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    Fonterra reports sharp dip in dairy prices By Guy Montague-Jones, 07-Jul-2010

    Fonterra has revealed that prices were down sharply at its latest auction, as concerns about supply, which had fueled recent price increases, eased.

    The New Zealand-based dairy processor said average prices for anhydrous milk fat, skim milk powder and whole milk powder fell 13.7 per cent across all contracts and contract periods after its latest globalDairyTrade trading event.

    Paul Grave, globalDairyTrade manager, said the result reflected supply increasing globally in response to what has been a very strong price signal over recent months. Concerns in the market about short term product availability, which to a large extent underpinned recent high prices, appear to have eased.

    Rough trend

    Patty Clayton, a senior analyst at Datum, told DairyReporter.com that the news from Fonterra gives a rough idea of a global trend whereby the market is moving from a situation of excess demand to one where supply is recovering.

    However, Clayton said the price slump is to a large extent particular to New Zealand because the country is moving into the peak production period.

    European market

    In Europe, the analyst said the market remains firm although production is starting to increase slightly in France and Germany. As for the direct impact of the price and supply situation in New Zealand, she said it may increase competition on international markets and put pressure on European exports of dry powders.

    In its latest take on the market, published on June 29, the European Commission said: “At present, EU and world prices appear to be stabilising for most commodities despite the seasonal increase in EU and US milk production.”

    The quarterly report on the dairy market judged that the release of butter and SMP intervention stocks have so far had no negative impact on the market. Clayton said the latest tender results, due for release on Thursday, will give the most up to date view from the commission on the current state of the dairy market.

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    FrieslandCampina moves away from commodities

    Multinational dairy company FrieslandCampina has revealed its strategy for the coming decade in which it plans to expand globally and shift its focus to three specialised product categories.

    In its route 2020 strategy, the firm said it envisages growth in dairy-based beverages, branded cheeses and infant and toddler nutrition ingredients as it plans to target previously unexplored markets in the Middle East, North Africa and South East Europe.

    Company CEO Cees ‘t Hart said “Worldwide we are seeing sharp movements in dairy prices, as well as a shift in the economic focus towards Asia, a globalisation of markets and businesses, increasing attention to sustainability and growing consumer demand for good, healthy food.”

    Looking to capitalise on dairy’s healthy image, FrieslandCampina said it wants to develop worldwide growth by developing specific ingredients with clients and shifting the focus from commodity sales such as milk and whey powder towards sales of specialised products.

    The firm has forecasted a 5 per cent average annual volume growth of its added value products, including branded cheese, Milner and added it would expand from cream products to a full dairy portfolio.

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    Yoghurt fastest growing dairy market – YouGov research By Oliver Nieburg, 18-Jun-2010

    Market research agency YouGov SixthSense has published a study suggesting that yoghurt is the fastest growing sector in the UK dairy industry.

    Researchers found yoghurt to be the third most profitable in dairy, behind milk and cheese, but said it was the most improved of all dairy markets with around a 7 per cent increase in value on the previous year. Value growth was said to be driven by price rises and interest in healthy eating.

    The Dairy Market, 2010 report, published in May, valued the UK dairy industry at £8.8bn in 2009, forecasting a further 3 per cent growth in 2010. The yoghurt, fromage frais and yoghurt drinks market was estimated at £1, 685m in 2009.

    The study also said manufacturers could further exploit yoghurt’s healthy image “to take advantage of current healthy eating trends”.

    Healthy image

    The report suggested that yoghurt firms benefitted from the product’s healthy image as 71 per cent perceived yoghurt as a healthy product. It noted how Danone Activia Light has seen a massive increase in sales in 2009.

    YouGov research director James McCoy told DairyReporter.com: “By definition, something viewed as indulgent isn’t normally considered healthy. Yoghurt, however, occupies a unique space in the consumer mindset, comfortably existing under both of those labels. Nevertheless, manufacturers need to strike the right balance between health and indulgence, ensuring that the desire for one doesn’t overshadow the other.”

