Sugar tycoon Alfonso Fanjul now open to investing in Cuba under ‘right circumstances’

Alfonso Fanjul fled Cuba as a young man, leaving behind his family’s mansions and vast sugar-cane fields as they were being wrested away by the communist Castro regime.

In exile in the United States, he built an even larger sugar empire, amassing one of North America’s great fortunes and befriending members of Congress and presidents who benefited from his largess. The sting of his family’s forced departure from Cuba led him to become one of the principal funders of the U.S. anti-Castro movement.

(Alex Quesada/Polaris) - Sugar tycoon Alfonso Fanjul.

Now, contrary to what almost anyone could have imagined, the 76-year-old Fanjul has begun to reassess old grievances and tentatively eye Cuba as a place for him and other U.S. businessmen to expand their enterprises. Quietly, without fanfare, Fanjul has started visiting the island of his birth and having conversations with top Cuban officials.

“If there is some way the family flag could be taken back to Cuba, then I am happy to do that,” Fanjul said in a rare interview, publicly discussing his recent visits to the island for the first time.

Fanjul’s about-face is a startling development for the exile network that has held a grip on the politics of U.S.-Cuba relations for decades and has played an outsize role in presidential campaigns. His trips place him at the vanguard of a group of ultra-wealthy U.S. investors with roots on the island whose economic interests and political clout are pushing the two countries toward a thaw in their half-century standoff.

Fanjul, in the interview, said repeatedly that his primary motivation in visiting Cuba has been a desire to “reunite the Cuban family,” referring broadly to the Cuban diaspora and those who remain on the island. Business considerations could be explored only if there are political and diplomatic advances, he said.

“The [Fanjul] family was in Cuba for 150 years, and, yes, at the end of the day, I’d like to see our family back in Cuba, where we started. . . . But it has to be under the right circumstances,” said Fanjul, who is best known by his nickname, “Alfy.” “One day we hope that the United States and Cuba would find a way so the whole Cuban community could be able to live and work together.”

Fanjul, who lives in Palm Beach, Fla., and whose family holdings include Domino Sugar and refineries across the United States, Latin America and Europe, has managed to maintain a remarkably low profile for a politically connected tycoon. His access to the highest levels of power was evident during the Monica Lewinsky scandal of the 1990s, when the special prosecutor’s report noted that President Bill Clinton received a call from Fanjul during a private Oval Office moment with the intern.

Last week, the Fanjul family’s influence over policymakers was on display when the U.S. House passed a farm bill that would cut subsidies to many agricultural products while leaving unscathed the controversial, taxpayer-backed program that protects sugar profits.

Fanjul visited Cuba in April 2012 and again in February 2013 as part of a delegation licensed through the Brookings Institution, the Washington think tank that has produced recent papers criticizing U.S. policy and calling on the Obama administration to further loosen sanctions. In Havana, he lingered with tears in his eyes at his family’s colonial-era manse, now a museum, with its elegant columns, lush inner courtyard, sparkling chandeliers and grand staircase.

He was so taken by the nostalgia and excitement of returning to the familiar streets of his youth, a travel companion recalled, that Fanjul enthusiastically chatted up random people of all ages as he walked around. He also met with Cuba’s foreign minister and toured state-run farms and a sugar mill with Cuban agricultural officials.

Unlike most other Cuban Americans who travel to the island, Fanjul has direct access to some of America’s most important policymakers. After returning from his first trip, Fanjul met with his good friend, then-Secretary of State Hillary Rodham Clinton, to express his changing views on Cuba. In November, Fanjul once again discussed his evolving mind-set with Clinton and her husband at a Clinton Foundation fundraiser in the Miami home of Cuban American businessman Paul Cejas, a former U.S. ambassador to Belgium.

Many embargo supporters say U.S. policy should change only when certain conditions are met, such as regime change or political reforms. Fanjul, however, said he prefers not to answer the question of whether he would require the fall of the Castro government or an end to communism before doing business in Cuba — saying that he respects existing U.S. law.

“Right now there’s no way for us to consider investing in Cuba. How can you work a deal if you’re not legally allowed to do it?” he said.

“Now, would we consider an investment at some later date?” continued Fanjul, a permanent U.S. resident who maintains Spanish citizenship. “If there’s an arrangement within Cuba and the United States, and legally it can be done and there’s a proper framework set up and in place, then we will look at that possibility. We have an open mind.”

He said the Cuban government — which has business deals with companies from countries such as Canada and Spain — would have to change its economic structure to make it easier and safer for outside companies to make money.

“Cuba has to presumably satisfy the requirements that investors need, which are primarily a return on investment and security of the investment, so they feel comfortable with what they’re doing,” he said. “I personally would look at that in the same framework as any investor would.”

Evolving politics

The logistical, political and legal complexities involved in any potential expansion of U.S.-based businesses onto Cuban soil are staggering. Fanjul’s willingness to hold meetings with the Castro government puts him on a potential collision course with Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.), a Cuban American whose campaigns have been supported by Fanjul but who is an unwavering advocate for the embargo and has the power to thwart any attempts to lift it.

Trickier still would be the impact on presidential politics, with Florida’s Cuban American electorate still a significant factor in the battle for that state’s crucial electoral college votes.

Already, there have been signs that younger Cuban Americans, particularly those born in the United States, are moving away from the hard-line views of their parents and grandparents. Now, as Fanjul’s recent gestures show, even some of the most entrenched exiles are evolving, and politicians accustomed to embracing the Cuba trade embargo in their pursuit of Florida’s large Cuban American electorate will have to calibrate the risks and rewards of evolving along with them.

Hillary Clinton, the putative Democratic front-runner for president if she chooses to run in 2016, spoke out in favor of the Obama administration’s actions relaxing restrictions on family travel and cash flow to the island. Yet she, like many politicians in both parties, has repeatedly expressed support for continued sanctions. She is close with several key players, besides Fanjul, who have stated an openness to more engagement with Cuba.

