IFT Newsletter April 30, 2008

Top Stories

Wrigley and Mars merger: Food technology perspective

Monday morning of this week was filled with reports of the merger between closely held chocolate and candy maker Mars, Inc. and Chicago-based gum giant Wm. Wrigley Jr. Co.

What does the deal mean for food technologists?
Merger

Basics

First the basics: Mars, Inc. has agreed to pay $80 cash for each share of Wrigley Company stock in a transaction valued at approximately $23 billion. Based on Wrigley’s closing share price of $62.45 last Friday, the offer represents a premium of about 30% to the stockholders. The price also represents 4.3 times Wrigley’s 2007 net sales and over 35 times Wrigley’s 2007 earnings per share.

If the transaction is approved by regulators, Wrigley will become privately held and the combined companies would have a major presence in the global chocolate, gum and candy businesses.

Funding for the deal includes approximately $11 billion from Mars, a $5.7 billion debt facility from Goldman, Sachs, and $4.4 billion of subordinated debt from Berkshire Hathaway, Inc. Also, Berkshire Hathaway committed to purchase a minority equity interest for $2.1 billion (about a 10% stake) in the Wrigley Company subsidiary at a discount to the share price being paid to the stockholders of Wrigley.

According to Euromonitor, combined, Wrigley and Mars controlled 14.4% of the global confectionery market in 2006, compared with 10.1% for next largest Cadbury.

Product Mix

Currently, according to news reports, Mars has the largest share, about $10.9 billion, of the $74 billion global chocolate confectionery market, while Wrigley has very little. Wrigley is the major player of the $19.1 billion global gum market at $6.6 billion. Both have lesser shares of the $43 billion hard candy/sugar confectionery market. Mars has about $1.2 billion and Wrigley has a fractional amount.

Mars is focused on snack foods and pet foods, which account for 91% of its sales, with food and beverage making up the rest. Its snack foods brands, mainly chocolate, are Snickers, Milky Way, M&Ms, Mars, Dove, and Skittles and Combos. Uncle Ben’s rice is the main food product along with European Pasta Sauce Brand Dolmio. It also has pet foods such as Whiskas and others.

Wrigley is the major global gum maker with brands such as Juicy Fruit, Extra, and Eclipse. It also has the more recently acquired, from Kraft, Altiods, Creme Savers, Life Savers, and Velamints brands.

Interestingly, Wrigley also makes chewing-gum bases and flavors at its Northwestern Flavors subsidiary. Northwestern Flavors processes mint oils for the company.

Research Focus

Wrigley opened a new research center, a 200,000-square-foot office and lab complex in the summer of 2005 in Chicago Ill. The center houses the company’s research and development, packaging, engineering, regulatory and quality-control departments.

The 153,000 square-foot main building houses laboratory and office space to maximize collaboration and the ability to support new projects and equipment as needed; immediately adjacent to the east is a 40,000 square- foot pilot plant. Wrigley estimated total investment in the facility at $50 million to date.

In March 2006, Wrigley established the Wrigley Science Institute to study whether chewing gum may help consumers as a tool in weight management, stress relief and increasing alertness and concentration. The Wrigley Science Institute is headed by WSI Executive Director Gilbert A. Leveille.

At Mars, research activities are conducted at three centers. Hackettstown is the main location which is also where the corporate headquarters is located. Elizabethtown, Pa., is the center for chocolate and cocoa development, and a research group in Cleveland, Tenn., focuses on baked products

In addition to the research and development facilities in the U.S., Mars has a research center in an “origin country.” Research from the Mars Center for Cocoa Science in Bahia, Brazil, augments the main research and development facility in Hackettstown.

Along with Wrigley, research efforts at Mars have focused on health benefits. In 2006, Mars introduced CocoaVia, a product touting chocolate’s health benefits.

Symbioscience is a Mars business unit which is, among other things, dedicated to pioneering new products to improve human health. It is developing pharmaceutical and therapeutic ingredients and products that have the potential to contribute significantly to human health. For example, Symbioscience is researching the therapeutic effects of flavanol compounds on heart health, vascular health, cognitive health, the treatment of diabetes and certain forms of cancer.

Conclusion

First, this deal was a too good to pass up for stockholders. The premium in price, being cited by Bill Wrigley Jr., as the deal maker. Also, the different product mixes, marketing, and distribution channels of the two companies may provide opportunities. Wrigley will continue to operate as an independent business unit of Mars, Inc.