    The health image could also have market potential among parents after 82 per cent of those surveyed considered dairy products good for children.

    The study supports earlier research by Mintel which also regarded health and indulgence as the driving force behind the market for yoghurts. Mintel’s research found a 9 per cent increase in product launches in the category over the past year, bolstered by strong demand in Europe.

    Consumer trends: multipack and flavoured

    YouGov’s findings indicated that multi-packs, which allowed consumer to stock up for the week, were the most popular format in the yoghurt sector followed by individual pots. The authors said manufacturers were introducing more individual pots to promote snacking and impulse purchasing.

    In terms of type, an overwhelming 59 per cent of those surveyed preferred yoghurts which were flavoured. Low/no fat yoghurts also proved popular and researchers recommended the use of recipe cards and PR to promote the use of natural yoghurt in cooking to boost sales.

    The report was drawn together from market research to establish consumer trends in five key sectors within the dairy market: milk, cream, yoghurts, cheese and yellow fats. Researchers surveyed between 1,500 – 2,200 people to compile the study.

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    Carbery targets sports drinks with clean whey By staff reporter, 09-Jun-2010

    Irish dairy ingredients specialist Carbery is marketing a “clean tasting” hydrolysed whey protein range aimed at the sports nutrition market after completing sensory studies in conjunction with the North Carolina State University (NCSU).

    Irish dairy ingredients specialist Carbery is marketing a “clean tasting” hydrolysed whey protein range aimed at the sports nutrition market after completing sensory studies in conjunction with the North Carolina State University (NCSU).

    Its offering Optipep is a blend of whey-derived di- and tri-peptides it says are suited to recovery from exercise and muscle building. It sys claims of this type can be made by products employing Optipep.

    “By evolving our Optipep range, we are now offering our customers what is believed to be one of the best tasting hydrolysed whey proteins (HWP) on the market”, said Bridget Holmes, the innovation project manager at Carbery in a statement.

    “Our industry leading research into HWP flavour profiles with NCSU, which started last year, included benchmark work comparing a range of leading products in the market place and is the first in-depth study of its kind. Focusing on HWPs, the study allowed us to evolve Optipep’s taste profile and ensure best-fit as an ingredient for sport and fitness-related nutrition from a sensory perspective.”

    Tools

    The company said the NCSU testing had provided it with a set of tools to better understand how to formulate whey extracts to make them cleaner tasting. Enzyme technology was the principle mechanism that allowed the bitterness typically associated with hydrolysis to be reduced.

    Holmes said Carbery’s sports division, Carbery Sports, was demonstrating some of the advances the company had made with a range of formulations, “containing Optipep for sports nutrition manufacturers and retailers”.

    The company said Optipep increased insulin response that stimulates the uptake of certain amino acids into the muscle, “promoting muscle protein synthesis and decreasing breakdown by inhibiting amino acid oxidation.”

    Dairy innovation programme

    Carbery joined an initiative called Food for Health Ireland (FHI), established last year, that includes Dairygold, Glanbia and the Kerry Group as well as Irish academic and government research organisations.

    It has received funding of €22.5m – mainly from the government – for the identification and commercialisation of bioactive ingredients from milk that can be used to address “the world’s most pressing health issues”, which include infant development, obesity, immunity and heart health.

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    Margin pressures to drive beverage sector convergence, report By Jane Byrne , 03-Jun-2010

    Beverage companies will need to move beyond their traditional categories in terms of future mergers with increasingly health focused consumers and an unprecedented level of retail pricing pressure creating serious challenges for the sector, says a Rabobank report.

    Acquiring competitors within their core segment is becoming increasingly complicated for leading beverage manufacturers due to the tighter competition regulation and existing level of consolidation within the industry.

    The report Convergence in the Beverage Sector holds that, as a result, many companies are expected to look for opportunities outside of their core segments.

    And the convergence process can help beverage companies improve their strategic positioning by building a strong portfolio of must-have brands across numerous segments, notes the publication.

