Editorial

 

Hampton Creek Foods subject of negative reporting in Business Insider

Aug 28, 2015
    

On Friday 21st August, EGG-CITE published an editorial dealing with Hampton Creek Inc. (formerly registered as Beyond Eggs Inc. and Hampton Creek Foods Inc.). The privately-held company founded on December 11th 2011 by Joshua Tetrick is located in San Francisco.

The company was the subject of negative reporting in an August 5th article in Business Insider authored by Biz Carson. Hampton Creek Inc. was the subject of an FDA warning letter this past week regarding the trade name Just Mayo™ for the mayonnaise substitute which does not contain eggs. The FDA also drew attention to spurious or unsubstantiated claims relating to cardiovascular health on the company website.

One of the allegations in the Business Insider article relates to the fact that Hampton Creek intentionally left off the word “concentrate” from the lemon juice ingredient listed on the Just Mayo label. Tetrick states in his rebuttal, “it was an honest mistake and within days of being notified by a team member I sent out the following to supply chain and creative (sic) “IMP:Let’s change to lemon juice concentrate.  Easy label change”.  On Saturday 15th August, an eight ounce container of Just Mayo was purchased from Target Superstore, Renaissance Blvd. Durham NC.  The ingredients listed include the designation “lemon juice”.  The container was imprinted SF13315 B 10:17, Use by Feb 15, 2016.  Accordingly, the accuracy of the response by Tetrick is questioned, in that the product label still lists the ingredient “lemon juice”.  It is however stressed that the actual ingredient description is a technicality. The significance relates more to the specific response by Tetrick and his veracity than whether added lemon juice is or is not derived from a concentrate.

It was alleged that despite Hampton Creek claiming inclusion of 7,000 plants plants in a company  database, it has less than 1,000 and closer to 400 species or varieties.  Tetrick maintains that the allegation is false and that the Hampton Creek research database contains botanical, molecular and functional data across more than 100,000 plant species and varieties.  It is doubtful whether a database of 100,000 plants could in any way contribute to product development and product quality compared to a database of 1,000 plants.  It is a contention of EGG-CITE that claiming or even possessing a database with details on 100,000 plants is irrelevant puffery. 

A dissident employee claimed that Just Mayo was developed by a consulting food-development company. Tetrick asserts in his rebuttal that this was untrue and that the Just Mayo™ product was developed by Hampton Creek.  Tetrick stated, “we’ve always said that we started with a product development firm and then opted to move our R&D in-house.  We launched our formula more than a year later, and have done three mayo overhauls since”.

   

Egg Industry News

 

 Ziggity Systems Welcomed as a Sponsor

Aug 28, 2015
    

Ziggity Systems specializes in watering systems with a concentration on water lines and nipples.

Based on experience and field research, the company supports producers with valuable educational web postings on topics promoting operating efficiency of nipples.

Robert Hostetler president of the second-generation company developed the concept of the Poultry Watering U to share information and to provide practical advice to producers.

Topics to be posted during succeeding weeks will include

  • preventing corrosion of stainless steel components in nipple drinkers,
  • reducing biofilm which has significant implications for flock health and
  • disadvantages of catch-cups.

The Poultry Watering U informational advisories will posted under the PRODUCTS tab.

   
 

ASDA Records Drop in Same-Store Sales

Aug 28, 2015
    

According to the Irish Times of August 19th, ASDA, the UK subsidiary of Wal-Mart Stores, reported a 4.7 percent decline in same-store sales for the second quarter of fiscal 2015.

Competition among the major supermarkets has intensified during the past two years with the major chains including TESCO promoting a range of products at low prices.  The traditional supermarkets have also encountered considerable erosion of customer loyalty from the small-store discounters including Aldi and Lidl.

   
 

Ahold to Open a bfresh Store in Boston

Aug 28, 2015
    

Following the unveiling of an Everything Fresh store in Philadelphia, the Fresh Format team of Ahold will open their new bfresh store concept in the Allston Village area of Boston.  The location of the store and the range of products will appeal to neighborhood shoppers and “foodies”.  The Ahold entry will operate in the highly competitive local small-store concept.  The theme of the store will be convenience-without-convenience-store-pricing expressed as “No Tradeoffs”.

   
 

USDA Price and Inventory Report, August 24th 2015.