Fanjul, a longtime supporter of Bill Clinton’s campaigns and causes, would probably be a major donor, as well as a close adviser on Cuba-related matters, to Hillary Clinton should she run. Virginia Gov. Terry McAuliffe (D), a longtime Clinton confidant, traveled to Cuba for a trade mission in recent years and held discussions with high-ranking government officials there. And Cejas, whom Bill Clinton appointed ambassador to Belgium, has expressed doubts about the U.S. trade embargo against Cuba.

“I can tell you one thing that became very clear to me: The embargo is really an embargo against America ourselves. Because Americans cannot do business with Cuba, where there are incredible opportunities for growth,” said Cejas, who traveled to Cuba with Fanjul.

The issue could prove thornier for Republicans, such as Sen. Marco Rubio (R-Fla.), a Cuban American widely seen as a possible 2016 presidential candidate. A staunch supporter of sanctions who blasted President Obama’s loosening of some restrictions as an “enrichment of a Cuban regime that routinely violates the basic human rights and dignity of its people,” Rubio has cited the Fanjul family as a crucial source of campaign funds and political connections.

The family recently hosted another possible GOP presidential candidate, New Jersey Gov. Chris Christie, who headlined a Republican Governors Association reception last month at the Palm Beach home of Fanjul’s nephew, Jose “Pepe” Fanjul Jr., just as a scandal was erupting around Christie.

The Fanjuls’ internal family politics — Alfy backs Democrats and brother Pepe Sr. supports Republicans — reflect both the complexities of the Cuban American experience and perhaps the shrewdness of a family dynasty that knows how to hedge its bets.

Asked about his brother’s trips to Cuba, Pepe, in an e-mailed statement from his office, said he has “always held firm that when the time comes and Cubans are reunited, I will return and help our fellow Cubans rebuild my birthplace.” But, he added: “As you know, I have yet to return.”

An untapped market

In recent years, other prominent Cuban Americans have begun to talk more about opening relations with the island. A number of these exiles see Cuba, communist or not, as a potentially lucrative market that has been closed off to American corporations by decades-old trade barriers they helped erect. Now, some say, the long-standing embargo has failed. They say increased foreign investment in Cuba and greater engagement with people there could spur greater reforms.

But such suggestions have frequently been met with anger by the older generation of Cuban exiles.

Miami businessman Carlos Saladrigas, for instance, said he has been openly branded a traitor in some circles because of his visits to Cuba and his interest in possibly changing U.S. policy.

“I used to be as hard-line as they come,” said Saladrigas, a member of corporate boards for firms such as Duke Energy and Advance Auto Parts. But now he warns that U.S. businesses, without the ability to invest in Cuba, could find themselves sidelined if the island begins to open up. “Do we as Cuban Americans, or do we as Americans, want to be left out of the picture?” he asked. “You can influence Cuba’s future much more by participating in Cuba’s future than by staying away.”

But the shift by Fanjul is far more significant. Not only do he and his family control one of the largest sugar operations in the world, but they also have been major donors to activist groups, such as the Cuban American National Foundation and the U.S.-Cuba Democracy PAC, that have been vocal advocates for trade sanctions.

Rumors of Fanjul’s Cuba visit prompted Mauricio Claver-Carone, a Washington-based board member of the U.S.-Cuba Democracy PAC, to confront the sugar magnate during a recent private lunch in West Palm Beach.

Claver-Carone said that he told Fanjul his trips had served only to help the Cuban regime. “I told him they were using him as a tool,” Claver-Carone said, “and that with his stature comes responsibility.”

Fanjul’s trips followed policy shifts by the Cuban American National Foundation, which has lost a number of its more conservative members amid its support for loosening restrictions on travel and money as a way to help Cubans living on the island. “Having known Alfy for 40 years, I think we can trust him to do the right thing,” said Pepe Hernandez, president of the foundation.

Fanjul said repeatedly during multiple interviews that “this is a highly sensitive issue.” He said he needed to “stay at a high altitude” in discussing potential changes in U.S. policies toward Cuba because of the political challenges involved. “What I say can be taken in the wrong context,” he said.

An opening for foreigners

Fanjul’s Brookings-organized trips coincided with calls by President Raúl Castro to rapidly revive Cuba’s moribund sugar industry. Castro has begun permitting foreign companies to participate in sugar production for the first time since the 1959 revolution, and Brazilian firms would be likely candidates to seize new opportunities in Cuba.

Fanjul said his visits were unrelated to Castro’s sugar initiative. He said he has not met with Castro and held no specific discussions with Cuban officials about investments in Cuban sugar. Yet experts say there are many reasons that the Cubans would hope to entice the Fanjul family.

“The Cuban government can revive its sugar industry only with an infusion of foreign investment,” said American University professor Philip Brenner, an expert on the Cuban economy and politics. “The old Cuban mills are enormously inefficient, and the country needs modernization and mechanization to increase productivity.”

Investments by Brazilian sugar companies in Cuba put those companies in the back yard of the Fanjuls’ operations, which dominate the Dominican Republic and Florida and have recently expanded into Mexico. Brenner, who regularly meets with Cuban officials, thinks the Cuban government may now “be willing to consider the possibility of permitting aging sugar barons” from the United States to invest and participate.

Fanjul joined the Brookings board this past July and has donated at least $200,000 to the think tank, which has hosted Cuban officials for panel discussions geared toward encouraging greater communication and loosened restrictions on doing business with Cuba. Ted Piccone, Brookings’ acting vice president and foreign policy program director, wrote an open memo to Obama last month urging him to use his executive authority to give direct aid to entrepreneurs on the island and expand travel licenses.

The memo did not mention Fanjul, but it said, “These measures would draw support from key political and business constituencies in the United States (including Florida).”