    “Acquisitions outside a company’s core segment can allow the company to grow revenues and improve operational efficiency in a mature market without cannibalizing existing brands and without raising anti-trust concerns,” said Steven Rannekleiv, executive director of Rabobank’s Food & Agribusiness Research and Advisory.

    He also states that combining operations across segments can help reduce costs and maximise distribution efficiency.

    In the US the top two non-alcoholic beverage suppliers now have a 65 per cent market share, and the top three rum suppliers and top two beer suppliers now own 75 per cent and 78 per cent of their markets, respectively, according to the report.

    Ongoing consolidation of retailers in the US, which is informing price and delivery pressures, are also driving beverage company convergence strategies, said Rabobank, and in order to realize a competitive advantage, beverage makers are increasingly growing their portfolios with ‘critical’ alternative category brands, the analysts point out.

    There has already been a notable shift by soft drink industry leaders in this regard, with both PepsiCo and its major rival Coca-Cola diversifing into healthier product categories as consumer preferences shift towards alternatives such as energy drinks, functional waters and juices.

    The beverages behemoths have been buying up beverage companies, particularly in the US, as they seek to garner some of this shifting market share.

    Last autumn saw PepsiCo acquire Brazil’s leading coconut water company, Amacoco, as part of this bid to transform its beverage portfolio towards more healthful products, while Coca-Cola invested in coconut water company Zico only a couple of weeks after the Pepsi-Co acquisition.

    Other recent PepsiCo buys include US-based healthy juice company Naked Juice, UK-based functional waters firm V Water, Russian juice company Lebedyansky, and juice maker Sandora in the Ukraine.

    The report states that carbonated soft drink (CSD) sales have been steadily losing market share to bottled water, ready-to-drink teas and other noncarbonated beverages, with CSDs’ share of non-alcoholic beverages in the US dropping 21 per cent over a ten year period from 1998 to 2008.

    In the same period, state the analysts, bottled water’s share grew from 4 per cent to 20 per cent.

    Areas of convergence opportunities that the analysts envisage include ventures between global soft drinks and beer companies, large soft drink companies investing in health and wellness positioned juice and dairy segments as well as globally focused spirits firms and breweries merging.

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    Leading UK cheese producer questions Minister’s export pledge By Oliver Nieburg, 01-Jun-2010

    A major UK cheese exporter has raised doubts over Food Minister Jim Paice’s plans to invest in cheese processing to boost exports.

    Stephen Jones, managing director of Somerdale, a firm specialising in British cheese exports, blasted previous cuts in government support and believed supermarket domination meant any future investments in cheese production would be in vain.

    Supermarket sweep

    “So many dairy farmers are out of business from supermarkets that squeeze the market – they just cannot afford to produce milk,” Jones told DairyReporter.com.

    “Compared to the Italians and other European countries the UK gets very little support.”

    The Somerdale chief called for greater government investment in overseas trade shows and private companies, but remained sceptical of governmental support for a matter that was “not a sexy issue”.

    Jones criticised cuts to Food from Britain, the government backed body that supported national food and drink exporters, which closed in March 2009.

    “Due to supermarkets squeezing out the competition, it is very difficult for the government to do anything,” he added.

    Industry body Dairy UK said cheese exports in 2009 amounted to a record 104,000 tonnes, up from 86,000 tonnes the year before. Director general Jim Begg said: It is important that government does its best to nurture this important part of the economy.”

    In its recently published ‘Dairy Manifesto’ the organisation called on the new government to play a supportive role in the industry’s development. Among its five key government actions was to ensure that competition policy allows UK dairy companies to compete at the global scale.

    An industry view

    Wyke Farms managing director Rich Clothier felt that cheese producers were not getting enough help in the right areas. He told DairyReporter.com that more marketing support was needed from government to build awareness of UK cheeses. Removing some of the red tape should also be a priority, he added, “interpretation of legislation in the UK with regard to exports can be over zealous & therefore costly.”

