Food Business News - January 26, 2016 - (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 Managing editor Eric J. Schroeder Senior editor, markets Ron Sterk Associate editor Jeff Gelski Assistant editor, markets Laura Lloyd Internet editors Rebekah Schouten Monica Watrous Contributing editor Donna Berry Graphic designer, market graphics, data Christina Sullivan PUBLISHING STAFF Chairman and C.E.O. Charles S. Sosland President L. Joshua Sosland President emeritus 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 Design services manager Sadowna Conarroe Associate design services manager Ryan Alcantara Circulation manager Whitney Hartman 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 marketing manager Jim White 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 January 26, 2016 MORTON SOSLAND Food uncertainty in zero-rate era end he economic and interest rate envi- currently, and inflation lagging well below ronment in which food companies are the target that encouraged the move. Conoperating is likely to be quite different fidence is voiced about inflation rising to 2 from anything the current line-up of execu- per cent "in the medium term," especially tives has dealt with. Assuming that leaders given the improving economic outlook. The of most companies are changed from a de- committee acknowledges "the time it takes cade ago, the marketplace in question has for policy actions to affect future economic not witnessed Federal Reserve increases in outcomes." interest rates for 10 years. Indeed, it is likely Just how the food industry will be affectthat most present-day executives have not ed by what is likely to be a totally new set been in their positions for longer than the of financial and economic forces depends seven years that the Federal Reserve maintained its zero Suddenly apparent is the vast uncertainty flowing from basic interest rate. This is meant to say that the increase the end of the zero-interest rate era. in interest rates announced by the Federal Reserve in mid-December marked the first such action many top food manufacturing executives have faced. Such a change largely on how successful the Federal Rewill have implications across all of the food serve is with these moves. This connection has prompted reminders of previous periods industry. In mid-December, coincident with a meet- of Federal Reserve rate increases that both ing of the board of governors of the Federal succeeded and in some instances miserReserve Bank, the Open Market Committee ably failed. Indeed, a few economists were unanimously voted to set the new target prompted by the latest move to point out range for the federal funds rate at 0.25 per that interest rate rises have often in the past cent to 0.5 per cent, compared with the zero slowed business growth and even precipitatto 0.25 per cent that had ruled since Decem- ed a sharp downturn. It is obvious from the ber 2008. Further, a forecast was made point- volatile stock market reaction to the interest ing to a federal funds rate of 1.375 per cent rate increases that agreement is lacking on ruling at the end of this year, which would what rising borrowing costs will mean. If the assumption is made that advancbe the result of four quarterly increases of a ing interest rates will put a damper on the quarter point. There have been few surprises in the reac- overall business outlook, the food industry tion of markets to these changes. Of over- is uniquely grouped with energy and utilities whelming importance is the emphasis by as one of three industries that historically the Federal Reserve's chair, Janet Yellen, on have gained during a period when most busiavoiding sudden actions. "Gradual" is the ness is lagging. Here food's standing stems promise made. As a result of this widely her- from steady demand enjoyed regardless of alded move, the Federal Reserve raised the economic trends, which hardly seems realinterest rate it pays on excess reserves to 0.5 istic in light of the Federal Reserve's outper cent from 0.25 per cent. Its discount rate look. Similarly, the food industry ought to covering loans to member banks is boosted benefit from pressure on commodity prices to 1 per cent. Commercial rates follow the stemming from excess supply and the dollar boosted by interest rate upturns curtailsame patterns. Of importance to the food industry in as- ing foreign demand. Suddenly apparent is certaining the impact of such actions is the the vast uncertainty flowing from the end Open Market Committee's confidence that of the zero-interest rate era. The only sure the rate increase will spur a desired rise in thing, it now appears, is that managing the inflation, to the goal of 2 per cent annually. It food industry is likely to be very different was the combination of reduced unemploy- from what might have been previously expement, from its worst 10 per cent to 5 per cent rienced. FBN T FOODBUSINESS NEWS ® 9

Table of Contents for the Digital Edition of Food Business News - January 26, 2016

Food Business News -- January 26, 2016
Global turmoil clouds Unilever’s outlook
D.O.J. toughens stance on foodborne illness accountability
Dairy Business News - Competition spurring yogurt innovation
Table of Contents
Web Contents
Editorial - Food uncertainty in zero-rate era end
Jelly Belly sees opportunities in organic
Dang Foods adds onion chips to portfolio
Enjoy Life Foods on the cusp of enjoying greater growth
Bone broth debuts in a K-cup format
Brynwood Partners to acquire Sunny Delight Beverages
Krave founder in new food endeavor
A long road ahead for Chipotle
Oberto Brands to streamline operations
Hain Celestial under pressure in the U.S.
Inventure expands in frozen food
Kroger remains Wall Street darling
Wal-Mart to close 269 stores
Market Insight - Sugar intake in the spotlight
Ingredient Trends - Savory Flavors sliding into sweet applications
Ingredient Innovations - Egg replacer revelations
U.S.D.A. detects avian influenza in turkeys
New Food Products
Ingredient Market Trends - Iran likely to remain market largely lost to U.S. wheat
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - January 26, 2016