Aug 26, 2015
    

The Midwest market for Extra Large and Large sizes fell by 10 percent and Mediums by 16 percent this past week. The national trend since the onset of HPAI is shown in the figure reflecting the Combined Regions price for Large which is updated each week by the USDA. It is apparent that the shell egg market is responding to the forces of supply and demand and prices fell due to a number of factors including a full pipeline through DCs to stores and possibly lowered demand due to significantly higher prices at the shelf compared to seasonal averages.

 

   
 

Status of Corn and Soybean Crops

Aug 26, 2015
    

The USDA Crop Progress Report issued on Monday August 24th indicated a continued favorable trend in the progress of corn and soybeans and development of these crops expressed as percentages as tabulated below:-

                                                     Week Ending      

Crop                             16th August                 23th August                 5-year Average

Corn Dough                         71%                           85%                             81%

Corn Dent                             21%                          39%                             43%

Soybeans blooming               93%                         96%                             98%

Soybeans setting pods           79%                         87%                            88%

 

   
 

Opal Foods Donates to Ozarks Food Harvest

Aug 26, 2015

    

Opal Foods based in Neosho, MO. this past week donated 17,000 dozen eggs to Ozarks Food Harvest.  This brings the total donations by the company to 30,000 dozen for the year to date

Denise Gibson, Development of Communications Director for the charity stated, “with the rising price of eggs, this incredible donation could not come at a better time for local families struggling to make ends meet” Since 2008, Opal Foods has donated 70,000 dozen eggs to the Springfield Food Bank which supplies over 30,000 individuals with food items in a 28-County service area each week.

   
 

McDonald’s Anticipates Improved Traffic

Aug 26, 2015
    

The intention of McDonald’s Corporation to serve egg McMuffins and other breakfast sandwiches throughout the day is anticipated to increase sales by 2.5 percent.  According to a presentation made by Mike Anders, president for U.S. operations, the innovation is expected to lift guest count by 2.3 percent and result in an increased profit of $31,000 annually for each franchise. 

The problem with the projection is that selling a relatively low-priced menu item may cannibalize sales of higher-priced sandwiches.  The tactic will only work if breakfast items are attractive to a new segment of their clientele or better still, competitors’ customers. 

There may also be problems relating to logistics.  Hash browns and fries are cooked in the same equipment and the introduction of all-day breakfast servings may require installation of new equipment.

   
 

Hong Kong to Require Health Certification

Aug 26, 2015
    

According to USDA-FAS Gain report HK1513, Hong Kong will impose mandatory health certification for importation of egg products. Effective December 2015 Hong Kong will require importers of egg products to apply for an authorization incorporating a health certificate, covering all egg products. 

In accordance with a 2008 agreement between the U.S. and Hong Kong, shipments of shell eggs are accompanied by a grading certificate and a statement that eggs were derived from a flock free of specified diseases.  The proposal submitted to the Hong Kong Legislative Council will now be extended to liquid and powdered egg products. 

In 2014, Hong Kong was the third largest market for US egg products valued at 50 million.

   
 

Iowa Egg Symposium

Aug 26, 2015
    

The Iowa Egg Symposium hosted by Iowa State University will take place on Thursday,  October 1st 2015 on the Ames, ISU campus according to an advisory circulated by Dr. Yuko Sato.

Predictably the key topic will be HPAI with speakers representing academia and industry.  In view of the severity and extent of the spring outbreak, the Iowa Egg Symposium will invite representatives and attendees from the turkey industry which was severely impacted by HPAI concurrently with egg production.

For further information contact Iowa State University Extension and Outreach Registration Services (800) 262-0015 or access  www.register.extension.iastate.edu/eggsymposium.  Registration will be $70 before September 21st.

   
 

Hampton Creek Receives FDA Warning Letter

Aug 26, 2015
    

EGG-CITE previously commented on the lawsuit brought by Unilever against Hampton Creek Foods regarding alleged deceptive labeling of their vegetable-based spread as “Just Mayo” despite the fact that the product which did not contain any egg material did not conform to the legal definition of “Mayonnaise”. (See postings November 18th 2014 and December 19th 2014)

Following recent adverse publicity regarding the Company and its founder/CEO Josh Tetrick, (see posting August 19th 2015) the FDA has addressed a warning letter to the Company regarding their label and claims.