    In spite of a perceived lack of governmental support, Wyke Farms said it plans to expand exports in the next year and build upon its £500k per month exports which make up approximately 10% of total sales by targeting new regions such as the Far East, Australasia and the US.

    Minister’s Milk Day pledge

    UK Food Minister Jim Paice said in the build up to today’s World Milk Day that the government needed to do more to help the dairy industry invest in processing.

    “We now need to help the dairy industry invest in processing, so that we can become a net exporter of all dairy products and send Britain’s iconic cheeses and other dairy products to the world,” said Paice.

    “We produce milk at highly competitive prices, but the gap between liquid milk and milk for processing is too wide,” he added.

    The Minister hoped the UK would become a net exporter of all dairy products and bring Britain’s 700 variety of cheeses to the world.

    The UK imports £2.3bn dairy products a years, but exports just £900m.

    Food and drink exports grew in value by 4.4 per cent to £9.65bn as a whole in 2009, according to research by the Food and Drink Federation (FDF). The study concluded that cheese was the UK’s sixth top export in 2009, worth 282.6m, but grew only 0.5 per cent on the previous year.

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    Is the food processing industry poised to embrace nanocoatings? Post a commentBy Rory Harrington, 31-May-2010

    Nanocoatings on food processing equipment hold huge potential for boosting safety and performance but lingering doubts and cost concerns among industry players are hampering take up, said an expert

    But one company that produces a nano-scale coating product said such barriers are “falling daily” as companies begin to embrace nanotech know-how.

    So – while uncertainties still exist – to what extent is the food processing sector readying itself to accept the breakthroughs offered by nanocoatings?

    Nanocoating potential

    There is widespread acknowledgement among a host of industry experts that nanocoatings on processing machinery could help realise a step-change in food production. But – as with so much connected to nanotechnology – companies are waiting for others to go first and costs to fall.

    “Nanocoatings can be applied to machinery to inhibit bacteria growth, which means they need less cleaning,” Kathy Groves, project manager of microscopy at Leatherhead Food Research told FoodProductionDaily.com. “They do not kill bacteria but prevent the microorganisms from adhering to surfaces.”

    She added the resulting reduction in cleaning also cuts down on the need for detergents. The coatings could also be used on pipes and heat exchangers with a view to decreasing the build up of deposits on their surfaces – so called biofouling.

    “Over time product residue builds up and the process has to be stopped to allow cleaning to take place. Clearly, use of nanocoatings means products would stick much less which would reduce the need for this, resulting in less downtime and more efficient maintenance,” said Groves. “There is real interest in the industry for this.”

    The technology could also see nano-coated blades staying sharper for longer – once again increasing operating efficiency and cutting downtime.

    Uncertainty

    But despite the clear potential the coatings are not being used because food processors need to be certain they will work in their specific application and that they are food safe, said the Leatherhead microscopy expert.

    “Part of the problem is that it is a big decision to coat equipment and pipework with nanomaterials,” she added. “The technology has great potential but the sheer cost and uncertainty means companies do not know what to do and are waiting for others to take the plunge.”

    But Groves said the wider-scale penetration of nanocoatings will come “sooner rather than later” as the technology becomes more established and because it is already used in other segments of the food industry, such as packaging.

    Barriers falling

    This view was backed by Germany-based company Nanopool which said that its nano-scale anti-microbial liquid glass product is being increasingly taken up the food processing industry as companies are convinced of its benefits and safety.

    The silicon dioxide material forms a flexible and breathable barrier – around 100 nanometres thick – that stops bacteria bonding to it because of its very low surface energy, company UK project manager Neil McClelland told FoodProductionDaily.com. The food-safe coating contains no nanoparticles such as nanotubes or silver ions, and can be sprayed or wiped on to surfaces. Nanopool said it can cut cleaning costs by 35 per cent and, depending on the thickness of layer applied, lasts from one top three years.