It may also force more consolidation in the confectionery area.

Research Briefs

Oligofructose effect low-fat probiotic ice cream

A group in Turkey studied the effects of supplementation of oligofructose or inulin on the rheological characteristics and survival of Lactobacillus acidophilus and Bifidobacterium animalis in low-fat ice cream.

Addition of oligofructose or inulin to ice cream mix significantly increased apparent viscosity and overrun and developed the melting properties in ice cream during storage. Some textural properties have also improved especially by the end of storage. Freezing process caused a significant decrease in the viability of Lactobacillus acidophilus La-5 and Bifidobacterium animalis Bb-12. Oligofructose significantly improved the viability of L. acidophilus La-5 and B. animalis Bb-12 in ice cream mix. Although the viable numbers for both bacteria decreased throughout the storage, the minimum level of 106 CFU/g was maintained for B. animalis Bb-12 in only ice cream with oligofructose during storage.

For more, see Journal of Food Science

Pan American group offers grants for nutrition projects

The Pan American Health and Education Foundation (PAHEF) announced its 2008 PAHEF Grants Program for projects in Latin America and the Caribbean. The group invites technical units and country offices/centers of the Pan American Health Organization (PAHO), recognized NGOs, universities, semi-autonomous government laboratories, research centers, and other nonprofit organizations in Latin America and the Caribbean to apply for one- or two-year project grants in the $5000 to $25,000 range. The deadline to apply is 5:00 p.m. EST May 30, 2008.

The PGP focuses on two priority areas: Combating Childhood Obesity and Improving Nutrition Promoting Healthy Aging.

For more information, see http://www.pahef.org/

Understanding red wine’s health benefit

Research suggests that resveratrol, a compound found in red wine, has the ability to lower blood sugar levels, but might have certain untoward side effects. Resveratrol has been reported to have cardioprotective, anti-inflammatory, anti-viral, and glucose-lowering properties. The effect of resveratrol on lowering blood glucose in diabetic rats has been reported by several investigators in the past.

Their results have shown that resveratrol improves glycemia by stimulating glucose transport in certain tissues including the skeletal muscle that expresses the insulin-sensitive Glut4 isoform of glucose transporters. However, this research indicates that in cells expressing the Glut1 isoform, resveratrol blocks glucose transport by binding and inhibiting the Glut1 transporter. This may be of importance because certain cells and tissues, including brain, retina, placenta, and red blood cells express large amounts of this transporter. Hence, the presumed inhibition of the Glut1 transporter in these tissues in-vivo may have undesired and negative effects on their normal function.

This research will be presented at the American Association of Clinical Endocrinologists (AACE) 17th Annual Meeting & Clinical Congress by Kimberly Martin, MD, and mentor, Dr. F. Ismail-Beigi, on Friday, May 16th, at the Walt Disney World Dolphin Resort in Orlando.

Meat technologists: win $1 million

Consumer group, People for the Ethical Treatment of Animals (PETA) has announced the offer of a $1 million prize to the “first person to come up with a method to produce commercially viable quantities of in vitro meat at competitive prices by 2012.” For more information, see http://www.peta.org/feat_in_vitro_contest.asp

Water acts like gel when confined

Research indicates that when water is confined to a small space, it behaves like a gel. Then, when shaken, it becomes fluidic and exhibits the same structural and mechanical properties as water in a bottle. The study, using an atomic force microscope to measure the viscosity of confined fluids, revealed that these liquids can respond and modify their viscosity based on environmental changes.

For more, see press release at http://www.newswise.com/articles/view/540231

Company News

Barry Callebaut to buy stake in KLK Cocoa

After receiving the approval of the Ministry of International Trade & Industry of Malaysia, Barry Callebaut, the world’s leading manufacturer of high-quality cocoa and chocolate products, announced today the closing of its acquisition of a 60%- stake in KLK Cocoa in Malaysia from Kuala Lumpur Kepong Berhad (www.klkcp.com.my).

KLK Cocoa will now change its name to Barry Callebaut Malaysia Sdn Bhd. The experienced management team of KLK Cocoa, under the leadership of BY Ng, will transfer to Barry Callebaut Malaysia.

The acquisition of a stake in KLK Cocoa gives Barry Callebaut a strong basis to further expand its footprint in Asia-Pacific, a region offering significant growth potential.

