HIGLIGHTS


Retail – Technology – U.S.A.

The high-tech way to order lunch meat comes to Bigg’s
Looking to slice the wait time at its delicatessen counters, Bigg's stores plans to put in high tech kiosks in all its supermarkets this summer.
Source: Cincinnati Post, May 2004

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Retail – Drugs market – U.S.A.

U.S. Could be next market for OTC cholesterol drugs
With Britain on the verge of clearing over-the-counter sales of a top-selling cholesterol drug, the United States will likely be the next big market as regulators warm to the idea of a switch, analysts said.
Source: Forbes, May 2004

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Retail – Joint venture – China

P&G to finish China deal for $1.8B
In a $1.8 billion deal, Procter & Gamble Co. plans to buy out its partner's 20 percent stake in its China joint venture, giving P&G complete ownership of its operations in the country.
Source: Cincinnati Post, May 2004

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Retail – Food sector – Corporate

Chiquita posts lower Q1 net income
US fresh produce company Chiquita Brands International has posted lower quarterly earnings, but said its underlying business performance was strong despite difficult market conditions.
Source: Just-Food.com. May 2004

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Retail – Food sector - Corporate

Pasta giant New World files for Chapter 11
New World Pasta, the nation's largest maker of retail dry pasta products, on Monday announced that it filed for Chapter 11 bankruptcy protection.
Source: Chicago Sun Times, May 2004-05-13

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Retail – Food sector – Wine market

California wineries go outside the bottle
When it comes to packaging, Northern California wineries are thinking outside the box - and beyond the cork, and even the bottle.
Source: MSNBC.com, May 2004

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Retail – Cosmetics – U.S.A. market

Estèe Lauder to launch beyond Paradise Men
US brand Estée Lauder is gearing up to introduce a companion male fragrance to its successful Beyond Paradise women's offer. Developed by Quest International with ingredients taken from the Eden Project conservatory in Cornwall, UK, the fragrance opens with an exotic blend of Eden's Mist, Brazilian jabuticaba fruit and Eden Buchu at the top, a Mediterranean accord at the heart, and an organic base with notes of Eden vetiver and melaleuca bark.
Source: Cosmeticnews.com, May 2004-05-13

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FOCUS


Retail – Ethical – Corporate

Gap: Violations at 90% of factories
Report: Apparel chain finds work force problems at most of its 3,000 facilities around the world.

Gap Inc., the biggest U.S. apparel chain, said many of its 3,000 factories around the world have work-force violations, according to a published report Wednesday.
Of the factories vying for Gap work, 90 percent failed the company's initial evaluation, the Wall Street Journal reported, citing a Gap (GPS: Research, Estimates) report that will be released Wednesday.
The company survey lays out working conditions including psychological coercion or verbal abuse at between 10 percent and 25 percent of its factories in China, Taiwan and Saipan, according to the paper.
At the same time, more than 50 percent of the factories reviewed in sub-Saharan Africa run machinery without proper safety devices, the Journal reported.
The clothing retailer has contracts with plants in about 50 countries to supply its Gap, Old Navy and Banana Republic stores, the story said.
A Gap representative was not immediately available to comment to Reuters.
Source; Copyright 2004 Reuters All rights reserved. May 2004

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Grocery – Food sector – Corporation

Parmalat May Keep U.S. Units
Bankrupt dairy group Parmalat S.p.A. may now decide to hold onto its U.S. operations instead of selling them off, since bids for the units so far have been lower than expected, according to a Reuters report.

In late February Parmalat put its three U.S. dairy units - Farmland Dairies LLC, its parent Parmalat USA Corp. and a subsidiary, Milk Products of Alabama - on the block as part of a Chapter 11 bankruptcy filing in New York.
Since that time the company has received interest from a handful of companies, including Dean Foods, but sources told Reuters that no offer is generating great enough interest.
While the assets are not off the block, the company and its creditors may opt for a stand-alone plan rather than a sale, sources said.
The units lost $12.5 million last year on sales of $577.5 million, according to court filings cited by Reuters.
Source; Reuters, May 2004
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Internet – Music online – UK

Independents day in online music
The online music sector is hotting up as two major players hoping to launch their digital download services in the UK this summer have signed partnership agreements with major record labels today.