    “We already have a number of clients in the food industry such as McDonalds, as well as other major players in the biscuit, drinks, ready meals, meat and fish processing sectors,” he added. “There have been barriers to the uptake of nanotechnology in the food industry – but we are seeing those barriers fall daily as people recognise the value and benefits of our product.”

    The company said take up of its product has so far been greatest in Germany and Austria, with more processors in the UK starting to come on board.

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    Nano risk assessment a work in progress By Rory Harrington, 02-Jun-2010

    The risk assessment framework for nanotechnology in Europe – like so much else connected to the technology – appears to be in its infancy but developing at a rapid pace.

    In its opinion issued in Spring last year, the European Food Safety Authority (EFSA) sought to lay down an overarching system to use as a risk assessment framework for nanotechnology – but was clear that much currently remains unknown about nanomaterials and how they behave in food and packaging.

    A further guidance document, the first draft of which is due to be published next month, is intended to fill in some of those gaps with practical advice.

    But such nano knowledge gaps have led some to call for a ban on the use of nanomaterials in food products until their safety has been fully established. One area of concern is whether nanoparticles can migrate from packaging materials into foods.

    EFSA position

    EFSA’s opinion, published in March 2009, was candid in stating that current uncertainties of risk assessment of engineered nanomaterials (ENM) and their applications in food and packaging arose because of the current “limited information on several aspects” of the technology

    In seeking to assess nanomaterials, the food safety body repeatedly used phrases such as “specific uncertainties”, “limited knowledge” and described ENMs as “difficult to characterise, detect and measure” in relation to toxicokinetics and toxicology in food. Likely usage and exposure levels are also largely a mystery, said the Parma-based experts.

    But despite such a patchy picture, EFSA’s Scientific Committee declared it was possible to apply internationally established risk assessment criteria to ENMs – namely those of hazard identification, hazard characterisation, exposure and risk characterisation.

    The body added that significant knowledge gaps meant assessment of risk must be carried out on a “cautious case-by-case approach” as it included some significant caveats into this overall risk assessment conclusion.

    Firstly, it said that risk assessment must take into account the specific properties of ENMs in addition to those of equivalent non-nanoforms. It is likely that toxicological properties may vary between ENMs and information on oral exposure to the materials is also “extremely limited”, added the EFSA scientists.

    The body highlighted the need to build up risk assessment profiles for ENMs – including identification and characterisation, and whether they will be ingested in nanoform.

    The committee said that while a case by case analysis “may currently be possible”, it stressed “risk assessment processes are still under development”. It recommended that methods to detect and measure ENMs in food should be developed and that a map detailing the extent of their use in foods be drawn up. More information was also needed on human exposure and ENM toxicity data.

    Referring to the risk assessments, Prof Vittorio Silano, EFSA Scientific Committee chair, said: “Given current data gaps and limitations in a number of cases, it may be very difficult to provide fully satisfactory conclusions.”

    The agency has formed an expert working group and is currently preparing further risk assessment guidance. This will provide practical recommendations on how to assess industry applications on ENM use in everything from food contact materials, novel foods, enzymes and food supplements. A first draft is scheduled to appear in July.

    Nano concerns

    The lack of certainty over ENMs has led some to push for a more cautious approach to their permitted use. The Swiss Centre for Technology Assessment (TA-Swiss) last year called for existing legislation to be adapted to meet the challenges posed by nanomaterials. It said Europe-wide regulation was needed in relation to ENMs in packaging and food.

    The researchers examined the issue of migration from nano-packaging into food and concluded that this was primarily dependent on how the nanolayer was applied.

    “In general terms, it must be said that in the case of laminated films with a nanolayer silicate plastic grid, it is least likely that nanoparticles will be leached out of the packaging,” said the body. “But where the food is in direct contact with the nanolayer, there is a greater risk that it will pick up nanoparticles from it.”

    EU politicians have also expressed fears over the availability of products using nanotechnology prior to the completion of proper risk assessment.