The Fanjul trips to Cuba reflect a broader, though still subtle, easing of Cold War-era tensions between the United States and the Castro regime. In recent months, U.S. and Cuban officials have engaged in small-scale diplomatic talks on issues such as immigration, drugs and offshore oil drilling. And Obama drew attention to the relationship in December when he shook hands with Castro at the memorial service for Nelson Mandela in South Africa.

Obama hinted at a November fundraiser in Miami of more changes ahead when he said U.S. policy toward Cuba should be “creative” and “thoughtful.”

“Keep in mind that when Castro came to power, I was just born,” he said. “So the notion that the same policies that we put in place in 1961 would somehow still be as effective as they are today in the age of the Internet and Google and world travel doesn’t make sense.”

Fanjul’s own travel to the island gave him insights not only about business possibilities, he said, but other possibilities, too.

“Do I have a soft spot in my heart? Yes, that’s my country. My interest is finding a way to unite the Cuban family,” he said. “When you talk with people and hear them, it humanizes. Talking is the first step.”

 

Alice Crites contributed to this report.

Infographic: Changing the food service channel- by Monica Watrous

CHICAGO — Convenience stores are robbing restaurants of traffic, according to a recent report from market research firm Technomic, Inc.

Nearly a third of consumers said they would have visited a restaurant had they not purchased prepared foods from a convenience store on their most recent visit, and 26% indicated they would have visited a fast-food restaurant.

Click the infographic for a closer look at food service usage at convenience stores.

Fifty-three per cent of consumers surveyed buy food from convenience stores once a week or more, compared with 57% who visit a restaurant on a weekly basis, according to Technomic. The survey included an on-line panel of 4,000 convenience store shoppers.

“Due to location and speed of service, c-stores are always going to be a dining option,” said Darren Tristano, executive vice-president of Technomic. “Recently, however, we’ve seen a concerted effort to improve the quality of food and service provided at these locations. If c-stores can continue enhancing these areas, they can look to drive traffic from restaurants.”

Leading the chains for food service usage is 7-Eleven, where 39% of survey participants purchased food within the previous two months. The chain expanded its food options this year with breakfast empanada bites, Pillsbury cinnamon rolls and a healthy snack section featuring such items as dry-roasted edamame, organic trail mix, vegetable chips and dried fruit and nut blends.

Circle K and Chevron follow in food service patronage, each with 17% of consumers buying food in the past two months.

Nine out of 10 convenience store users consider food quality and flavor when deciding which store to visit. Wawa earned the highest food and beverage ratings, trailed by Quick Trip, Sheetz, Stripes and Kwik Trip.

Nigel Travis, chief executive officer of Dunkin’ Brands, discussed the emerging competition from convenience stores during an Oct. 24 earnings call.

“We do see convenience chains thinking about food and beverage — that’s something we’re very aware of,” Mr. Travis said. “Most of these competitors are very good. They’ve invested new concepts — you’ve seen that from everyone from Race Trac, Wawa, 7-Eleven. We’re aware of all these. Our franchisees are highly aware of them. And we talk about competitors like these all the time with our franchisees.”

Sam’s Club to Lay off 2,300

Wal-Mart Stores Inc. will lay off about 2,300 Sam’s Club employees – 2 percent of the warehouse club division’s employees in the United States -- in a bid to streamline its work force.

 "We're doing this to rebalance our resources more effectively across our clubs to align our structure more closely to the current and future revenue of each club," Sam's Club spokesman Bill Durling toldPG. "We are eliminating certain hourly positions, in some cases reducing the number of assistant managers, and in some cases creating new, more senior-level positions."

He added that the action was expected to affect "four associates per club, on average."

Other Opportunities

Durling also noted that affected employees would be paid their regular salaries for 60 days to give them enough time to apply for other jobs within Bentonville, Ark.-based Walmart or Sam's Club, with those unable to find a new position eligible for severance pay. "We know this is a difficult time for some of our associates, and we're doing everything we can to treat them with the utmost care and respect," he said.

Despite the layoffs, Sam’s Club said in the Los Angeles Times it still planned to open 15 new clubs in 2014. It currently operates 630.

Dessert trends 2014: Sweet, single and ready to please 1/6/2014 - by Donna Berry

KANSAS CITY — Almost everyone appreciates a little sweet treat after a meal, whether it is a cookie, fruit or a scoop of ice cream. Even with consumers increasingly making better-for-you food and beverage choices, they are not ready to desert dessert.

Out-of-home dessert consumption is on the rise as consumers expand their definition of “dessert” to include more nontraditional items, according to the 2013 Dessert Consumer Trend Report from Technomic, Inc., Chicago. Dessert is also no longer limited to the final course of the evening meal. It has become an all-day, any-day phenomenon. In fact, 40% of consumers now eat dessert twice a week or more often, up from just 36% of those polled in 2011, according to the report.

Only about half of consumers’ post-restaurant meal desserts are purchased at the same restaurant, while the remainder are eaten at home or at another food service location. What attracts consumers to eating dessert out — indulgences that are not easily prepared at home or may not be readily found at another food service concept. Another attraction is desserts that may be shared and customized.

Appealing to millennials

When it comes to the booming foodie demographic known as the millennial, dessert is a social and culinary experience. Millennials were born into a world of infinite choice and have come to expect the unexpected in foods and beverages, including desserts.

Millennials also eat impulsively. According to the Culture of Millennials 2011 report from The Hartman Group Inc., Bellevue, Wash., millennials try not to “really think about it too much ... just eat whatever I want when I feel like it.” Unique and customizable desserts that may be shared are appealing to the demographic that is eclipsing baby boomers in numbers and importance. They are projected to outnumber non-millennials by 2030. And because dessert is an important part of their lifestyle, product developers are developing products that satisfy their sweet tooth.

Seasons 52 offers miniature desserts in shot glasses.