Independent download service Wippit has signed with its third major music company in a deal with Sony Music UK, adding to the company's partnerships with BMG and EMI Music signed in March, and adding to its library of 200 independent labels.
Also announced today, Napster has entered into a worldwide distribution deal with the UK's Association of Independent Music (AIM) to initially offer 50,000 tracks from 50 of AIM's 800 independent labels on the new Napster service when it launches this summer.
Napster, which signed with UK retailer Dixons last week to have its 2.0 software installed on all Dixons' own-brand computers, said that its US members will also gain access to this content. The licensing deal will also be made available to continental European labels under the IMPALA (Independent Music Companies Association) umbrella.
The deal, negotiated by AIM's new media arm Musicindie and administered by Rightsrouter, includes repertoire from labels including Ninja Tune, Domino, Cooking Vinyl and Hospital, featuring artists such as Kruder & Dorfmeister and The Orb. Many other AIM members are expected to join over the coming months, Napster said.
In Wippit's case, Sony Music content including tracks from Beyonce, Manic Street Preachers and Anastacia will become available when Wippit's service launches, also in the summer.
Sony's music library will be included in Wippit's 'a la carte' single download service, allowing users to burn a limited number of CD copies and export tracks to portable devices.
Wippit last month celebrated a relaunch of its website by offering 'a la carte' music downloads for 29 pence. The company also launched the offering to purchasing music downloads using an SMS mobile phone billing option, targeting the youth market and similar to a feature launched by rival, OD2 in March.
Source; Netimperative, May 2004
Write; by Gareth Vorster

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Business & economics – Trading – Japan

Earnings soar at Japan's 2 largest trading companies
Mitsubishi Corp. and Mitsui Co., Japan's two biggest trading companies, said Tuesday that annual earnings soared, helped by increased demand from China and other Asian nations for energy, raw materials and equipment.

Mitsubishi's net income for the year that ended March 31 rose 85 percent to ¥115 billion, or $1 billion, from a year earlier, the Tokyo-based company said. Mitsui said profit more than doubled to ¥68.4 billion, from ¥31.1 billion.

China's economic growth has helped push the prices of crude oil and steel to their highest levels in more than a decade. Earnings growth may slow this year as China and the United States try to temper economic expansion to ease a shortage of raw materials.

The key for the trading companies lately has been that they are doing well in China and in the United States, said Shigemi Nonaka, chairman of Polestar Investment. "Another thing is their handling of energy-related businesses in the Middle East," he added.

Mitsubishi said earnings in the current fiscal year might rise 13 percent to ¥130 billion. Mitsui forecast an earnings gain this year of 17 percent to ¥80 billion.

Mitsubishi shares rose ¥47 to ¥996 while Mitsui stock rose ¥6 to ¥822.

Mitsubishi, which operates units worldwide including mining, convenience stores and aircraft leasing, said profit from its mining and metal operations rose 29 percent to ¥31 billion, while net income from energy trading jumped 28 percent to ¥30.6 billion. Machinery earnings almost doubled to ¥42.2 billion, from ¥21.2 billion.

Shares of Mitsubishi have fallen 9.2 percent since April 25, when Mitsubishi Motors' largest shareholder, Daimler Chrysler, withdrew financial support for the automaker.

Mitsui, which operates mines, trades oil and natural resources and sells other products, said profit at its metals division gained 58 percent in the year just finished to ¥23.6 billion. Income from machinery and telecommunication equipment was ¥7.3 billion, which compared with a ¥4.92 billion loss the previous year.

Itochu reports annual loss
Itochu, Japan's third-biggest trading house, reported an annual net loss of ¥31.9 billion, or $281 million, after it wrote down the value of its assets.

The company predicted a return to profit this year. Itochu's loss for the 12 months that ended March 31 compared with a profit of ¥20.1 billion a year earlier, the Osaka-based company said.
Source; Bloomberg News, May 2004
Write; by Tim Kelly and Yoshiko Matsushita

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Geo-economic – Development – Vietnam

Vietnam has become one of the fastest-growing countries in Asia
If foreigner investment is anything to go by, the nominally communist rulers of Vietnam have made their peace with capitalism.

