Supply-Side Memo - Mergers & Acquisitions: Can the Virtuous Mouse and the Wealthy Elephant Live Happily Ever After?

What happens when small, iconic, socially-oriented companies like natural-specialty products industry leaders Ben & Jerry's (acquired by global giant Unilever), Stoneyfield Farm (purchased by international titan Groupe Danone) and Tom's of Maine (bought by global packaged goods leader Colgate) are acquired by large, multinational companies?

That very question, which the owners of smaller, socially-oriented companies ask themselves during the acquisition courtship process, as do all the stakeholders involved when such acquisitions occur -- suppliers to these companies, brokers, natural and specialty products retailers and others -- always ask, is also one two Harvard University Business School (HBS) professors recently asked themselves.

The two HBS professors, James E. Austin and Herman B. "Dutch" Leonard, recently examined the acquisitions of natural products icons Ben & Jerry's, Stoneyfield Farm and Tom's of Maine by the multinational consumer packaged goods corporations mentioned above, in a research project in which they asked this central question: "Can the virtuous mouse (the socially-conscious companies) and the wealthy elephant (the big guys) live happily ever after?"

"What happens when small iconic socially-oriented businesses are acquired by large corporations? Such mergers create significant opportunities for creating both business value and substantially expanded social value, but also pose unusually difficult challenges because the merging entities are often strikingly different in philosophy and operating styles as well as in scale," the Harvard researchers say.

In their research they examine Ben and Jerry's acquisition by Unilever, Stonyfield Farm by Groupe Danone, and Tom's of Maine by Colgate to ascertain what is distinctive about the merger process and to analyze the elements critical to success.

In their recent paper on the research, "The Surprisingly Successful Marriages of Multinationals and Social Brands," which was just published this week, the researchers say they also develop suggestions about how other companies considering similar arrangements might best manage the process of courtship, developing agreements, and executing effectively within the newly merged entities.

Based on their research of these three acquisitions, they find the marriage to have been beneficial to both the three smaller, iconic, socially-oriented natural products companies, as well as to the three acquiring global consumer packaged goods companies.

This is valuable information for smaller, iconic, socially-oriented companies in the natural and specialty foods segment internationally. It's also important information for all engaged in the various segments of the food and grocery business, particularly in the natural products segment.

Sara Jane Gilbert, a Web product manager at the Harvard Business School, recently conducted a Q&A interview with the authors of the research paper, James E. Austin and Herman B. Leonard, which she shares with Natural~Specialty Foods Memo. Readers interested in obtaining a copy of the 26 page paper can contact the authors by clicking on their linked names above.

You can read the Q&A conducted by Sara Jane Gilbert here. There's also an executive summary of the research paper, along with the Q&A, at the link.

Supply Side Memo: Current Credit Crunch and Financial Crisis Beginning to Have Negative Impact on Smaller Specialty and Natural Foods Companies

The current credit crunch and financial crisis in the U.S. is starting to have a negative impact on smaller specialty foods manufacturing companies, particularly those who had embarked on growing their product lines and distribution prior to the crisis emerging so strongly in September to the present.

Yesterday's San Francisco Chronicle profiles one such specialty foods company in a credit jam, Napa, California-based The Perfect Pear, which produces and markets homemade specialty pear sauces, oils, marinades and jams.

The Napa specialty foods company was founded in 2003 by former corporate marketing executive Susan Knapp, who left her corporate job to live her dream, to become a specialty foods industry entrepreneur.

Today The Perfect Pair produces 19 different pear-based specialty foods products and has annual sales of $700,000.

Not bad for a self-funded,start-up niche specialty foods company that's not yet five years old.

But that's the good news.

The not so good news is that Susan Knapp needs $200,000 right now to fill current orders from customers like Whole Foods Market, Inc. and others, as well as to meet the increased demand from retail customers for her products, she tells the San Francisco Chronicle staff writer Julian Guthrie in the story.

Normally that wouldn't be a big problem for the specialty foods industry entrepreneur, since her company has good credit, she has fairly strong sales, and has an existing retail customer base, along with new customers wanting to buy her pear-based specialty products.

But because of the frozen credit markets Susan Knapp has been unable to obtain a working capital loan. In order to hold on, she is using her credit cards, asking friends and associates for loans or to invest in the company and searching out private investors who if the deal is right she is willing to sell a stake of her self-funded specialty foods company to in return for working capital so she can fulfill her orders. Investors in small companies like hers are very hard to find in good times let alone now though.

Read the story, "Successful pear products firm in a credit jam," from yesterday's San Francisco Chronicle here.

Susan Knapp's specialty foods company is far from alone in experiencing the freeze in the credit markets, even for short-term, working capital loans. In recent weeks we've spoken to a number of smaller, entrepreneurial specialty, natural and artisan foods manufacturing companies facing the same issue.

Most of these companies are doing well. They just need short-term loans to produce inventory. In most of the cases we've come into contact with there are orders from distributors and retail customers for this to be produced inventory. It's cash flow that's lacking. And crdit is tight.