Mark Bastian, creative director of new product development for Dawn Food Products Inc., Jackson, Miss., said two of the biggest trends in food service desserts are miniature items that may be customized to meet the individual diner’s flavor preferences and finger-food sweet treats for sharing, or even for dashboard dining.

“Our mini-bundt cakes allow operators to create their own signature desserts, as they can fill the cakes with just about anything,” Mr. Bastian said. The frozen cakes come in 48-count boxes and need to be thawed prior to serving. The Sonic chain, headquartered in Oklahoma City, uses the mini-bundt cakes to create individualized ice cream sundaes.

The individual portion concept was a driving factor in the cupcake boom and is now influencing the rise in the popularity of donuts. Upscale cupcake concepts appear to have matured, while the gourmet donut market is starting to take shape, as patrons flock to donut concepts for their innovative takes on a classic American treat, according to Technomic. Donut concepts appeal more to consumers than cupcake stores because they’re cheaper and they offer breakfast as well as snacks, said Darren Tristano, executive vice-president with Technomic.

“The consumer appeal of gourmet donut concepts will continue to grow, particularly across lower- and middle-income demographics, because donuts provide patrons an affordable, nostalgic indulgence,” Mr. Tristano said. “Concepts can differentiate themselves by switching up their flavors every few months or by pairing their donuts with high-quality coffee and specialty drinks.”

He cited the example of the five-store Chicago-based chain Glazed and Confused, which opened its flagship store in May 2012. The artisan donuts are prepared throughout the day at the location and then delivered to each unit. The donuts contain no trans fatty acids and are made with such ingredients as seasonal jams and Madagascar vanilla beans. Some of the chain’s specialties include Apple Caramel (apple-cake donut with chunks of Granny Smith apples, topped with a cinnamon glaze and peanuts), Crème Brûlée (bismarck with vanilla crème brûlée, pumpkin or chocolate filling, with brûléed sugar crust) and Maple Bacon Long John (yeast-raised Long John topped with real maple glaze and peppered maple bacon).

Smaller indulgences, such as the small desserts offered by Delightful Pastries, are often perceived by consumers as a smart choice.

This past May, Dawn Foods received the National Restaurant Association’s FABI Award for its Taste-fills bakery bites, a spin on the traditional donut hole. Taste-fills are freezer-to-fryer (or oven) bite-size treats that allow operators to provide a sweet option to expand their menus, said Bill McClellan, vice-president of food service at Dawn Foods.

“Taste-fills were created with both operators and consumers in mind,” he said. “They are not only delectable, but also easy to prep and serve.”

Varieties are apple, cinnamon, cream cheese, cinnamon cream cheese, strawberry cream cheese and strawberry.

“They allow unlimited customization,” Mr. Bastian said. “They can be used in mouth-watering recipes such as French Toast Bites, Bananas Foster for One, Caramel Walnut Apple Bites, and more. The versatile variety of flavors allows Taste-fills to be used in desserts, breakfast applications and snack options. They can even be served as a shareable dessert with different dipping sauces.”

Mini treats are often perceived by consumers as a smart choice.

“Little portions complement the ‘everything in moderation’ approach to dining,” Mr. Bastian said.

Janet Carver, culinology group manager for Ingredion Inc., Westchester, Ill., agreed that smaller portions are what keep consumers ordering dessert.

“Sample-size desserts help diners manage their calorie and sugar intake, and still allows them to have a full-fledged dessert, less the guilt.”

She cited the decision by the Seasons 52 chain to make shot glass desserts a mainstay on their dessert menu.

“They make it fun and easy to try a couple of different things and share at a table,” Ms. Carver said. “The thought is a little indulgence is better than none at all.”

It’s no wonder mini-portion desserts, such as flights and dessert sampler platters, are trending on restaurant menus, according to Technomic. Offering the treats may drive traffic among consumers who prefer affordable desserts that are less filling and better for you.

The nutritional cover-up

When it comes to better for you, the emphasis in the dessert business is currently on sugar reduction.

“This is quite different than fat reduction, and much more challenging,” Mr. Bastian said. “We have had some success with stevia and monk fruit extract in fillings, frostings and icings.”

A new ingredient from Steviva Brands Inc., Portland, Ore., is expanding the use of natural high-intensity sweeteners in dessert applications.

“We manufacture a 10X fine mesh powder that is a proprietary blend of two of our ingredients: erythritol and stevia extract powder,” said Thom King, president. “Once the erythritol and stevia are agglomerated, we run it through a pharmaceutical hammer mill, allowing us to create custom sweetening solutions from 30 mesh to 120 mesh.”

The ingredient is a two-to-one replacement for confectionery/powdered 10X sugar in most recipes.

“We believe we found the perfect threshold for using steviol glycosides in a bulking sweetener environment (erythritol),” Mr. King said. “If we increased the sweetening factor beyond double-strength, the flavor profile of the stevia extract would start to bleed through.

“This ingredient dissolves readily in any liquid or fat, hot or cold, and works in sweetened uncooked foods without making them grainy,” Mr. King added.

In addition to less sugar, better for you to some simply means a little taste of the very best dessert imaginable. Thus, mini portions provide permission to indulge.

Technomic said mini-desserts resonate with women who may be looking for smaller portions or healthier dessert options. Operators may want to specifically target the demographic by marketing the options as small indulgences or by including healthfully positioned ingredients, such as berries or yogurt.

Dawn Foods' Taste-fills are a spin on traditional donut holes with a variety of flavors and applications.

Restaurants are increasingly offering “foods with benefits,” and this includes desserts. For example, another approach to better for you is to include healthful ingredients, such as Greek yogurt.

“Everything Greek seems to be trending,” Mr. Bastian said. “So we created a line of tortes that include Greek yogurt fillings. These fillings are lower in fat and higher in protein than our usual cheesecake fillings. The Greek yogurt gives the tortes a slight tangy flavor and a very desirable eating quality.”

