(Reuters) – Packaged food giants including Kraft Heinz, General Mills and Kellogg are pushing sales of their products to consumers directly via their own online channels, in a quest to gather more data about shoppers’ purchasing habits.
FILE PHOTO: Tins of Heinz Baked Beans rest on a palette in the company’s factory in Wigan, northern England, May 21, 2009. REUTERS/Phil Noble
Velveeta-cheese maker Kraft Heinz saw its e-commerce sales double in 2020, now representing more than 5% of its global sales, Chief Executive Miguel Patricio said at the virtual Consumer Analyst Group of New York (CAGNY) conference this week.
The company sells Heinz baked beans and tomato soup by subscription or in bundles directly to consumers on a “Heinz To Home” website in the United Kingdom, Australia and Europe.
Sales on the site are “giving us valuable insights into consumer behavior, enabling us to quickly test and learn from innovations,” Kraft’s head of international business, Rafael de Oliveira, said at the conference.
Kraft would continue to use the site as a channel to generate strong sales in developed markets, he said.
The company also counts sales of its products through marketplaces such as on Amazon.com and Walmart.com as part of its e-commerce sales.
U.S. shoppers spent on average $1,271 buying groceries online last year, 45% more than they did in 2019 as the pandemic spurred shopping online, according to market research firm Earnest Research. In contrast, the average dollars spent in stores rose only about 7% to $3,849.
PepsiCo sells products including Doritos, Quaker oats and Gatorade directly to consumers through two websites, pantryshop.com and snacks.com, both launched in 2020.
Chief Financial Officer Hugh Johnston said that more than 45% of the company’s capital investments over the next few years would be dedicated toward manufacturing capacity, automation, and a “ramping up of investments in our e-commerce channel.”
As major online retailers including Amazon.com and Walmart.com continue to gather valuable data on shoppers, many packaged food manufacturers are keen to gather their own data on shoppers, too.
“COVID (has) simply accelerated our digital growth and has provided us with yet another source of data and insight,” Monica McGurk, chief growth officer at breakfast cereal maker Kellogg Co., told the conference.
Kellogg, producer of Corn Flakes as well as Pringles chips, said on Wednesday it had launched a direct-to-consumer website focused on digestive wellness. The group plans to sell its new Mwell Microbiome Powder for gut health via the site to gather data on customer interest before it launches the product more widely.
E-commerce sales have doubled in the past year and now represent about 8.5% of the group’s $13.77 billion in annual sales, Kellogg said.
Pillsbury dough-maker General Mills also sees the benefits of tracking consumer habits more closely.
“We’re aggressively investing in data and analytics. We are gathering unparalleled insights from the first-party data we collect through our brand websites,” General Mills’ Chief Executive Jeffrey Harmening said at the conference.
On its Bettycrocker.com website, General Mills provides hundreds of recipes using Betty Crocker cake mixes and frosting. The site leads people to the closest store or an online retailer where they can purchase the products, thereby generating data for General Mills on what a particular customer from a certain zip code is buying. The company does not sell the food products directly on its website.
Consumers, however, may have to shell out more if they shop directly from brand websites.
Prices on the two PepsiCo sites, for example, were generally higher than those on Walmart.com or Amazon.com, Reuters checks show. On Walmart.com, for example, a 10 oz pack of Doritos Nacho Cheese was on sale for $2.50 compared to $4.29 on Pepsico’s website.
Kraft Heinz offers tins of soup, beans, pasta and baby food bundled into packs ranging from six to 25 items and costing between 10 and 20 pounds ($14.01-$28.03) on its UK website. It told Reuters the relatively higher prices of items and bundling of packs than on some other online marketplaces was to be able to eke out a margin after including delivery costs.
“Longer term, we see real value in this channel to be an insight and data channel for us,” Jean-Philippe Nier, head of e-commerce for Kraft Heinz’s business in the UK and Ireland, told Reuters. People are more prepared to order directly from manufacturers than they were before. The time is now.”
Graphic: Direct online sales to cross $20 billion in 2021 –
($1 = 0.7137 pounds)
Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru; Editing by Vanessa O’Connell and Susan Fenton
Japan’s Mizuho suffers problems at ATMs, preventing use of some services
Japan’s Mizuho Bank is suffering problems at its ATMs, preventing customers from accessing some services, the lender said on its website on Sunday.
FILE PHOTO: Mizuho Bank’s signboard is pictured in Tokyo, Japan, January 25, 2017. REUTERS/Kim Kyung-Hoon
TOKYO (Reuters) – Japan’s Mizuho Bank is suffering problems at its ATMs, preventing customers from accessing some services, the lender said on its website on Sunday.
Customers are unable to make withdrawals at some machines, national broadcaster NHK reported.
ATMs in Tokyo are among those affected, a spokeswoman said. She declined to say which services were affected as the lender is still investigating the matter.
The core banking unit of Mizuho Financial Group said that it would update customers on its website.
Japan’s third-largest lender by assets has a history of system troubles spanning more than a decade. It had a costly “fat finger” keyboard error at its securities arm in 2005 and suffered a breakdown at its ATMs after Japan’s devastating 2011 earthquake, unlike its rivals.
Reporting by Kevin Buckland and Takashi Umekawa; Editing by William Mallard
U.S. urban office market, stung by pandemic, hopes tech firms drive comeback
The growing footprint in New York of major tech companies like Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google has given property owners and brokers hope that once the coronavirus has been conquered demand for office space will quickly return to pre-pandemic levels.
NEW YORK (Reuters) – The growing footprint in New York of major tech companies like Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google has given property owners and brokers hope that once the coronavirus has been conquered demand for office space will quickly return to pre-pandemic levels.