Unlike larger manufacturing companies, these entrepreneurial specialty companies don't have the sales or cash flow to always fund production. This is expecially true if they get a new customer like a Whole Foods Market, Inc., who's initial order of such a product for all of its U.S. stores can easilty be 400 -to- 1,000 cases. or more Most of these smaller firms don't keep that much extra inventory on hand since doing so isn't financially prudent.

Another difficulty is in the current poor economic climate distributors and retailers often hold back their payables a bit longer than normal. Going say just an extra 30 days without being paid by a couple major customers can play havock on the cash flow of these smaller specialty producers.

Another problem many smaller specialty, natural and artisan foods manufacturers have is they may not have noticed the coming economic downturn like bigger companies did. Therefore they didn't cut expenses or make other preparations soon enough. Of course in the case of the current credit crisis, not even the largest U.S. banks and corporations, let alone the Bush Administration and Congress, appeared to have had any idea it was on the way. And despite the $700 billion taxpayer bailout of financial institutions we have yet to see any thawing in the credit markets.

Unfortunately for these smaller, entrepreneurial companies the current credit crisis is just the tip of the iceberg. Most U.S. economists believe the country has now fallen into recession, and that things are going to get far worse before they turn around.

As a result, for smaller specialty foods companies this not only means a continued period of frozen credit markets. It also means the possibillity of decreased sales to retail customers because the demand for more expensive specialty and natural products is decreasing. There is across the board evidence of this, as consumers are trading down to lessor-quality, cheaper food and grocery products -- and shopping more at discount rather than natural and specialty stores -- in significant numbers all across America.

This means less sales, cash flow and resources for these smaller specialty foods companies. It also means those who are going to survive need to look at their operations from stem to stern and cut costs whereever they can -- from procurement and production to administrative and operations.

This week's Newsweek magazine has an informative article suggesting small businesses of all kinds need to do just that now -- to shift into cost-cutting mode.

Read the Newsweek article, "Shifting into Cost-Cutting Mode," here.

Now is the time for smaller specialty, natural and artisinal food companies to cut costs. The longer and deeper into a recession it gets the harder it becomes to realize proper savings. And to survive.

Below are a few suggestions we have for smaller specialty companies looking to and needing to cut costs now:

>If you use a co-packer sit down with him or her and talk costs. Also talk to one or two competing co-packers and find out what they would charge you compared to what you currently are paying. There is usually money to be saved by doing this exercise.

>Cut any extra administrative costs to the bone. Do you really need those two company vehicles? Can you pay yourself a smaller salary for a while? What are you paying for office supplies? Probably too much. Lastly, can you afford the current number of employees you have working for you?

>Cut back on travel. Do you really need to attend the number of food shows you have been? Coudn't you cut back to two or three key shows and still be fine? Do you really need to travel to the number of customer calls out of the region you have been? Can you cut back on this expense -- air fair, hotels, meals when on the road -- a bit in order to save big dollars without hurting sales.

>Look at packaging. Packaging is one of the biggest money wasters smaller specialty companies neglect. Talk with your suppliers. Get estimates from competitors. Could you save by say going from glass to plastic, for example. Maybe you should reduce the size of your package from say 16oz to 14oz so you can make a bit better margin per unit of sale. Notice how the traditional gallon of bleach is now a few ounces less than an actual gallon? That's because Clorox and the other big guys have reduced package sizes in order to gain a few extra pennies per unit in gross margin. It's the same with various food products from numerous major manufacturers. They've been reducing package sizes by small increments since last year.

These are just a few examples of places smaller specialty, natural and artisan food companies can look to cut costs.

Generally speaking, cost-cutting isn't going to solve the need for cash that Susan Knapp and her The Perfect Pear has, although cutting costs to the bone without harming sales is the first thing she needs to do if she hasn't already done so.

However, we've never seen one smaller-size (under $10 million in annual sales say) specialty or natural foods company that couldn't cut costs, be it cutting back on excess travel, trimming administrative costs, doing better with marketing and sales, shopping around for better deals on co-packers and packaging, and other key operational, production and related expenses.

It's also important that along with cutting costs right now these companies make sure they are collecting receivables on time. There is a time-honored practice by some customers to hold their accounts payable for as long as possible in recessionary times. Even an extra week can be negative to the cash flow of a smaller specialty foods company.

Therefore, keep on top of receivables. Also, if things get real bad check into factoring companies. These companies will advance you cash on your unpaid customer receivables, taking a percentage cut of course, which in the case of seriously outstanding accounts can mean the difference between surviving and folding up the tent in terms of needed cash flow.

Now is the time for smaller specialty and natural foods manufacturing and marketing companies to take a comprehensive, rational look at every aspect of production and operations. Doing so will allow you to whether the current recessionary storm.

Also such companies should be all over their Congressional representatives about the $700 billion bailout's not yet having even a minimal affect on thawing the credit markets. After all, its is small business, such as specialty and natural foods companies, that provide the majority of new jobs in America, as is said by both Presidential candidates multiple times a day on the campaign trail. These very same small businesses need access to the credit markets in order to create these jobs.

[Photo credit: Credit Crunch Cereal graphic courtesy: lewrockwell.com. That's Federal Reserve Bank Chairman Ben Bernanke pictured on the front of the cereal box.]