The Schwan Food Co., Marshall, Minn., recognized the Greek yogurt trend and recently introduced frozen Greek Yogurt Pie Wedges. Sold as single-serve units for easy plating, the pie wedges are available in three varieties: blueberry pomegranate, strawberry kiwi and vanilla honey. The company said the clean-label product is a good source of protein and calcium, expanding it beyond the dessert menu to a breakfast food or a morning snack.

Expect the unexpected

With millennials on a quest for taste adventures, they are more apt to explore new flavor combinations, including ethnic fusions as well as sweet with heat. It’s no wonder menu trends analyst Nancy Kruse, president of Atlanta-based The Kruse Co., said Sriracha sauce has become one of “the” cool ingredients in foods for every day-part. Another cool ingredient is beer, which is being used in desserts such as Red Robin’s Oktoberfest Beer Shake.

Technomic’s Menu Monitor report for the third quarter of 2013 indicated, as compared to the same period in 2012, chocolate, vanilla and strawberry remain the top-three dessert flavors, but all three have experienced a reduced presence on dessert menus. This is likely due to the melding and fusion of flavors, which makes it difficult to identify a dessert as having a single dominant flavor.

“With chocolate, the flavors of vanilla, coffee and cherry are joining toffee, coconut and cinnamon,” said Craig “Skip” Julius, manager of culinary services for Sensient Flavors, Hoffman Estates, Ill. “Other new trending flavors include wild blueberries, cocoa nibs, golden flax, apricot, star anise, pumpkin, pink peppercorn, maca, lucuma, coconut milk and of course, sea salt, but even that is now morphing into infused and smoked salts.”

Ms. Carver said salted caramel is showing up in more desserts and in different ways, from being part of a crust to an inclusion to a topping.

“Retro puddings and pastry creams are coming back strong, but with an innovative twist,” she said.

For example, Chef Wylie Dufresne serves a Root Beer Pudding at his New York restaurant Alder.

“This root beer flavored pudding is topped with smoked cashews and crushed root beer barrel candies,” Ms. Carver said.

The texture of puddings, creams and fruit fillings is critical for success.

“We offer an extensive portfolio of texturizing ingredients that allows for all types of formulations, from reduced-fat to lower sugar to gluten-free,” Ms. Carver said. “For example, we created a reduced-sugar strawberry lemon ginger filling using our instant agglomerated functional native starch combined with our stevia sweetener. This is a great way to add layers of flavors without all the sugar to products such as macaroons or mini-pies.”

Mr. Julius said cookie sales in food service are off the charts. This is likely due to the cookie’s ability to be a mini-portion dessert, as well as the batter’s ability to be forgiving with many innovative ingredients.

Innovative flavors in mini-size desserts keep macaroon cookies on the dessert menu.

“The macaroon has certainly gained popularity in the past couple of years and it’s not uncommon to see a wide variety of exciting and unique flavor combinations in this bite-size treat,” said Harbinder Maan, vice-president of global market development for the Almond Board of California, Modesto, Calif. “French macaroons are made exclusively with almond flour, as the recipe would not be functional without it.”

The healthy halo of almonds transfers to macaroon, which is attractive to today’s consumers.

The unexpected also may be delivered through the use of textured ingredients.

“Savory, crunchy toppings are proving successful in food service desserts,” said Steve Moore, director of product innovation for Brand Formula, Bedford, Va. Mr. Moore is the product developer and co-marketer of a new line of tortilla chip crumbs from Azteca Ingredients Inc., Chicago, which provide color, crunch and a Hispanic twist to all types of foods, including desserts.

“The flavor and crunch of the tortilla chip crumbs pairs well with chocolate, caramel, fruits and custards,” Mr. Moore said.

The crumbs are gluten-free and nut free, providing an innovative way to add crunch to foods that appeal to consumers with dietary restrictions.

With so much innovation, and something for everyone, dessert will continue to be an important component of the menu.

Sigma, Shuanghui offering to acquire Campofrio 12/23/2013 - by Keith Nunes

MONTERREY, MEXICO — Mexican Food processor Sigma Alimentos and Hong Kong-based Shuanghui International Holdings are joining together to acquire Spain’s Campofrio Food Group, Madrid. The joint offer is for €6.90 ($9.45) per share of Campofrio Food Group stock, for a total investment of approximately €700 million ($958 million).

The two companies currently own approximately 82% of Campofrio’s outstanding shares. Through its acquisition of Smithfield Foods, Inc. on Sept. 26, 2013, Shuanghui International indirectly acquired approximately 37% of the outstanding shares of Campofrio. Following its acquisition of Smithfield Foods it was not clear how Shuanghui management would address the company’s ownership stake in Campofrio.

In a series of purchases from Nov. 13, 2013, to Nov. 27, 2013, Sigma acquired approximately 45% of the outstanding share capital of Campofrio.

With annual sales of €1.9 billion, Campofrio is one of the largest meat processors in Europe. The company has eight interdependent operating companies in France, Spain, Germany, Italy, Belgium, Portugal, The Netherlands, the United States and a joint venture with Caroli Foods in Romania.

Infographic: Changing the food service channel 12/18/2013 - by Monica Watrous

CHICAGO — Convenience stores are robbing restaurants of traffic, according to a recent report from market research firm Technomic, Inc.

Nearly a third of consumers said they would have visited a restaurant had they not purchased prepared foods from a convenience store on their most recent visit, and 26% indicated they would have visited a fast-food restaurant.

Click the infographic for a closer look at food service usage at convenience stores.

Fifty-three per cent of consumers surveyed buy food from convenience stores once a week or more, compared with 57% who visit a restaurant on a weekly basis, according to Technomic. The survey included an on-line panel of 4,000 convenience store shoppers.

“Due to location and speed of service, c-stores are always going to be a dining option,” said Darren Tristano, executive vice-president of Technomic. “Recently, however, we’ve seen a concerted effort to improve the quality of food and service provided at these locations. If c-stores can continue enhancing these areas, they can look to drive traffic from restaurants.”