The FDA communication is available for download at http:/Egg-Cite.com/documents/Hampton-Creek-Letter.doc

   
 

Konos Proceeds with Organic Egg Project

Aug 26, 2015
    

The Associated Press reported on August 19th that the proposed Konos Organic-Egg Farm to be erected in Otsego Township, MI. is proceeding according to schedule.

Rob Knecht, Vice President of Operations of the family-owned enterprise confirmed to the Kalamazoo Gazette that the complex will eventually house 500,000 hens in a series of buildings equipped with Big Dutchman aviaries.  The cost of the initial phase of the project will be close to $9 million.

Previous reports in EGG-CITE have commented on the objections raised by residents of the Township (see postings on Jan 23 2013 and Jan 9 2015) but the project was approved in terms of Michigan statues which provide protection to farmers.  According to Knecht the farm will function without odors or insect pests and will conform to standards imposed by the National Organic Program administered by the USDA.

   

Shane Commentary

 

Outlandish Prediction on Price based on HPAI

Aug 28, 2015
    

According to NBC News, Bret Hundley of BB&T Capital Markets commented on the rise in price of eggs occasioned by the recent HPAI outbreak.  This is very perceptive and obviously confirms his acumen and expertise which allows him to hold down a responsible position with a leading financial institution.  Where Hundley and I differ is his outlandish forecast of $6 per dozen in the event of subsequent outbreaks of HPAI. The $6 per dozen figure is presumably for generic eggs although he makes no distinction among categories of shell eggs. His prediction is contingent on “if bird flu gets closer to home for Cal-Maine Foods.”

   
 

Transition by McDonald’s to Offset Sales Decline

Aug 28, 2015
    

EGG-CITE and the financial press have reported extensively on the sequential-quarterly decline in U.S. same-store sales announced by McDonald’s Corporation.  Efforts to revitalize the company by incoming CEO Steve Easterbrook have received considerable publicity but it is evident that his efforts will take time before they are reflected in the significant operational and financial parameters. (see Q2 Results posted on July 27th 2015)

Press reports some time ago noted that McDonald’s was introducing a “create your taste” customization effort for their sandwiches.  When first proposed under the previous CEO, Don Thompson the initiative was roundly criticized as it was unworkable for a chain heavily committed to drive-thru window sales.

Aware of the trend towards “healthier” and “natural” menus as promoted by Chipotle, Panera Bread and smaller chains, McDonald’s is trying to emulate their successful competitors.  The “create your taste” concept was reworked, and will be tested in New York allowing customers to order using touch-screen pads and kiosks to select from among toppings and sauces some of which are new to the McDonald’s menu.  Whether this concept is applicable to as many as 3,000 restaurants is questionable.

As a gentle suggestion, McDonald’s may wish to apply consumer segmentation to their approach.  If a proportion of McDonald’s restaurants have menu items and décor to attract millennials, will I as a traveler know what to expect when I select a McDonald’s store?  After all the selling point for McDonald’s over the past four decades has been consistency in quality (or otherwise) cleanliness (or otherwise) service (or otherwise) which one expects of a name-brand franchiser.  By altering the ambiance and menu, in selected stores McDonald’s may end up with worst of all possible worlds. They may lose existing clientele with a suitably adapted intestinal flora and enzyme secretions to competing chains offering uniform products. Concurrently they may fail to attract fickle millennials who in any event are patronizing more upscale QSRs.

McDonald’s might well be advised to follow the attempts by Target, Walmart and even Whole Foods Market and develop a different store concept with a modified name to create a brand appealing to a defined demographic.  It is absolutely impossible for McDonald’s to become Chipotle in the same way that Texas Steakhouse could not aspire to become a one-star Michelin restaurant. I remember the failure of the McCafé concept in the early 2000s when McDonald’s tried to become Starbucks. They just could not transfer the ambience of an upscale coffee shop to a hamburger QSR. Now the McCafé is reduced to a machine or two somewhere down on the right side of the counter where the staff trip over each other working the drive-through delivery window.

   

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Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.

Industry Prices: Mon Aug 31
 Corn3.75 $/bu
 Soybeans8.88 $/bu
 Soybean Meal311.30 $/ton
 Eggs, Producer210  ¢/doz
 Eggs, Warehouse 226-229 ¢/doz