Grupo Bimbo offers award for food science research

As part of its commitment to the community’s health and well-being, Grupo Bimbo, the leading baked goods company in the Americas, invites professionals and young scientists to participate in the 2008 Bimbo Pan-American Nutrition, Food Science and Technology Award.
The award is in effort to promote research and knowledge in these areas, and to improve the quality of processed food and nutritional standards of the population. Prizes will be awarded in the amounts of $5,000 for the Professional category and $2,000 for the Young Scientist category.

All award proposals shall be registered online at:
http://premiopanamericano.grupobimbo.com/ from March 1st, 2008 at 00:01 (Eastern Standard Time) to October 31st, 2008 at 23:59 (Eastern Standard Time). The proposals not registered online will not be accepted, as well as those lacking the information requested or submitted outside the specified dates.

The Scientific Jury evaluating the awards consists of renowned researchers and experts in human nutrition, food science and technology chosen by Grupo Bimbo.

DSM announces price increase for vitamins

DSM Nutritional Products announced a global price increase for all fat soluble vitamins.

After recent price increases announced for Vitamin E and A the remaining fat soluble Vitamins in the their product portfolio – K1, Natural Source Vitamin E, Mixed Tocopherols and Vitamin D3- will now also increase in price for all newly contracted business.

The increase is effective for all qualities of these vitamins marketed in the human nutrition and personal care industries and will amount to a minimum of 10%.

According to the company, the price increase is necessary due to significantly higher costs of raw materials, energy and transportation.

Symrise completes acquisition of flavor business

Symrise has successfully finalized its acquisition of Chr. Hansen’s flavorings business Holzminden/Frankfurt. Symrise has acquired the Dairy Flavors, Savory Flavors, Sweet Flavors and Seasonings sectors of the Danish manufacturer Chr. Hansen. The anti-trust authorities approved the transaction on April 25, concluding Symrise’s largest acquisition to date.

The acquisition allows Symrise to keep expanding its business in the US: over 80% of Christian Hansen’s sales in the flavoring sector come from North America. This move will help Symrise continue to become one of the leading suppliers on the largest flavor market worldwide.

According to the company press release, Symrise will benefit from much more thorough market coverage and be able to offer its clients an even broader product portfolio. The additional production capacity will dramatically improve Symrise’s competitive ability and service in North America. The two companies’ client structures and core competences complement each other perfectly. In addition to its extensive knowledge of development and application technology, Chr. Hansen also works with technologies which are an excellent match for Symrise. In turn, Chr. Hansen’s clients will profit from Symrise’s global infrastructure, market knowledge and research expertise.

Regulatory News

Acheson to speak at IFT Food Laws luncheon

IFT’s Food Laws & Regulations Division annual business meeting and luncheon, on Monday, June 30 at the IFT Annual Meeting in New Orleans will feature David Acheson, M.D., the FDA Assistant Commissioner for Food Protection. Acheson is charged with offering strategic and substantive counsel to the FDA Commissioner on food safety and food defense matters. Acheson is an accomplished speaker and has been at the center of the FDA response to a number of food protection issues. One of Acheson’s first projects has been the development of an agency-wide, visionary strategy for food safety and defense. The strategy will serve as the framework in helping the agency prioritize and address food safety and defense challenges.

This is a ticketed event. Tickets can be purchased along with your Annual Meeting & Food Expo registration or on-site, up to two days prior to the event, at the IFT Ticket Desk in the Registration Area.

For more, information on the Food Laws and Regulations Division, see http://www.ift.org/divisions/food_law/

FDA Director speaks on Chinese seafood safety

The U.S. FDA Office of Food Safety Deputy Director Don Kraemer appeared before the U.S.-China Economic and Security Review Commission Hearing on “Chinese Seafood: Safety and Trade Issues”

For a copy of the presentation, see http://www.fda.gov/ola/2008/seafood042408.html

FDA issues regulation to protect against BSE

The U.S. FDA has issued a final regulation barring certain cattle materials from all animal feed, including pet food. The rule further protects animals and consumers against bovine spongiform encephalopathy (BSE, also known as “mad cow disease”). The new measure builds on FDA’s 1997 feed regulation, which prohibited the use of certain mammalian proteins in ruminant feed.

For more, see http://www.fda.gov/bbs/topics/NEWS/2008/NEW01823.html

AMI launches new country of origin Web site

The American Meat Institute has unveiled an updated version of its country-of-origin labeling (COOL) Web site, http://www.countryoforiginlabel.org/ . Mandatory COOL is scheduled to go into effect on September 30, 2008.