Food & Politics Memo: It's Zen and the Art of Chocolate Making For City Council Member Turned Chocolatier and Confection Company Entrepreneur

Oakland, CA city council member Nancy Nadel shows off some of the chocolates that she has made from beans. Nadel spends her summers in Jamaica cultivating a cooperative of cacao farmers to supply her with fermented beans. (Photo Credit: Mike Lucia/Oakland Tribune)

From the Natural~Specialty Foods Memo Editor's Desk: Who says food and politics don't mix? Not longtime Oakland, California USA city council member Nancy Nadel.

Her honor, perhaps finding a lack of sweetness in her position as a local politician and lawmaker, decided to seek her sweet delights elsewhere: She founded a confections company, Oakland Chocolate Company, specializing in chocolate, and named it after the city she serves.

Nancy Nadel remains on the city council, she just added a second hat (well, a hair net actually) to her already busy life.

The Oakland Tribune newspaper profiled city lawmaker/chocolatier Namcy Nadel and her Oakland Chocolate Company in a recent article. We enjoyed the story, including the interesting juxtapositon of local politics, chocolate-making and small business building. We thought you would enjoy it too. Read it below:

Oakland council member finds her Zen in chocolate
By Cecily Burt
Oakland Tribune
October 18, 2008

After a grueling week immersed in the city of Oakland's problems, Councilmember Nancy Nadel unwinds in a unique way. She puts on a hair net, cranks up the reggae, and loses herself in swirling vat of warm, rich, dark chocolate.

Nadel has become a chocolatier in her (very little) spare time, launching the Oakland Chocolate Company with its roots in Jamaican soil.

"It's like my Zen," Nadel said last Sunday, the only day of the week she isn't buried in budgets and voluminous agenda packets or other issues affecting her West Oakland district. "The preparation and even the clean up, I get into it. When I give people my chocolate they are happier than when I talk about my progressive policies."

No doubt. But Nadel's progressive policies have a way of steering her life choices, and the decision to dabble in chocolate is no exception.

The story can be traced back to the last vacation Nadel and her late husband, West Oakland activist Chappell Hayes, took to Jamaica before he died. She has returned year after year during summer breaks from council business, staying with friends in the rural reaches in the parish of St. Mary on Jamaica's north coast.

Cacao farmers such as Steve Belnaviz eke out a living selling their just-picked beans to the government, which sends them to a state-run fermenting plant. Many of the poor farmers that Nadel met have land, but no money to harvest their cacao trees. Some have cleared the trees that shade the cacao to plant other crops.

"It's a beautiful place but it has the same kind of (economic) problems as Oakland," she said.

At first Nadel wondered whether she could help the farmers get better prices for their beans by helping them organize a fair-trade cooperative. The cooperative would ferment its own organic beans and sell the product in bulk to chocolate companies, basically removing the middle man. Then she thought, why not try her own hand at farming and making chocolate?

"As a city council member I've talked about sustainable issues and farming for a long time," she said. "My goal is to put my money where my mouth is."

So she took a weeklong class at UC Davis in chocolate technology and hasn't looked back. The Oakland Chocolate Company started small and Nadel intends to keep it that way for the foreseeable future, given the demands on her time.

For a time Nadel rented kitchen space at Brown Sugar restaurant on Mandela Parkway. But that arrangement required her to bring in her supplies and pack it all out at the end of the day. She recently subleased space from the maker of Barlovento artisan chocolates in Jack London Square. She bought a bigger machine for melting her chocolate and she can leave all her equipment, ingredients and finished products there.

Nadel is averaging about 200 pieces of filled chocolates or dipped nuts and fruits each Sunday, plus molded chocolate leaves and textured chocolate crunch bark. She eagerly gives visitors samples of nutty-tasting cocoa nibs to munch on as she describes how the milky white beans are harvested from football-sized pods that grow from the trunks of cacao trees, and then placed on trays and covered with banana leaves to dry and ferment.

It's taken years of research and outreach, but Nadel and her partners in Jamaica gathered with cacao farmers for the first time in February to discuss their plans for a cooperative and fermentary, and efforts to join the Jamaican Organic Agriculture Movement.

And it will be some time yet before a production-sized fermentary is established and the farmers can produce enough fermented beans to provide a steady supply to her company and other chocolate makers.

Still, the seeds are starting to take root.

"Two weeks ago was the first time I made chocolate from beans that I had picked, fermented and dried, and brought back 3,000 miles," said Nadel, sounding like a proud parent. "It's an incredible feeling."

A portion of the sales from the Oakland Chocolate Company will go to help build a production-sized cocoa bean fermentary in Jamaica.

To learn more about the company and the Jamaican farmers, or to order chocolates, visit http://www.theoaklandchocolateco.com/.

Supply Side Memo: Long Live Newman's Own and its Charitable Mission: Famous Name Food Maker on New Product Introduction Rampage; Next Up Frozen Pizza

Ladies and gentlemen, start your ovens -- natural and premium foods company Newman's Own is getting into the ready-to-bake frozen pizza business.

