Food Business News - December 17, 2013 - (Page 12)

Kroger sees greater opportunity in 'natural' portfolio CINCINNATI - Natural and organic foods are only the "sixth or seventh largest department" at Kroger, but it is the fastest growing department on a percentage basis, and sometimes dollar basis, said Rodney McMullen, president and chief operating officer. With that in mind, the retailer has plans to grow the department through such store brands as Simple Truth. Mr. McMullen added that if the retailer's natural food sales were compared to those of other natural foods retailers, Kroger would be the second largest retailer "out there on a standalone basis by a pretty wide margin." Looking ahead, Mr. McMullen said Kroger has plans to grow its presence in natural and organic products. "If you look at the market share opportunities for us, we can easily see how that business could double from where we are today," he said. "But we don't see it as something that's a dream to double our business. We actually have a pretty good plan in place that will get us significantly along the way on getting there in a reasonable period of time." He said Kroger is driven to grow the category, because "that is where the consumer is headed." "We think the growth there is because customers overall - Our existing customers continue to buy more and more organic and natural foods, plus the younger generation buys a higher share in those categories," Mr. McMullen said. Mr. McMullen made his comments during a conference call with financial analysts to discuss the retailer's third-quarter results for fiscal 2013, ended Nov. 9. Net income for the quarter was $299 million, equal to 58c per share on the common stock, down 6% from $317 million, or 61c per share, in the same period a year ago. Sales for the quarter were $22,505 million, an increase compared with the previous year when sales were $21,807 million. FBN Diamond Foods continues to struggle A difficult nut market, special charges contribute to wide loss SAN FRANCISCO - Diamond Foods, Inc. sustained a wider loss in the first quarter of fiscal 2014 - $42,153,000 in the quarter ended Oct. 31 versus a loss of $10,729,000 in the same period in 2012. During the most recent quarter, Diamond said it incurred $23.5 million in expenses for the mark to market adjustments related to shares issuable in connection with the settlement of a securities class action lawsuit, a $5 million expense associated with the company's estimated future impact from a potential resolution of the Securities and Exchange Commission investigation and a $17 million charge related to a change in the fair value of the Oaktree warrant liability. Excluding the charges, non-GAAP net income amounted to $5,039,000, or 18c per share, which compared with $5,218,000, or 24c per share, in the same period a year ago. Net sales fell 9% to $234,668,000 from $258,462,000, reflecting lower walnut sales, impacted by lower supply, and prior-year stock-keeping unit reductions on the company's Emerald business contributed to the decline. The company's Snacks business performed well in the quarter, though, as gross profit increased 3% to $39,424,000 and sales rose 1% to $112,589,000. 12 FOODBUSINESS NEWS ® Brian Driscoll, president and chief executive officer, said during a Dec. 5 conference call to discuss first-quarter results that the company's Pop Secret brand gained 320 basis points of market share across all outlets in the 12-week period ended Nov. 23. Another strong performer in the Snacks business was Kettle U.K. "We continue to see the benefits of cost savings being invested in brand support and more effective advertising," Mr. Driscoll said. "In fact, household penetration and market share in the U.K. hit an all-time high in mid-November." Despite top-line softness on Kettle U.S., Mr. Driscoll affirmed his belief that the trend will reverse and gain momentum in the second quarter and beyond. He said the company already has begun to see Nielsen consumption patterns improving. For example, the company's core fried chip line was up nearly 13% in the 12-week period ended Oct. 26. "When you consider the growth of the potato chip category in the natural channel compared to mainstream channels, it appears that the trend is in our favor," he said. Looking to the future, Mr. Driscoll said a driver for growth at Diamond in the snacks segment in fiscal 2015 and beyond will be the continued development of its innovation pipeline, and the gradual expansion of its distribution base. "We plan to introduce two new Kettle varieties - Sweet Chili Garlic and Sriracha, our formulated and repositioned tortilla chip line, and two new Pop Secret products we are expanding from test," he said. "We have also launched a Kettle single-serve initiative that, while early and on a small base, is demonstrating potential." Gross profit in the Nuts segment was $18,509,000, down 9% from $20,259,000 in the same period a year ago. Net sales fell 17% to $122,079,000 from $147,219,000. Mr. Driscoll did note that Diamond was encouraged by progress with the brand repositioning of Emerald. "The new canister line that we launched in Q1 has achieved broad distribution at retail," he said. "And our 100-calorie product line is growing at a solid pace." In walnuts, although Diamond expects to have less supply to sell than last year, Mr. Driscoll said the company believes it has stabilized its supply base. "As I've said before, we continue to take the long view on this business, and remain confident that we have the right strategy in place," he said. FBN December 17, 2013

Table of Contents for the Digital Edition of Food Business News - December 17, 2013

Food Business News - December 17, 2013
Post acquisition binge continues
WhiteWave Foods to acquire Earthbound Farm
New U.S.D.A. action plan targets Salmonella
Table of Contents
Web Contents
Editorial - Potential exists for a great 2014
Sysco to acquire US Foods in $8.2 billion deal
Pepsi ousts Coca-Cola at Buffalo Wild Wings
Kroger sees greater opportunity in ‘natural’ portfolio
Diamond Foods continues to struggle
C.D.C. taking food safety surveillance to food service
Use of antibiotics in meat animal production may be ending
Pizza: The next big thing in fast-casual?
On-line sales looming for food
Bob Evans Farm on the brink?
Post acquisition binge continues
Breaking in to breakfast
Global trends to watch in 2014
Yogurt makers pump up protein claims
Market Insight - Corn sweetener prices will be lower in 2014
Ingredient Innovations - Mimicking mother’s milk
Sodium reduction: A little goes a long way
Beverage Business News - Wellness beverages
New Food Products
Ingredient Market Trends - Nature’s bounty, nature’s wrath
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - December 17, 2013