Leading the chains for food service usage is 7-Eleven, where 39% of survey participants purchased food within the previous two months. The chain expanded its food options this year with breakfast empanada bites, Pillsbury cinnamon rolls and a healthy snack section featuring such items as dry-roasted edamame, organic trail mix, vegetable chips and dried fruit and nut blends.

Circle K and Chevron follow in food service patronage, each with 17% of consumers buying food in the past two months.

Nine out of 10 convenience store users consider food quality and flavor when deciding which store to visit. Wawa earned the highest food and beverage ratings, trailed by Quick Trip, Sheetz, Stripes and Kwik Trip.

Nigel Travis, chief executive officer of Dunkin’ Brands, discussed the emerging competition from convenience stores during an Oct. 24 earnings call.

“We do see convenience chains thinking about food and beverage — that’s something we’re very aware of,” Mr. Travis said. “Most of these competitors are very good. They’ve invested new concepts — you’ve seen that from everyone from Race Trac, Wawa, 7-Eleven. We’re aware of all these. Our franchisees are highly aware of them. And we talk about competitors like these all the time with our franchisees.”

Private label vs. brands: Can’t we all get along 12/18/2013 - by Keith Nunes

CHICAGO — Private label is here to stay, according to Information Resources, Inc. (I.R.I.), and it would be in the best interest of both private label and national brand food and beverage marketers to identify ways to coexist and benefit mutually. I.R.I. staked its position on the subject in its latest Times & Trends report “Private label and national brands: Paving the path for growth together.”

“While some industry experts believe private label has ‘had its day,’ I.R.I. believes that private label and national brand marketers can enjoy mutual growth by not simply co-existing, but rather evolving and working together to serve the full spectrum of consumers’ needs and wants,” said Susan Viamari, editor of Times & Trends for I.R.I. “Of course, consumers are shopping conservatively and looking for money-saving options, so they have embraced private label. However, national brands remain critical. In this environment, manufacturers and retailers must work together to provide a balanced assortment of national and private label solutions, targeted at the store level, to offer the best overarching value.”

The market research firm said private label sales inched up slightly during 2013 when compared to 2012. But despite the fact the market appears to be holding steady, there has been category movement within specific retail channels. Private label performance within the drug channel, for example, has been strong during the past year. Unit share grew one point, to 17.6%, while dollar share climbed less sharply, to 16.9%. Though private label share inched up slightly in the convenience channel during the same time period, it remains well below industry average, at 2.4% and 1.7%, respectively.

Private label’s strength across the drug and convenience channels is attributable to a number of factors, including retailer efforts to broaden and enhance private label programs, according to I.R.I.

The club channel is demonstrating the strongest private label share growth —growth that is occurring across both heavy and light purchasers of private label products. The growth brought the channel nearly $1.4 billion more in private label sales from heavy and light buyers in 2013 compared with 2010.

In the coming months and years, consumers will continue to look to both national brands and private label solutions to find the best value, according to I.R.I. To deliver, marketers from both sides must focus on one or more growth strategies, including deepening penetration, fracturing concentration and strengthening of price and promotion strategies.

“Private label is clearly here to stay,” Ms. Viamari said. “For private label to prosper, it is critical for private label marketers to understand the role of their brands in relation to competing national brands. And, national and private brand marketers must step up their collaborative focus, directing their efforts to retailer/manufacturer partners that ‘best fit’ their strategic goals and objectives.

“This type of strategic collaborative marketing partnership will increase sales and strengthen customer loyalty by getting the right products to the right place at the right time, with a targeted value proposition.”

Darden casting off Red Lobster 12/19/2013 - by Monica Watrous

ORLANDO, FLA. — Red Lobster is off the hook.

As part of a comprehensive plan to increase shareholder value, the board of directors for Darden Restaurants, Inc. has approved a tax-free spin-off or sale of the seafood chain.

Other components of the review include reducing unit growth at Olive Garden and LongHorn Steakhouse, lowering capital expenditures and forgoing acquisitions of additional brands. The company expects to increase cost savings through aggressive operating support cost management and enhanced cost efficiencies in order to increase return of capital to shareholders through dividends and its share repurchase program. Compensation and incentive programs for senior management will be refined to emphasize same-restaurant sales growth and free cash flow.

“In developing this plan we assessed a number of alternative ways to segment our portfolio of brands and leverage our other assets, including our real estate,” said Clarence Otis, chairman and chief executive officer, during a Dec. 19 conference call with financial analysts. “We’re excited about the plan we’ve chosen because it enables us to continue to benefit from the complementary strengths of our brands.”

The announcement comes at a time of increasing sales volatility for the casual-dining segment. Darden has implemented other recent changes that have included reducing workforce, slashing operating costs and overhauling its Olive Garden brand to restore sales momentum for the Italian restaurant chain. Darden also this year tested an express-lunch model in some of its Red Lobster restaurants that was dismantled after a few months. On Sept. 23, Barington Capital Group, L.P., which owns 1.4% of Darden’s outstanding common stock, wrote a letter to the board of directors recommending the company split its restaurant operations and real estate properties.

With 705 restaurants in the United States and Canada, Red Lobster had annual sales of approximately $2.6 billion in fiscal 2013. Amidst changing consumer dynamics, the company said Red Lobster’s competitive position and priorities have diverged significantly from those of Darden’s other brands, which also includes The Capital Grille, Yard House, Bahama Breeze, Seasons 52 and Eddie V’s Prime Seafood.

“We talk about pockets of consumer strength,” Mr. Otis said. “One example is more financially secure consumers. Another is younger consumers, even just the sheer size of that category. With the exception of Red Lobster, all of our brands are having success increasing their relevance to these various pockets of strength.”