The food company founded by and named after actor, race car driver and entrepreneur Paul Newman, who passed away last month, plans to soon introduce four varieties of all-natural, premium, frozen ready-to-bake pizzas called Newman's Own Thin and Crispy frozen pizza. The all-natural and premium frozen pizza pies come in four varieties: Supreme; Four Cheese; Roasted Garlic and Chicken; and Uncured Pepperoni.

According to Mike Harvard, vice president of marketing for Newman's Own, the all-natural, premium frozen pizza's will be competitively priced with the leading national frozen pizza brands. This has been one of the keys to the fabulous success of the Newman's own brand in fact. While offering a premium-quality product, be it salad dressing, pasta sauce, popcorn or ready-to-drink lemon aid, the food company always made sure to price the brand close to or just slightly higher than other national, mass market brands in the respective categories, even though its products are all-natural and of premium quality.

Asked why frozen pizza's are the newest line extension for Newman's Own, Harvard says: "For 25 years, our consumers have loved our all-natural products that help make delicious meals. So, we figured, why not make it easier and provide the whole meal. Our new pizzas deliver what consumers want --delicious, convenient meal solutions the whole family will love."

"I guess you could say we've jumped from the salad bowl onto the pizza pan," Harvard adds.

Of course he is referring to the fact the very first category Newman's Own began with 26 years ago was ready-to-pour salad dressings. We see lots of potential synergies between the two product lines, such as salad dressing and frozen pizza FSI coupon cross promotions, in-store tie-ins and the like.

The new frozen pizza line is being launched in stores this month in five test market areas. Those market regions are: New England; Albany, NY; Milwaukee, WI; Minneapolis, MN; and Charlotte, NC. Harvard says Newman's Own has plans to expand to other U.S. markets next year and roll the frozen pizza line out nationally by 2010.

Newman's Own Thin and Crispy pizza retails for a suggested price of $6.49-$6.99 for pizzas that range from 12.3 oz. to 14.7 oz, according to marketing vice president Harvard.

Among the supermarket chains in the U.S. states mentioned above involved in the frozen, premium pizza pie line's introduction this month include: Shaw's supermarkets; Price Chopper; BigY; Hannaford; Demoula's Market Basket; Roche Bros.; Foodmaster; HarrisTeeter; CUB Foods; Piggly Wiggly; Woodman's Markets; Copps; Sentry; Byerly's; Lund's; Kowalski's and a number of others.

That Newman's Own is introducing its new line of frozen pizzas just shortly after the death of Paul Newman is particularly bittersweet because along with popcorn (and pasta and Lemonade), pizza is said to be the award winning actor's other favorite food.

The Newman's Own brand frozen pizza's go from the freezer to the oven, taking only 10-12 minutes to bake, according to the company.

All four of the premium, thin crust frozen pizzas are trans-fat-free. Additionally, The crust is made with flaxseed, all-natural cheeses are used in all the pizzas, the roasted garlic chicken pizzas are made with only all-natural white meat chicken, and the pepperoni on that variety and on the Supreme pizza is uncured. The Supreme Pizza variety contains sausage, uncured pepperoni, green, red, yellow peppers, onions and cheese.

There are no artificial ingredients or colorings in any of the Newman's Own frozen pizzas, according to company marketing chief Mike Harvard.

Newman's Own is on a new product introduction rampage.

The food marketer recently introduced a new line of ready-to-eat breakfast cereals, Newman's Own Sweet Enough breakfast cereals. As is the case with the frozen pizza category, the new cereal line is the company's first entry into the shelf-stable ready-to-eat breakfast cereal category.

It's not an accident the food marketer's two newest product lines are both in the ready-to-eat and ready-to-heat segments.

Mike Harvard says a major segment focus of the company's new product development efforts is in the meal solutions sector. These are food products of various types that are ready-to-eat with either zero or only a slight (like adding milk to cereal or baking a frozen pizza) effort needing to be added by consumers. In other words, most of the value has already been created and added by the products' manufacturer.

Prior to introducing the new breakfast cereal line, Newman's Own introduced a new line of shelf-stable marinades named Dress Up Dinner Marinades, along with a new line of salad dressings in sprayer-style bottles called Newman's Own Natural Salad Mists.

These two new lines fit into the meal solutions strategy from the opposite end in that they are convenient, value added products that can be used by consumers to aid in the preparation of and to enhance a meal with very little preparation -- marinading chicken with the marinades and then simply baking or grilling, and spraying the salad dressing misters on a packaged salad mix and simply eating, for example.

Newman's Own was founded on a lark by Paul Newman and his buddy, the writer A.E. Hotchner, in 1982 in the kitchen of Newman's Westport, CT USA home. Newman and Hotcher, who wrote a best selling biography of Ernest Hemingway and the famous memoir King of the Hill about his life growing up in St Louis, Mo. during the Great Depression, along with many other works, made up a batch of Newman's favorite salad dressing -- the company's first commercial product sold at retail stores -- and gave it away to friends and family members for Christmas, creating a label that said "Newman's Own" in part as a tongue-in-cheek joke.

From there as is often said -- the rest is history. The company was launched by the pair with one key proviso -- that all of its profits after expenses would be donated to charity.

Newman and Hotchner followed up the salad dressing line with popcorn, ready-to-drink lemonade and pasta sauce. Today Newman's Own produces and markets 175 different varieties of food products in the U.S. and internationally.

