Food & Beverages

Pret’s soured image puts fat returns out of reach

11 Oct 2018

The ubiquitous sandwich chain is under fire after two customers died from contaminated food. When owner JAB bought Pret in May, upping margins to create lucrative returns looked straightforward. The cost of clearing up its mess now means those returns could be much less, or zero.

Tesco gives investors reason to shop elsewhere

3 Oct 2018

Britain’s biggest grocer is charging lower prices in its home market to fend off discounters, making it harder to hit operating profit margin targets. Doubling down with the launch of a new bargain chain may push shareholders into the arms of smaller rivals, such as Sainsbury’s.

Uber’s profitability recipe starts with Deliveroo

21 Sep 2018

The taxi app may buy the $2 bln European food-delivery group, says Bloomberg. It’s a hefty mouthful for a company that’s steered clear of large dealmaking. As long as Uber Eats and Deliveroo are tearing chunks off each other, though, investors have little chance of a full belly.

Mars plan for sustainable cocoa is moreish

19 Sep 2018

The confectioner’s $1 bln investment in the key ingredient’s “broken” supply chain benefits all from forests to farmers. As a way of getting better supplies and reassuring customers, it benefits Mars too. Other companies should feast on this kind of sustainability strategy.

Starbucks’ Italy push may help it more at home

19 Sep 2018

The $74 bln coffee giant unveiled a massive espresso emporium in the centre of Milan. It sounds like the equivalent of carrying coals to Newcastle. But there may be some logic here if the buzz created around the Italian launch gives a jolt to flagging sales in America and beyond.

Unilever shows wisdom of snubbing Kraft’s recipe

13 Sep 2018

The Dutch maker of Ben & Jerry is expanding faster, becoming a leaner company, and its investments are paying off. Kraft, meanwhile, looks light on ideas. Had Unilever accepted a merger offer two years ago, shareholders would be 15 pct worse off today.

Loeb needs Campbell Soup to taste more like Heinz

11 Sep 2018

The activist is trying to replace the board at the indebted $12 bln food group. He’s backing off demands for a sale, though. That leaves improving lackluster margins. Success could bring an investment win, but it’s a grind more suited to Kraft Heinz backers 3G Capital.

Sodexo’s recovery plan looks half-baked

6 Sep 2018

After a profit warning in March, the French catering giant wants to boost sales and profitability. Its targets still lag those of peer Compass. And boss Denis Machuel hopes to grab market share in the United States, where Compass has an edge, and staff costs are rising.

Meituan Dianping IPO demands a nemesis discount

3 Sep 2018

As China’s takeaway-to-taxis unicorn seeks up to a $55 bln valuation, former investor Alibaba is intensifying the rivalry. It began a loyalty plan to get customers spending more and brought in SoftBank to back its Ele.me delivery service. Bad blood should be priced into the deal.

Coca-Cola pays big price for global coffee fix

31 Aug 2018

The soda giant is spending $5.1 bln on the Costa chain of cafes. Justifying the frothy 16 times EBITDA multiple requires Coke to order up new markets for hot drinks. It’s another reminder of consumer groups’ lust for coffee. Investors in seller Whitbread are the big winners.

Campbell lukewarm sale pitch is begging for a cook

30 Aug 2018

The $12 bln soup and snack company plans to sell its fresh and international food brands, and step up cost cuts on stagnant core brands. It’s leaving the door open for a sale, but that’s unlikely to appease activists like Dan Loeb. A focused auction would be a better approach.

Yum China will struggle to get a fancier takeout

29 Aug 2018

The U.S.-listed KFC operator has rejected a buyout bid worth nearly $18 bln from a group led by Hillhouse. The deal already builds in supersized prospects and a hefty debt burden. A sweetened offer, given hints of weaker spending ahead, would be demanding.

Pepsi’s fizzy water deal may have flat aftertaste

20 Aug 2018

As CEO Indra Nooyi departs, the drinks giant is buying SodaStream for $3.2 bln. Diversifying into the high-growth carbonated water market has strategic logic, and Pepsi has cash. But new boss Ramon Laguarta will need sparkling revenue growth to make a decent return.

Carlsberg’s drinking game victory looks temporary

16 Aug 2018

The Danish brewer’s second-quarter sales grew a better-than-expected 7.6 pct. The World Cup turned its big Russian business from a drag into a boon. While Carlsberg now trades at a premium to Heineken and AB InBev, less exposure to emerging markets means the bump is temporary.

Nooyi leaves Pepsi wondering what might have been

6 Aug 2018

The $166 bln food-and-drink giant’s CEO is leaving after 12 years. She successfully fended off activists seeking a breakup as returns underperformed Coke. Though Pepsi has had a good run more recently, her successor Ramon Laguarta will need to reconsider the conglomerate.

Campbell is an indigestible meal for all but Kraft

3 Aug 2018

Dan Loeb is pushing for a sale of the $13 bln soup maker. Campbell’s pretzel deal larded it with debt so an LBO won’t work. The $72 bln food giant with a penchant for cost cuts may be solo at the table. But heirs holding 42 pct of shares won’t roll over without a hearty payout.

Heineken beats honourable retreat from China

3 Aug 2018

The Dutch giant is handing its business in the People’s Republic to CR Beer and taking a $3.1 bln stake in the country’s top brewer. Focusing on other countries makes sense. Influencing the future of its brand in the world’s largest beer market, however, will be more challenging.

China’s Starbucks-wannabe has a weak brew

30 Jul 2018

Luckin Coffee says it's worth $1 bln after raising money from Singapore’s GIC and others. It’s growing fast and wants to woo consumers away from its dominant rival. Yet an emphasis on takeaways and sub-prime locations means the startup is not shaping up as a threat.

UNFI mixes organic food and financial steroids

26 Jul 2018

The natural-food distributor is paying $2.9 billion for grocery wholesaler Supervalu – a clear attempt to bulk up in response to Amazon’s foray into food retail. UNFI is getting a good deal thanks to generous cost cuts, but the amount of debt it is taking on makes this risky.

Papa John’s poison-crust defense is justified

23 Jul 2018

The U.S. pizza chain has adopted a mechanism that would dilute ousted founder and largest shareholder John Schnatter if he tries to gain creeping control. It will keep other bidders away too. Such measures often aren’t helpful, but in this case they offer needed breathing space.