Following the separation, Kim Lopdrup, president of Specialty Restaurant Group and New Business for Darden, will become chief executive officer of Red Lobster, and Harald Herrmann, president of Yard House, will succeed Mr. Lopdrup as president of the Specialty Restaurant Group in January. Salli Setta, who was named president of Red Lobster in July, will continue in that role.

If Red Lobster is spun off, Brad Richmond, senior vice-president and chief financial officer of Darden since 2006, will become chief financial and administrative officer of Red Lobster upon completion of the transaction. The completion of the contemplated spin-off is subject to customary conditions and is expected to close in early fiscal 2015, which begins May 26, 2014.

Following the separation, Darden expects it will achieve higher and more consistent same-store sales and earnings per share growth and generate significant free cash flow. The company expects to save at least $60 million annually beginning in fiscal 2015, which represents a $10 million increase over its previous projection of $50 million.

“The spin-off will transform Darden into two independent public companies that can each focus on their different opportunities,” Mr. Otis said. “New Darden’s core strategic focus will be on retaining to core customers and expanding our customer base. … New Red Lobster’s focus will largely be on retaining its core customers and on using its strong and consistent cash flow generation to support what will be a more stable rather than growing return of capital to shareholders.”

Strong same-store sales for LongHorn Steakhouse and solid momentum for the Specialty Restaurant Group chains helped offset a drop in second-quarter income due to costs from recent reduction efforts, as well as legal and financial advisory costs associated with the announced strategic review.

For the quarter ended Nov. 24, net earnings fell 41% to $19.8 million, equal to 15c per share, from $33.6 million, or 26c per share, during the same prior-year period. Food and beverage expenses, including an unfavorable price increase driven by higher shrimp and land-based protein costs, negatively impacted profits. Net sales increased 5% to $2,049.9 million from $1,960 million during last year’s second quarter, but same-restaurant sales and guest counts fell below expectations.

During the quarter, Red Lobster’s sales dipped 5%, while LongHorn Steakhouse sales grew 17%, Olive Garden sales climbed 2%, and the Specialty Restaurant Group sales advanced 21%.

For the first half of the fiscal year, net earnings slipped 38% to $90 million, equal to 69c per share, from $144.4 million, or $1.12 per share, during the same period of the previous year. Net sales for the six months grew 5% to $4,208.4 million from $3,994.8 million.

Yogurt, Protein Lead Dairy Case Trends

Dairy is one of the most frequently shopped grocery departments, at 36 trips per year. New product introductions are robust at approximately 12,000 to 13,000 products annually.

That's according to What’s in Store 2014, the latest edition of the annual trends publication of theInternational Dairy-Deli-Bakery Association (IDDBA).

Also among dairy case highlights in the group's latest report:

• Yogurt shows strong growth trends. Sales projected to 2017 show an anticipated 17 percent growth (an estimated $9.1 billion USD). It’s a growing breakfast and snack category.
• Three macro factors impacting the dairy case are: decreasing U.S. middle-income households, diversity of shoppers by age and ethnic group, and access to smart technologies (encouraging unprecedented levels of transparency).
• Watch for dairy processors to boast protein content and treatment of health issues, messages about dairy’s nutrients beyond calcium and weight management, which tout dairy as an excellent agent for prebiotics and probiotics, and stress satiety effects.
• Dairy to-go trends include products with longer shelf-lives, as well as occasion-specific desires (mid-morning snacks), and complete convenience (serving utensils included).

Well-being is an overarching trend shaping product offerings in the dairy case, according to the report. "Many refrigerated dairy case products boast natural nutritional properties, protein and vitamin content, satiety characteristics, and the ability to provide energy, in addition to functional additives. Some of these new products readily meet lifestyle claims, too," the report states.

Dairy products are uniquely positioned as a medium for functional additives, the report asserts: "Today’s dairy case includes products to address protein consumption, digestive health, cardiovascular health, immune system support, relaxation, beauty and skin health, and life-stage nutritional needs. Dairy products continue to provide an excellent medium for fortification."

Globally, the leader with 20 percent of new dairy product introductions is the spoonable yogurt category, followed by hard and semi-hard cheeses (11.7 percent), and drinking yogurts (10 percent). Greek yogurt sales continue to grow, as current data indicated that Greek yogurt accounts for 35 percent of sales, according to Packaged Facts.

Political, economic and supply uncertainty lead to a shrinking middle class. According to the Innovation Center for U.S. Dairy, the decline is predicted to drive a reduction in mid-priced brands and retailers. Dairy producers and retailers will need to address the new markets (high-end and low-end) and better meet the needs of consumers’ new definitions of value.

Growth of minority groups, such as Hispanic consumers, coupled with an aging population will pose challenges for the dairy industry. Our youth demographic will become more diverse and prominent and the aging population will pose new health needs. These trends will require new product formulation, micro-targeting and marketing. Smart technology will continue to develop and allow consumers to demand unprecedented levels of information and transparency. Dairy manufacturers and retailers will need to address these needs with product information and packaging.

Extended-shelf-life packaging offers on-the-go convenience and expands consumption opportunities. Single-serve packaging expands the opportunities for milk consumption and increased flavor varieties.

What’s in Store 2014, IDDBA's 28th edition, is a 230-page trends report that details consumer and industry trends affecting the in-store dairy case, cheese case, bakery, deli and foodservice departments. It's supplemented by What’s in Store Online, a collection of more than 150 downloadable tables, as well as white papers and trends articles.

Latin Love...

From tropical to traditional, supermarkets look south to satisfy consumers' appetite for fresh produce.

 

FRESH FIELDS
Avocado groves stretch into the distance on a farm in Peru, which is boosting its imports of the fruit to the United States.

These days, talk of food trends invariably turns south – as in Argentina, Brazil and Peru. South American cuisine is on nearly everyone's list of the hottest foods to watch, with the region's produce gaining particular attention.