And of course Newman's Own has even produced its own food company offspring, Santa Cruz, CA-based Newman's Own Organics, which was founded by and is run by Paul Newman's daughter, Nell Newman.

Still based in Westport, Conn., the charitable mission of Newman's Own is expressed in its Company motto: "Shameless exploitation in pursuit of the Common Good."

The food company's charitable mission is reflected in the following statement that will appear on every package of Newman's Own products: "The Newman's Own Foundation continues Paul Newman's commitment to donate all after tax net profits from this product and related royalties for educational and charitable purposes," says company marketing chief Mike Harvard.

The statement is being added to every Newman's Own product package to reflect Newman's wishes and plans that the company and its charitable mission live long after his death.

The Newman's Own Foundation, which is the charitable arm of the food company, have given over $250 million to thousands of charities since its founding in 1982. That's impressive. And a wonderful legacy for Paul Newman to leave.

Food Show Memo: Record Attendance at World Food Moscow 2008 Show Demonstrates Russia's Growing Consumerism and International Opportunities

The emergence of Russia as a major food and grocery consuming nation was on display at the recently-ended World Food Moscow 2008 trade show, which featured over 1,300 exhibitors from throughout the world and was attended by thousands more food and grocery industry professionals, all focusing on how to do business in the country of about 143 million that's becoming flush with cash from its sales of oil and other natural resources, along with creating a growing higher-income consuming class, as well as the beginnings of a middle class.

The product exhibitions at the huge World Food Moscow 2008 show, which ran from September 23-27, ranged from basic food and grocery products, fresh produce, meats and other perishables, to non-foods and natural, organic, specialty and gourmet products from throughout the world, including Europe, Asia, the U.S., Canada and Latin-Central America.

Fresh produce, including organics, was a big feature of this year's Moscow food show. Produce suppliers and trade associations from Europe, Latin and Central America, Asia and the U.S. all had a major presence at the show. Many of these suppliers already do some business in Russia but want to expand their respective business in the increasingly affluent nation. Others are hoping to get into the Russian market as it improves its logistics systems and more larger and even upscale supermarkets open throughout the country.

The show also included a series of forums in which various speakers talked about how to enter the Russian food and grocery market, along with ways to increase business in the nation, discussions of Russian consumer behavior and other related topics. The annual Russian Agricultural Outlook forum also is a part of each year's Moscow food show.

Russia's food and grocery retailing industry is going through a rapid modernization process, adopting the western supermarket, superstore and hypermarket models in increasing numbers. Western chains like France's Carrefour (the worlds second largest global retailer) and Wal-Mart (the world's number one retailer) are currently in the process of entering Russia with their first stores.

As an example of the growing consumer affluence in Russia, this year's World Food Moscow 2008 show featured far more specialty, gourmet, natural and organic food and grocery products across all categories, according to the food show's organizers. This included specialty and organic fresh produce items and meats, gourmet, specialty and organic shelf-stable food products from throughout Europe and even the U.S. and Australia, and lots of higher-end premium products including beverages as well as food items.

As is the practice in Russia, foreign companies in any sector who are let in early tend to get preferential treatment by the Russian government. This is the case with overseas food and grocery companies as well. Much of doing business in the food industry in Russia still relies on setting up various joint-ventures with Russian companies, along with going through various layers of government and quasi-government middle men, each who takes a cut of the action.

A new U.S-Russia cold war? "Nyet." Some analysts and pundits are suggesting the U.S. and Russia are on the verge of a new cold war over Russia's recent invasion (after Georgia's invasion) of two breakaway states of the Republic of Georgia, which the U.S. is allied with. No impending new cold war was evident on September 27 however when John Beyrle, the United States Ambassador to Russia , attended the last day of the World Food Moscow 2008 food show. Ambassador Beyrle, pictured above enjoying a slice of apple, greeted Russian officials at the show as well as visted U.S. exhibitor companies and trade groups such as the California Grape Association and USA Pears, among others.

This system isn't in the main preventing European, American and Asia food and grocery companies --big, medium-sized and even small -- from wanting to enter the Russian market though, as was evidenced by the record attendance and number of exhibitors at the just-ended Moscow food show.

The natural and organic products categories, along with imported specialty, gourmet and ethnic food and grocery products, are in the infant stage in terms of category development in Russia. Therefore, Russia is a growing new market for western and Asian suppliers. The potential is very big and lucrative.

Additionally, with western chains Carrefour (based in France) and Wal-Mart (based in the U.S.) planning to soon open their first stores in Russia, the opportunity for western natural, organic, specialty and gourmet foods suppliers and marketers who already do business with these two mega-retailers should be enhanced.

More Russians than ever before also are traveling abroad, particularly those from the country's new upper-income class. As these and other Russians travel to western European cities and to the U.S. more frequently they will acquire an increased taste for and desire of the food products from these countries, just as Americans and Europeans who travel throughout the world do for foods from other lands. This fact will increase demand for imported foods in Russia, creating additional opportunity for western suppliers and marketers.

The organizers of the Food Moscow 2008 food show have a comprehensive photo and video gallery of this year's and last year's shows, ranging from pictures of various exhibitor booths and forum events to the trade show's product tasting events and award presentations. Click here to view that photo gallery.

