Kroger’s Big Tech Play
Giant grocer Kroger has been feeling left out of the tech race in food retail. Well no more. It has trotted out a series of launches/partnerships intended to impress investors worried that the low-margin grocery business was going to get even worse. Kroger’s tech plays include a hookup with British online grocer Ocado to build automated warehouses stateside, acquisition of meal kit company Home Chef, and a partnership with Nuro to use their driverless vehicles to deliver groceries. A common theme in all these? They all involve logistics. In the quest for more digital sales, the big upfront investment is in supply chain efficiency. The big winners will be those who can drive the most cost out of the last mile of delivery.
Pet Food Moves
The race among big CPG’s to buy up pet food brands continues with Nestle SA’s plans to acquire Canadian pet food maker Champion Petfoods for something north of $2 billion. Not quite as rich as the General Mills/Blue Buffalo deal, but still a premium for a company that generated under $200 million in revenue last year. That’s around a 10X multiple compared to an 8X multiple for the General Mills deal (they paid $8 billion for a company doing over $1 billion in revenue). Champion makes the modest claim of supplying “the world’s best dog and cat food” but they don’t have near the brand presence of Blue Buffalo in the US. Nestle will need to muster all of their branding expertise and leverage their product positioning in retail to turn Champion into a moneymaker for them.
Bees and Food Pricing
Bees have been the invisible essential workers behind food production for thousands of years but are now in decline to the point where it threatens future food supply and puts upward pressure on food pricing. Bee expert and book author Thor Hanson says bee pollination is needed for every third bite of food in the human diet. It’s even higher for the most popular and nutritious food crops. Bees are also behind a lot of the flavorings used in our most popular fast foods and consumer packaged goods. When bees started to mysteriously die and disappear in 2006, beekeepers and biologists initially had hoped it was a temporary malaise which would correct over time. But the decline has persisted and is creating increasing concern about the impact on the food supply chain. Experts say the bees’ challenges can be summarized with four “Ps”: parasites, poor nutrition, pathogens, and pesticides. The impact of each challenge varies from region to region but everyone agrees this is a global problem. The good news is that scientists now understand the causes and can recommend specific actions to maintain bee health and mitigate losses in specific areas. But it’s not a quick fix. Expect to see impact on supplies of a number of food products and resulting pricing pressure in the short term.
Exclusive: The Food Tech List
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