    Last April, the European Parliament’s environment committee called for the withdrawal of products containing nanotechnology which are already on the market until safety assessments can be made. Earlier this month, the committee also said that foods produced by nanotechnology processes must undergo a specific risk assessment before they can be approved for use and labelled.

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    Release of SMP intervention stocks could deflate prices By Guy Montague-Jones, 25-May-2010

    The EU Commission has agreed to start releasing intervention stocks of butter and skimmed milk powder (SMP) sparking some concern that the price recovery could be jeopardised.

    Last year the EU bought up stocks of butter and SMP to help out farmers struggling to cope with the sharp fall in dairy prices. Now that the market has recovered significantly, the CMO Management Committee has voted to open tenders for the two dairy commodities.

    The release in stocks comes on top of the amounts already agreed under the Deprived Persons Scheme.

    Intervention stocks

    So in the case of butter, 76 000t are in stock, of which 51 000t have been set aside for the most deprived and 25 000t are now to be opened up for tender.

    As for SMP, there is 257 000t in stock and 65 000t have been committed for the most deprived leaving 192 000t, of which 65 000t are to be tendered.

    Arnaud Haye, senior analyst from the Agriculture and Horticulture Development Board (AHDB), told DairyReporter.com that the decision to release the stocks was not “entirely surprising” given the amount in stock and that prices are quite high at the moment.

    Market impact

    In terms of the impact the move is likely to have on the market, Haye said the situation is quite different for the two dairy commodities in question.

    The analyst told DairyReporter.com that it is unlikely that the release of butter socks will have much of an impact on the market. The move may release a little pressure as prices continue to rise but the amount being released is relatively low in relation to total European production.

    In the case of SMP there is the potential for a more significant impact because the quantity being released is larger and it is a much higher proportion of EU production. Last year the EU bought up around a quarter of EU production of SMP so trying to feed much of that back into the market could put significant downward pressure on prices.

    However, Haye said that a lot of EU produced SMP is exported so its price going forward depends a lot more on world demand and supply. This makes it harder to predict how prices will evolve as result of the release of stocks.

    The first tenders have to be submitted by 1 June 2010, before being assessed by Management Committee on 3 June. The Commission said it will fix the price and quantities to be accepted after each tender taking into account the market situation at that moment and avoiding market disturbances.

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    Fonterra prepares for sharp organic dairy growth By Guy Montague-Jones, 21-May-2010

    Fonterra expects to see the organic side of its dairy ingredients business grow 140 per cent over the next five years.

    Driven by the ever increasing popularity of organic dairy products, Fonterra said its organic dairy ingredients, which are used in cheese, milk powder, proteins, and butter, are set to enjoy continued high growth.

    Fonterra has more than doubled its organic milk supply over the past year to help meet demand and has accredited manufacturing sites at Hautapu, Waitoa, and Morrinsville.

    Room to grow

    The rate of progress partially reflects the small starting base – Fonterra said organics currently account for only one per cent of its revenues.

    However, Rick Carmont, head of organics at Fonterra, said: “Although organics is a small part of Fonterra’s milk supply and production, dairy is the fastest-growing category in the international organic market, and having seen 60 per cent growth over the last two years we are well placed to build on this.”

    Carmont added that Fonterra is actively recruiting farmers to its Organics Conversion Programme to help the company deliver on its growth expectations. He highlighted the advantages of turning to organics, including a three year support system guaranteeing premium payments from day one of the contract and no cap on volumes supplied.

    Mixed signs

    The comments from Carmont came as the New Zealand trade minister Tim Groser published a report on the organic sector, highlighting continued rapid growth, especially in high-value markets such as the United States and Europe.

    Despite the optimism about the potential in the organic sector, there is some evidence that the category has come under pressure during the recession.

    A recent Soil Association report said that while demand grew across Europe as a whole in 2009, organic food and drink sales in the UK were down 12 per cent. But the certification body and lobby group said organic milk did perform a lot better than other organic products in the UK, with sales up 1 per cent compared to 2008.

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