Additionally, the Netherlands-based Web site Freshplaza.com took photos of the fresh produce exhibitors at this year's World Food Moscow 2008 food show. Click here to view the photo report.

The Food Show Moscow 2008 event is held annually in the fall, usually in late September or early October. According to the show's organizers, this year's show had the highest number of exhibitors and attendees in its history.

Despite a bit of a freeze in Russian western relations, especially with the U.S., American and European companies and food industry representatives attended this year's Moscow show in great numbers.

This fact reflects that despite a chilling of political relations between these western nations and Russia, trade between the west and Russia is still moving forward.

It also reflects the fact Russia is spending billions of dollars to improve its agricultural industries and is looking to U.S. and European companies for much of the expertise and technology to achieve that goal, as it is looking towards the west to help modernize its entire food distribution chain, from the farm and food processing plant to the supermarket.

Supply-Side Guest Memo: 'Sustainability,' Advocacy Marketing and 'Doing Good By Doing Well' Keys to Unilever's Present and Future Says CEO

Natural~Specialty Foods Memo Editor's Note: Anglo-Dutch global food, consumer packaged goods and personal care products giant Unilever owns brands ranging from Dove Soap, Lipton Tea and Hellman's and Best Foods Mayonnaise, to the Knorr specialty and ethnic foods brand, Bertolli (premium) Italian foods, and the trendy Axe brand of personal care products for men, among many more global brands, including such natural and specialty foods iconic niche brands as Marmite, Bovril, Coleman's Mustard, PG Tips Tea and many more. [Read an April 30 piece we wrote about a number of these brands being put on the market by Unilever.]

Unilever has been doing lots of reorganizing in the last couple years. It's also been stepping out into the forefront under the leadership of French CEO Patrick Cescau (pictured above) in the areas of advocacy marketing and advertising--with its Dove brand advertising campaign which features woman from all walks of life and body styles in the television commercials and print ads--wellness and premium foods marketing, and in the "green" or environmental area, among many others.

The Financial Times newspaper has an interview in today's addition with Unilever CEO Patrick Cescau in which he talks to the interviewer, staff writer Michael Skapinker, about these topics and a wide variety of other issues involving Unilever's global business.

In the interview piece, the CEO talks about how the company is focusing on the "conscious consumer," the developing world's markets, the fast-rising cost of ingredients and energy, along with other wide-ranging topics. In the piece, he says Unilever has always been known for its community involvement and efforts to be good stewards of the planet since the days of founder William Lever. However, he adds the company lost that heritage a few years back, which is something he's committed to restoring as CEO.

Growing the company and making a profit while at the same time creating an even more socially responsible and sustainably-focused Unilever--or "doing well by doing good," which has become Unilever's corporate mantra Mr. Cescau--is what the 59-year old CEO says he wants his legacy to be because its what the company's roots are.

Below are the first three paragraphs of the Financial Times' interview with Unilever CEO Patrick Cescau, followed by a link to the entire interview-based piece in today's issue.

In 2003, Patrick Cescau sat down with fellow Unilever directors to hear a presentation from the Dove soap and cleansing products team. The Dove people had an idea for an advertising campaign that would feature women of all shapes and sizes rather than svelte models.

They showed the directors a film of girls talking about the pressure to look perfect, and how disappointed they were when they didn’t. The girls in the film were the directors’ daughters. Mr Cescau says watching his own teenager talk about her worries greatly affected him. He had no idea the Dove team had interviewed her, although his wife knew.

“It suddenly becomes personal,” he says. “You realise your own children are impacted by the beauty industry, how stressed they are by this image of unattainable beauty which is imposed on them every day – and the loss of self-esteem and other trouble going with it, anorexia and all of that.”

Click here to read the entire interview.

Supply-Side Guest Memo: Chris Reed Plans to Grow His Two-Decades Old Reed's Natural Beverage Company Into the Big Leagues

Natural~Specialty Foods Memo Editor's Note: Chris Reed founded his Reed's Ginger Brew beverage company nearly two decades ago. Since starting the natural beverage company, Mr. Reed has focused distribution of the brands (Reed's Ginger Brew and Virgil's Root Beer) primarily in the natural foods and upscale food and beverage retailing segments of the industry, along with higher-end foodservice establishments, mining the niche market for consumers who are willing to pay a premium for all-natural and unique-tasting beverages.

However, last year the ponytailed natural soft drink entrepreneur took his company public. Following that move, the company experienced not only a cash infusion, but grew its sales by about 24% between then an now, largely by gaining distribution in new retail stores, including a number of what can be described as more mainstream-oriented supermarkets. The beverage company currently has annual sales of about $13 million.

The June, 2008 issue of Fast Company magazine has an article about Reed's plans and strategies to grow the Reed's natural beverage company (and the brands) even further into the food and beverage retailing mainstream channel, and how he and his team members plan on doing so, along with growing the company in general.