The site contains a summary of information about the implementation of country-of-origin labeling (COOL) as it exists under the law as enacted in 2002. The site also includes information relating to possible changes that may occur through passage of the 2008 Farm Bill. .

IFT & Meeting News

Call for Nominations to 2010 Dietary Guidelines Advisory Committee

IFT plans to submit nominations for one or more individuals to serve on the 2010 Dietary Guidelines Advisory Committee (http://edocket.access.gpo.gov/2008/pdf/E8-7614.pdf). Prospective members of the Dietary Guidelines Advisory Committee should be knowledgeable of current scientific research in human nutrition and be respected and published experts in their fields. They should be familiar with the purpose, communication, and application of the Dietary Guidelines and have demonstrated interest in the public’s health and well-being through their research and/or educational endeavors.

Expertise is sought in specific specialty areas, including but not limited to, the prevention of chronic diseases, energy balance, epidemiology, food safety and technology, general medicine, gerontology, nutrient bioavailability, nutrition biochemistry and physiology, nutrition education, pediatrics, public health, and evidence review methodology. Nominations of individuals to serve on the DGAC must be submitted to USDA by Saturday, May 24, 2008.

Please send any recommendations you may have for the 2010 Dietary Guidelines Advisory Committee in an email (with contact information and attached CV for nominee) to sfdavis@ift.org by COB on Wednesday, May 14, 2008. Individuals to be nominated by IFT will be determined by established procedures, with the final decision ultimately being made by IFT’s leadership.

Missed the Food Technology Presents Conference but Need to Identify Marketplace Opportunities?

If you missed the Food Technology Presents conference, but still want to tap into the rich content that was delivered there, now you can! Conference attendees have already learned how to effectively develop and market healthful products. In fact, 67% reported that they have identified new business and marketplace opportunities as a result of attending the conference. Now you can tap into these same insights. IFT’s on-demand library includes all 23 sessions from the conference, so you can listen to the sessions when it’s convenient for you. For IFT education on-the-go, download both audio and PowerPoint presentations for playback on your MP3 player. And don’t miss other IFT on-demand webcasts, offering rich content on key industry topics.

Visit ift.org/ftpc for more information.

Capitalize on New Functional Food Trends

May 14, 2008, 12:00 – 1:30 p.m. CST

Interested in leveraging consumer and market trends to capitalize on the functional foods market? Then register for this interactive webcast. You’ll discover the market trends that are impacting Americans’ increasing reliance on functional foods. Whether to improve their well-being or to help manage health and wellness, functional foods are becoming a key part of everyday life, and 69% of Americans are incorporating such foods into their lifestyle.

Join Dr. Elizabeth Sloan, President of Sloan Trends, Inc. and Consumer Trends Columnist for Food Technology magazine, as she discusses 2008’s top 10 functional food trends. Gain insight into the changing consumer knowledge, needs and desires, and technological advances that are giving rise to new opportunities in the functional foods market. Some of the trends that will be discussed include smart treats (guilt-free delicious enjoyment), changing venues (convenience stores and vending), and balancing the “bul-get” (weight management through portion control).

For more information on additional trends to be discussed, and to register, visit ift.org/knowledge. When registering, please enter this code: 0408EM1183

Register for a Pre-Annual Meeting Short Course

Friday, June 27 – Saturday, June 28
8:00 a.m. – 5:00 p.m., Hilton New Orleans Riverside

Need focused education on food safety, labeling requirements, or preventing a food recall? These Short Courses offer you the collective experience of expert faculty, combined with the opportunity to exchange best practices with peers. You’ll learn about the latest trends, applications, and techniques. In addition, you’ll be part of a growing network of IFT Knowledge & Learning participants who have formed new personal connections for sharing ideas, expertise, and best practices long after the course had ended. Remember, the connections you make at these Short Courses will not only expand your contact base, but can also help you expand your knowledge base.

The Short Courses below represent only three of the eight courses offered. Regardless of your level of experience, each course can provide you with timely information and new insights. Don’t miss them!

* Recalls: Best Practices in Prevention, Management, and Crisis Communications
* Food Safety for the Non-Food Scientist
* Labeling Requirements and Implications for Foods Marketed in the U.S.

For more information about all eight short courses, and to register, visit ift.org/IFT08. When registering, please enter this market code: 0408EM1184

Tags: April 2008, ift newsletter