Earlier this year, Chicago-based research and consulting firm Technomic called South America "the next frontier." Restaurant-goers who've long favored Mexican food will be seeking out new Latin flavor experiences from countries like Brazil and Argentina, the firm predicted.

South American fruits and vegetables are unmistakably at the heart of this heightened interest in Latin flavors. NBCLatino, which reported "6 Latin Food Trends for 2013," says people will be savoring the sour flavors of passion fruit, tamarind and lime. It also sees health-conscious younger Hispanics looking for traditional superfoods like nopales (a dish made from prickly pear) and chayote squash.

Tempting Tropicals 
The nation's love affair with fusion food, as well as a growing ethnic population, is also bringing more South American flavors and produce to the table.


In the U.S., there's a boom in fusion restaurants that integrate tropical products into different dishes."
–Marion Tabard,
 Turbana Corp.

"In the U.S., there's a boom in fusion restaurants that integrate tropical products into different dishes," notes Marion Tabard, marketing director for Turbana Corp. "Taking into account the increase in Hispanic and Asian populations in the U.S., chefs are innovating and adding tropical flavors to popular dishes to invite all kind of cultures into their dining establishments."

The Coral Gables, Fla.-based produce importer recently introduced a program for its Tropicals line that's designed to help retailers capture the growing ethnic market. Turbana cites recent Nielsen data indicating that the U.S. Hispanic and Asian populations increased 47.3 percent and 51 percent, respectively, between 2000 and 2012. Nielsen expects that increase to triple by 2050.

Making this demographic all the more important to supermarkets, notes Tabard, is the frequency with which ethnic consumers cook from scratch and eat at home (four to five times per week).

To help retailers capture this home-cooking consumer's buying power, Turbana is offering a mobile application that allows retailers to log in to learn more about ethnic tropical produce, as well as the demographics for each of its market areas. Certain items in Turbana's tropical line, which includes yucca, chayote, eddoes, batata, malanga lila, calabaza, yellow yam, dry coconut, ñame, aloe vera, malanga coco and malanga blanca, will also feature QR codes linking to creative recipes.

Traditional Tastes 
As an independent upscale grocer, West Point Market, in Akron, Ohio, is well versed in exotic produce and gourmet ingredients. But when the economy took a nosedive, so did its customers' willingness to pay more for, say, cherimoyas versus cherries.

"Americans got a little tighter in their belts, and exotic produce was an easy thing to let go," says Produce Manager David Lukens. "As the economy picks up, we're starting to see more interest from customers wanting to try something new again."

TROPICAL CHOICE
Turbana Corp. imports a wide variety of produce from Latin America.

Exotics aside, West Point is selling 50 percent to 60 percent more South American fruit than five years ago, estimates Lukens. Grapes, apples, pears, citrus, bananas and cherries from South America are all strong sellers for the grocer.

Grapes are West Point's most significant South American product. "My big thing is keeping them fresh and keeping them reasonably priced," says Lukens. "Most bags are so highly printed, so I merchandise them with the backside up to show how nice and fresh the grapes are. ... Off-season apples, early-summer Fuji and Grannies, also do really well."

Thanks to better shipping and storage practices, says Lukens, "you can't tell the difference in quality between peak-season South American fruit and peak-season fruit from the U.S."

Jason Kazmirski, produce/floral director at Northwest Grocers, in Tukwila, Wash., agrees. "The quality of products from Chile has really improved over the years, and we're definitely seeing more Chilean produce in our stores, because people are feeling more comfortable with the quality of it," he says. "Customers come back and want to buy more."

Chilean grapes are also among Kazmirski's biggest South American sellers. "Chile is doing a great job with grapes, and their season fills a nice gap in our grape program," he says. "When Chilean grapes are at peak season, they are fantastic, and there's a lot of sales to be made there."


"When Chilean grapes are at peak season, they are fantastic, and there's a lot of sales to be made there."
–Jason Kazmirski,
 Northwest Grocers

Color From Chile 
In addition to quality, Kazmirski is excited about the welcome color break that Chilean produce provides in the dead of winter. Last year, Northwest Grocers ran a blueberry display contest with the help of the Chilean Fresh Fruit Association and invited all of its stores to participate.

"We wanted to create something exciting in January and February, when you feel like you've been doing nothing but citrus for months," explains Kazmirski. "The promotion helped drive sales for our stores and the product itself. It was a win-win."

"U.S. per capita consumption of blueberries has more than doubled since 2005, and consumption continues to grow," says Karen Brux, managing director of the Sonoma, Calif.-based Chilean Fresh Fruit Association. "The availability of Chilean blueberries from November through March enables consumers to enjoy blueberries 12 months a year and contributes significantly to category growth."

In the summer, citrus is a novelty, so Northwest Grocers recently decided to run a similar display contest among its stores that was tied to Chilean citrus. "It gets the produce managers involved, and then they use their creativity and tell the story about the product," notes Kazmirski.

Monumental Avocado Introduction 
It's no secret that avocados have experienced explosive growth in the past decade. According to the Hass Avocado Board, in Irvine, Calif., Hass avocados – which represent more than 94 percent of the U.S. avocado market – accounted for $1.4 billion in 2012 retail dollars.

Unprecedented demand for this lusciously textured fruit has caught the attention of Peru, which just happens to cultivate Hass avocados. "The U.S. market is growing from all suppliers cementing consumption of avocados. In some months, demand is higher than supply," says Xavier Equihua, CEO of the Peruvian Avocado Commission (PAC).

Washington, D.C.-based PAC made its foray into the U.S. avocado market with the "Monumental Taste" campaign in 2012, and is planning to increase its market presence substantially in 2014.

The campaign included demos at more than half of Costco's locations, promotions with Stop & Shop and Giant, and radio tags with Walmart, the last of which represented a first for the avocado category, notes Equihua.

Future promotional efforts are expected to include a new website slated to debut in May/June 2014 at the start of the Peruvian avocado season, which typically runs from June to September.