Read the article, "An All Natural Icon Reaches Beyond Whole Foods," by Saabira Chaudhuri in the June, 2008 issue of Fast Company.com below. The first few paragraphs are reprinted below, with a link to the rest of the piece below that:

An All Natural Icon Reaches Beyond Whole Foods
By: Saabira Chaudhuri

As Reed’s ginger brew makes a play for the big leagues, the natural question arises: Can the brand's success be attributed to the marketing or is it all about the taste?

Chris Reed isn't your typical CEO. He's a tie-dye aficionado who sports a ponytail, eats vegetarian, and enthuses ceaselessly about the benefits of yoga, Ayurveda, and meditation. He comes off more like a freewheeling Californian—maybe a wave chaser or an amateur home grower—than a guy from Queens who runs a multi-million-dollar business.

But when you ask him about the inspiration for his soda company, Reed’s, you uncover a side of him that is ambitious and openly profit seeking. "I'm a renaissance man. I'd rather not make money for other people when I can make it for myself," Reed says unabashedly. Last year, his company brought in sales of around $13 million outselling established brands like Izze (owned by Pepsi Co.), RW Knudsen, and Hansen within the natural foods category, a group of about 3,000 markets that includes Whole Foods and Trader Joes. It is now the number one player in natural sugar/fructose sweetened soft drinks.

In January of 2007 Reed’s went public and experienced a 24 percent increase in growth that year. Now, after 18 years in business, the company is looking to branch beyond just natural foods, and go mainstream.

Home Brew

A self-made businessman with no formal business background, Reed started out wanting to be a rock and roll guitarist. He tried working the music circuit for a few years, playing rhythm and lead in a band, before he reluctantly decided to get serious and go the conservative route, trudging off to study cryogenic engineering at the Rensselaer Polytechnic Institute. After the oil and gas industry crashed in the mid '80s however, Reed came to terms with the fact that he just wasn't cut out for the life of an engineer.

At 29, he packed up and moved to Hollywood to study guitar at the Musicians Institute. Simultaneously, he started working for a friend who owned a 1-800-DENTIST outlet. At first he just answered the phone. Eventually, he started selling to the dentists, displaying an unexpected aptitude for bringing in dollars that prompted him to consider starting his own business.

While Reed already possessed a deep-seated interest in Ayurvedic and Chinese medicines, many of which incorporated ginger, the inspiration for creating his eponymous brew only came while he was traveling across India in 1988. There, the roadside sugarcane juice vendors often infused their drink with ginger or lime and it was during this trip that Reed settled on ginger brew as the best vehicle to get ginger to the American public.

Back in the States, he did some research at UCLA and found that before soft drinks were commercially made, they had been brewed at home. So, he decided to brew his own line of natural soft drinks, and began experimenting with recipes in his Venice Beach kitchen, tinkering for almost two years before he settled on a spicy-sweet concoction.

With the aid of a loan from his father, Reed launched his first batch of ginger brew for less than $5,000 in the summer of 1989. He sliced 90 pounds of fresh ginger by hand, brewed the product at a small brewery with no bottling operation, bottled it on his own, slapped on labels with a stick of glue, and loaded 36 cases into the back of his VW bug for distribution at four local stores.

Click here to read the rest of the article from the June issue of Fast Company.com.

Supply-Side Memo: Food Industry Giant H. J. Heinz Co. to Launch New Energy Conservation, Alternative Energy and Greenhouse Gas-Reduction Program

Natural~Specialty Foods Memo Editor's Note: Pittsburg, Pennsylvania USA-based H.J. Heinz Co., one of the world's biggest international food companies as well as a major player in the natural and organic foods industry and specialty foods sector, plans to reduce the amount of greenhouse gases it produces company-wide by 20% by 2015, according to the report below from today's Pittsburgh Tribune Review, a daily newspaper in the food company's hometown.

Although a 20% carbon footprint reduction over the next seven years doesn't sound like much, one has to consider how difficult it is to make such changes in a giant, global supply chain system such as the one H.J. Heinz operates.

Further, the fact the giant food company plans to rely on alternative energy for 15% of its total energy needs by 2015 is a pretty big deal.

Could companies like H.J. Heinz do more, such as shoot for say a 35% carbon reduction over the next seven years? We think so. However, it's a mistake to discount the giant food company's 20% reduction goal, as 20% of the total carbon output--not top mention the energy savings which will be a result of such a reduction--is a big deal.

Even more important is the company's leadership role. H.J. Heinz is a global food manufacturing industry leader and we expect other companies its size who've yet to announce similar initiatives to take notice of what Heinz is doing.

The report by Pittsburgh Tribune-Review staff writer Rick Stouffer sumarizes the steps H.J Heinz says it will take and the programs it will implement in order to achieve its 20% reduction in carbon footprint by 2015:

Heinz launches effort to cut waste, energy use

By Rick Stouffer

PITTSBURGH TRIBUNE-REVIEW,

Tuesday, May 27, 2008

The H.J. Heinz Co. today announced a goal to reduce greenhouse gases by 20 percent by 2015, part of what the company calls its sustainability vision to maintain the health of people, the planet and the company.

From using potato peels to generate energy, to reducing the amount of our packaging, every day we're finding new ways to reduce the environmental footprint and improve the efficiency of our company," CEO William Johnson said.

To achieve its goal, Heinz will focus:

• Reducing energy consumption by 20 percent through improved operations.

