Food Business News - February 10, 2015 - (Page 9)

Editorial EDITORIAL STAFF Editor-in-chief Morton I. Sosland Executive editor, markets Neil N. Sosland Editor L. Joshua Sosland Executive editor Keith Nunes Senior editor, markets Jay S. Sjerven MORTON SOSLAND Oil and currency moves should be seen as threats Managing editor Eric J. Schroeder Senior editor, markets Ron Sterk Associate editor Jeff Gelski Assistant editor, markets Laura Lloyd Internet editor Monica Watrous Contributing editor Donna Berry Graphic designer, market graphics, data Christina Sullivan PUBLISHING STAFF Chairman Charles S. Sosland Vice-chairman L. Joshua Sosland President and publisher Mark Sabo Associate publisher G. Michael Gude David DePaul Bruce Webster North American sales Matt O'Shea Vice-president, chief financial officer Melanie Hepperly Audience development director Don Keating Advertising manager Nora Wages Director of design services Sadowna Conarroe Circulation manager Whitney Forrester Digital systems analyst Marj Potts Manager of advertising design Becky White Director of e-Business Jon Hall Director of on-line advertising and promotions Carrie Fluegge Promotions manager Lon Davis WE'RE EAGER TO RECEIVE YOUR FEEDBACK: E-mail or write to us at Food Business News, 4801 Main Street, Suite 650, Kansas City, Mo, 64112 February 10, 2015 t is a rare year in which two Black Swan Swiss currency cap-lifting. Seldom has a move business-related events occur within twelve by a central bank, including America's Fedmonths, making even rarer the two coincid- eral Reserve, had as pronounced an effect as ing early in 2015. The reference is to the pre- did that action. Its influence, while directly recipitous plunge in oil prices and the action of lated to the country that is one of the smallest, the Swiss National Bank in removing the Swiss weighed heavily on global share prices, especurrency's cap against the euro. Both deserve cially of large banks that had many of their obthe Black Swan designation on account of how ligations in terms of Swiss francs. Subsequent they match the term's widely accepted defini- surveys have revealed that few companies in intion of being unexpected and of difficult-to- dustries like food manufacturing were engaged define global consequences occurring when no in borrowing substantial sums denominated in one expected and where the consequences play this currency, which has soared to new highs. over a long period. When related to food manu- Instead, major financial institutions, including facturing, such past surprises have had significant impact, but Still to unfold as a force affecting the food business is that has not been so with this year's events. That prompts the how the oil price collapse may exert negative consesuggestion that considerable wariness is justified in waiting quences for large American areas where it is reducing and watching. When it comes to examining employment as well as undermining what had been the drop of 50% and more in oil prices that began late in 2014 and regarded as statewide prosperity. continued at an equally sharp rate this year, making the case that this development is other than favorffi l Af h f i f i h i h able for the food industry is itself difficult. After those featuring foreign exchange services, have all, rising energy prices had been one of the in- been victims. The result is a global financial endustry's principal cost concerns for a number of vironment reeling from susceptibility to such years when oil prices steadily climbed to reach an event. While currency hedging, which ought to be $100 per barrel and above and seemed stuck at $100-plus for a very long time. The real surprise pursued diligently by companies having significame with the recent fall to below $50 per bar- cant exposures beyond the dollar, would have rel, bringing fuel and manufacturing costs down provided protection, the dimensions of what happened did cause a few horrifying losses. to much less expensive levels. Still to unfold as a force affecting the food A 20% rise in the value of the Swiss franc, the business is how this price collapse may exert immediate result of the cap lifting, was unprecnegative consequences for large American ar- edented as a reaction to such a surprise. Nestle eas where it is reducing employment as well SA, the world's largest food maker that is also as undermining what had been regarded as based in Switzerland, had been an active buyer statewide prosperity. Some economists have of its own shares, taking a daily maximum of 1.3 warned that the worrying oil effect will extend million shares in five days preceding the cenits reach into many other parts, including per- tral bank's action. These purchases involved sonal incomes and retail sales. Focusing on daily outlays of as much as $100 million. This the possibly significant impact on American action eased the effect of the currency move prosperity overlooks the weight of sharply on Nestle's share price and was credited to lower prices on nations like Russia and in the the intelligent position taking by this company. Middle East that rely on oil exports for fiscal Little is known about similar actions that may strength. How these regions might react is un- have been taken by other food companies, in folding, creating questions about the effect on America or elsewhere, but let it be known that the existence of these two Black Swans stands the world economy. If an example is needed of how surprises re- as a warning to food companies of all sizes and verberate, it is unnecessary to look beyond the locations. FBN I FOODBUSINESS NEWS ® 9

Table of Contents for the Digital Edition of Food Business News - February 10, 2015

Food Business News - February 10, 2015
Hershey continues move into snack categories
Renewed school food fight looming on the horizon
Beverage Business News - Colorful ways to quench a thirst
Table of Contents
Web Contents
Editorial - Oil and currency moves should be seen as threats
McCormick eyes ambitious growth in year ahead
Dunkin’ to debut cold blended beverage platform
Campbell Soup in the midst of reorganizing
The future of shopper marketing
JBS USA plans expansion at Utah beef plant
Large MOM multiples
More tough times ahead for McDonald’s
Inside Wendy’s menu strategy
Chipotle on fire
Diamond acquires stake in potato chip maker
Market Insight - More cattle but beef prices still rising
Health and Wellness - On the cutting edge of digestive health
Ingredient Innovations - Backing up satiety benefits
Company Profile - Tyson Foods flying high
New Food Products
Ingredient Market Trends - Soybean oil market pulled lower, then higher
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - February 10, 2015