The country raked in foreign direct investment worth more than 8% of GDP last year: even more, proportionally, than China. After its oversized and overheating neighbour, Vietnam also boasts Asia's best-performing economy. It has grown by an average of 7.4% a year over the past decade and is likely to achieve a similar figure this year. Better yet, the boom has lifted many Vietnamese out of poverty. As recently as 1993, the World Bank considered 58% of the population poor. By 2002, that had fallen to 29%. Can Vietnam maintain this remarkable momentum?
So far, its economy has proved unstoppable. Neither last year's outbreak of SARS, a respiratory disease which scared away tourists, nor this year's avian flu epidemic, which hurt poultry farmers, made much of a dent. Even during the Asian financial crisis of the late 1990s, when other countries in the region were plunged into recession, growth in Vietnam never fell below 4.8%.
At first, agricultural reform, which redistributed land from the state to poor farmers, propelled the boom. More recently, export growth, fuelled by cheap, efficient labour and burgeoning foreign investment has driven the economy. Exports leapt 20% last year. As Do Duc Dinh, a local economist, points out, the money Vietnam earns from this trade - roughly $20 billion last year - now dwarfs the $2 billion-odd it gets each year in hand-outs from foreign donors. Vietnam's exports to America doubled in 2002, after the two countries signed a trade pact, and again in 2003.
Admittedly, as trade with America grows, it has become more controversial. Last year, American catfish farmers, by invoking arcane anti-dumping laws, persuaded their government to impose steep tariffs on imports of Vietnamese catfish. Now American shrimp-fishermen are trying to repeat the same trick. American bureaucrats are also contemplating reducing the amount of garments Vietnam can export to America, as a penalty for allowing Chinese-made clothes to enter America on Vietnam's quota. Even if Vietnam is let off the hook, the quota will from now on only grow by a few percentage points a year. Between 2001 and 2003, by contrast, textile exports to the United States grew from $47m to $2.4 billion.
But Vietnam's diversified exports - it produces commodities, agricultural goods and manufactures - provide insulation against fluctuations in any single product. Its markets are diverse, too: although catfish exports to America fell by a third after the new tariffs were imposed, overall exports of catfish grew, as Vietnamese exporters found new customers in Europe and Australia. Vietnam also hopes to join the World Trade Organisation next year. But even if this deadline slips, it still has its trade pact with America, its membership of AFTA, a South-East Asian free-trade area, and its proximity to China.
Small businesses have also boomed, since the government passed a new law in 2000 making it easier to set them up. By the end of 2002, over 50,000 new companies had sprung up. But as Martin Rama of the World Bank points out, Vietnam has almost no middling private firms between these mom-and-pop ventures and big exporters backed by foreign investors.
Such businesses find it hard to grow because they cannot readily get access to land or capital. About half of bank lending goes to state-owned enterprises, although that share is falling. What is more, even if banks (mostly state-owned themselves) wanted to lend to entrepreneurs, the latter have little collateral to pledge for their loans. In Vietnam, the state owns all the land and grants land-use rights to farmers, businesses and home-owners. Although these are theoretically transferable, banks are fearful that Vietnam's antiquated courts would not enforce their rights. Such fears have precluded a free market for land, further adding to private firms' difficulties. Corruption also weighs heaviest on small businesses: in some provinces, they can be subjected to as many as 15 different bureaucratic inspections each year.
The government, although trying to solve some of these problems, appears addicted to public enterprise. It continues to provide state-owned firms with loans and land - which many of them then rent on at a mark-up to the private sector. It invests with Stakhanovite zeal in impressive but uneconomical facilities, such as oil refineries, steel mills and fertiliser plants.
The net result is a massive misallocation of resources. Vietnam's ratio of investment to economic growth has fallen by roughly a quarter in recent years. To reverse that slide, argues Robert Glofcheski, an economist at the UN Development Programme, the government must revert to the same tactics that made its agricultural reforms so successful: more spending on health and education, further transfers of assets from the public to the private sector and faster deregulation.
Such moves are particularly important if poverty is to be reduced further. Thanks in part to the stunning success of the past decade; tackling poverty has become more difficult. The poor are now concentrated in remote, rural districts populated chiefly by ethnic minorities—just the sort of area least touched by the government's reform programme. Now that industry has replaced agriculture as the main engine of the economy, cities are growing faster than the countryside. Vietnam cannot afford to provide services to the rural poor, or cope with a population influx in the cities, and cosset state-owned firms at the same time—even during a boom.
Source; The Economist, May 2004

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Business – Logistics – U.S.A.

Deutsche Post expands again in US
Alliances and acquisition activity in the European and global postal markets has continued this year with a series of recent announcements by European mail and express operators.

Deutsche Post has announced that it has made two new acquisitions in the US postal market. Its subsidiary Deutsche Post Global Mail USA has reached agreements to acquire U.S. mail service providers SmartMail Services, a leading provider of transport and sorting services for flat mail, and QuikPak Inc. a market leader in catalogue fulfilment. The new organisation will employ 1,850 people in the USA and will generate revenue of about $600m (€500m). It will utilise the network of USPS with which the companies already have existing agreements.
Meanwhile in Europe TNT Express has announced that it has entered into an alliance with Norway Post, which will enable it to sell its global express products through Norway's post office network. This is in addition to a similar deal with Sweden's national postal operator, Posten.
In the UK there has been better news for the beleaguered national postal operator, Royal Mail. The organisation is two years into its recovery plan and is expected to announce operating profits of £250m (€365m) for the year ending March 2004, a significant improvement on the £197m (€307m) loss suffered last year.
This turnaround has prompted civil servants to once again consider the sale of the group, which could be valued at £4bn (€5.84bn), representing the largest privatisation in the UK since in 1996.
The recent problems encountered by Royal Mail have, in part, been caused by the increased competition within the UK mail market, especially in the more profitable business sector. In the past few months, DPWN, TPG, Hays and Business Post have all been awarded licences to provide competitive services in the lucrative business-to-business arena.
Source; Transport Intelligence, May 2004

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