• Reducing packaging by 15 percent through the use of alternative materials and reductions in existing packaging.

• A 10 percent reduction in transportation by improving its distribution network. By transporting fuller trailers with more direct routes and using more rail transportation, Heinz expects to save more than 2 million gallons of fuel globally each year.

• Mandating that 15 percent of all energy used comes from renewable sources, such as solar, biomass and biogas.

At the Heinz facility in Ontario, Ore., the company is developing a process to convert potato peels into biofuel, which then will be distributed to a natural gas pipeline for sale and distribution. The project is expected to generate enough fuel to heat 4,000 homes.

• In its agricultural operations, Heinz projects a 15 percent cut in greenhouse gases, a 15 reduction in water usage, and increasing by 5 percent tomato yields by using hybrid seeds that require less water, fertilizer, pesticides and fuel to harvest.

• A 20 percent reduction in water usage through reuse and improved sanitation.

• A 20 percent reduction in solid waste by increased recycling and waste reuse

Supply-Side Memo: Giant Nestle is on the Prowl for Natural, Nutritional, Health and Wellness Food Companies to Acquire

The world's largest food company, Nestle, will soon have $11 billion dollars of cash on hand from its planned sale of 25% of its 77% stake in the U.S. eye care company Alcon, to drug company Novartis. Nestle announced the sale today.

Further, not too long after that, Novartis will acquire the remaining 52% of Nestle's original 77% stake (23% of Alcon isn't owned by Nestle in other words) for a fixed price of $28 billion, making the total purchase price of Nestle's (77%) stake in the U.S. eye care company by Novaris a whopping $39 billion.

Even more interesting to those in the natural products industry is the fact Nestle plans on using a big chuck of those new billions to acquire companies in the natural, healthy, nutritional and wellness food and product's sectors, we've learned.

This acquisition strategy fits well with the food giant's strategic positioning and strategy to become the dominant global corporate force in natural and nutritional foods. In fact, Nestle could use as much as half of the $39 billion, nearly $20 billion, to acquire natural, nutritional and healthy product food companies, we've learned.

In fact, one of our sources who is close to Nestle and thus needs to remain anonymous, told us on Monday Nestle executives have already identified a number of natural and nutritional foods companies which they plan on making acquisition offers to.

Switzerland-based Nestle has positioned itself into the world's foremost nutritional, health and wellness foods company, with top brands in these categories across the board. But it is far from finished. The world's "most admired" food company, as named by Fortune magazine, wants to dominate the nutritional and health and wellness categories globally because it's in these sectors where the company's leaders believe the most future growth will com.

Nestle makes and markets far more than just nutritional, health and wellness category food products of course. [Take a look at the company's brand portfolio here.] However, nutrition, health and wellness are the giant global food and beverage companies fastest-growing categories and where its going in terms of its overall global positioning, as we mentioned above.

Overall, Nestle controls food, grocery and beverage brands, and markets products in the following categories: bottled water (number one globally); baby foods; dairy products (including Hispanic and Asian specialty products); breakfast cereals (including partnering with General Mills outside of North America); and beverages (Nescafe coffee, Libby's fruit juices, Nestea and more, as well as a complete line of Hispanic coffee products).

Other categories include: ice cream (including marketing the frozen treat in China and the Middle East, among other places in the world), chocolate and confectionery (everything from basic chocolate bars to gourmet treats), prepared foods (everything from packaged soups and pasta sauces, to shelf-stable dinner entrees and frozen foods, including numerous specialty, ethnic, gourmet and natural/organic brands), and pet foods and pet care (the Carnation brand and Ralston-Purina brand, along with others.

Lastly, is the nutrition, health and wellness category, which Nestle is growing the fastest of all the above sectors in its consumer packaged goods and beverage group, and plans to use a major portion of the $39 billion from the sale of its 77% stake in Alcon eye care to Novartis to grow even faster by acquiring numerous companies in these categories, which are all related.

Nestle also has a huge global foodservice operation called Nestle Professional, as well as owning 30% of the cosmetics firm L' Oreal.

Look to Nestle for multiple acquisitions of natural, nutritional and health and wellness-oriented food companies in the U.S. as well as globally before 2008 is over.

Despite the global economic slowdown, Nestle believes there's no better time than the present to make major acquisitions to continue growing its nutritional sector. That's the primary reason, along with wanting to pay down some debt, the comapny is selling its 77% stake in eye care company Alcon.

Nestle's acquisition search is going to shake up the scene

There hasn't been much acquisition activity in the natural, health and nutritional foods manufacturing and marketing sector in the last year. With billions in its acquisition bank, Nestle is going to stir things up quite a bit and shake up the currently static M&A scene.

For example, there a number of successful, large and middle-sized natural and nutritional foods companies in the U.S. that are looking to be acquired or merged as they're in need of additional capital in order to get to the next level.

However, since there hasn't been a "big foods guy" like Kraft, General Mills, Heinz or Nestle (all which have made major acquisitions in the sector in the past) out there for a couple years, there's a pent-up demand so to speak in the natural, health and nutrition industry for suitors, in our analysis. Nestle could be that suitor many of these companies are looking for. Stay tuned.