major sales globally and is the focus for future growth. The news that Mondelez will combine its coffee operations with DE Master Blenders, and the potential formation of Jacobs Douwe Egberts (JDE), means that Mondelez is likely to streamline its business lines, focusing on snacks. Expansion into the Latin American hot drinks market will also be a key factor in this latest deal.
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Seasonal chocolate is the most expensive type of chocolate in many markets globally. With the cost of food rising and wages stagnating in many countries in real terms, Euromonitor International analyses the correlation between wages and seasonal chocolate prices to highlight how consumers are being squeezed by these trends. In Brazil for example, the average 2013 hourly wage is US$4.9 compared to the US$13.8 average cost of 250g of seasonal chocolate.
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