FILE PHOTO: The Met Life Tower (L) and Chrysler Building in Manhattan’s midtown east skyline are seen out the windows from the 54th floor of the 77-story One Vanderbilt office tower, in midtown Manhattan, New York City, New York, U.S., September 9, 2020. REUTERS/Mike Segar
But the popularity of working from home and the exodus of people from expensive coastal cities will likely weigh on demand and change workspace requirements, leaving office buildings that do not adjust less valuable.
Big Tech’s expanding real estate clout already hides declining values for lower-quality properties.
Prices for premier workspace in U.S. gateway cities have held or even risen during the pandemic in a flight to quality. But leasing volumes and number of buildings sold have plummeted, with valuations at the lower end falling, data shows.
The pandemic has left a massive question mark hanging over the office sector, said Joe Gorin, head of U.S. real estate management and value-added investing at Barings in New York.
“I know how people are going to use the hotel coming out of the pandemic. How are people going to use office buildings?” he asked. “There’s going to be some pain because we’re going to have to go through a restructuring of how people use space.”
Companies need to make the office more compelling and allow busy work to be done at home, which means workspace demand might not grow, Gorin said. Buildings that cannot provide a great environment will become obsolete.
“If you can own or create the right stuff, it’s going to be valuable,” he said. “Office can become more important and shrink as much as it can expand.”
Limited data suggests buildings classified below the top Class A industry designation already have suffered a drop in value during the pandemic and could be poised for a further slide if a decline in demand persists.
The amount of available office space has soared as tech companies have dumped excessive workspace, a sign of uncertainty among management about a company’s future workspace needs.
Institutional investors have put transaction decisions on hold, with the sale of buildings in Manhattan valued at more than $100 million falling more than half to just 32 last year, research by brokerage Newmark Group Inc shows, using Real Capital Analytics data.
Leasing activity has picked up after the New Year but is still far below pre-pandemic levels.
The office sector is the hardest in commercial real estate to assess because leases generally are long-term commitments, said Sam Isaacson, president of Walker & Dunlop Investment Partners in Denver.
“Eventually the cash flow streams have to match up with the asset value appreciation and when that doesn’t occur, that’s when we’re going to see some real pain,” Isaacson said.
WAITING TO MEET THE BOSS
The number of virtual tours brokers conducted with clients fell 61% in December from a year earlier in seven U.S. gateway cities, according to data from View The Space Inc. Tours declined 74% in New York, the biggest drop outside of an 80% plunge in Seattle, the property technology firm said.
A reversal of Seattle’s early recovery from the pandemic may suggest a significant embrace of more remote work in the city over the long-term, VTS said in the report.
“Our data is pointing to the fact tech companies are still really comfortable working from home and they’re probably going to be the last ones to return to the office,” said Ryan Masiello, co-founder and chief strategy officer at VTS.
Of the 115 people VTS has hired since March, Masiello has met none of them because they are all working remotely, he said.
Tech companies led other industries for the second straight year in Manhattan leasing activity, brokerage CBRE Group Inc said in January. A decline in the technology sector’s real estate footprint would be significant for a property market looking to ride the growing digital economy.
Brokers point to Amazon’s $978 million purchase of the Lord & Taylor building on Fifth Avenue last year and Facebook’s leasing of the Farley Building across from Madison Square Garden, as prime examples for Manhattan’s real estate prospects.
The Amazon deal was valued at $1,466 a square foot, more than 10% above last year’s top-quartile average price, while Google’s billion-dollar deals in Chelsea and Hudson Square have redefined swaths of the city’s Far West Side.
Scott Rechler, chief executive and chairman of closely held RXR Realty, one of the largest office building owners in New York, sees a growing disparity between high- and lower-quality properties.
Companies need to re-imagine the workspace and how they engage with employees who expect properties to be well-located, energetic and have health and wellness centers, he said.
“For buildings that can’t do that – they’re not in the right location, they’re older, they’re obsolete – it could be a meaningful free-fall in value,” Rechler said.
Graphic-Tenant interest in Manhattan office space by category :
Reporting by Herbert Lash in New York; Editing by Alden Bentley and Matthew Lewis
India approves $1 billion plan to boost IT product exports
India on Wednesday approved a 73.5 billion rupee ($1.02 billion) plan to boost local manufacturing and exports of IT products such as laptops, tablets, personal computers and servers, the technology minister said.
NEW DELHI (Reuters) – India on Wednesday approved a 73.5 billion rupee ($1.02 billion) plan to boost local manufacturing and exports of IT products such as laptops, tablets, personal computers and servers, the technology minister said.
The production-linked incentive (PLI) plan will help India export IT goods worth 2.45 trillion rupees, minister Ravi Shankar Prasad told a news conference.
It provides manufacturers cash-backs of between 1% and 4% of additional sales of locally made goods over four years, with 2019-2020 as the base year.
“The focus of the scheme is to get global champions to India and to make national champions out of local manufacturers,” Prasad said, adding that the plan could create roughly 180,000 jobs.
The PLI plan is also likely to help U.S. tech giant Apple Inc assemble some of its iPad tablets in India, Reuters previously reported.
Prime Minister Narendra Modi’s policy push in the electronics sector has prompted Apple suppliers Foxconn and Wistron to expand in India, and driven Pegatron to set up base there.
The three Taiwan companies have committed to invest roughly $900 million to make iPhones in India as part of a $6.7 billion PLI plan launched by the government last year.
Modi’s strategy, coupled with India’s huge market, have also helped turned the country into the world’s second-biggest mobile maker after China.
New Delhi now wants to replicate the success of smartphone manufacturing with other electronics in a bid to cut imports.
The federal cabinet last week approved a $1.68 billion plan to promote local manufacturing and export of telecoms and networking gear.
Reporting by Sankalp Phartiyal, editing by Louise Heavens and Nick Macfie
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