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The Supply Side briefs: Mars partners in wind farm, Kraft heeds caution

• Mars invests in sustainable wind farm
Candy maker Mars Inc. formed a partnership with Sumitomo Corp. of Americas to invest in a wind farm that will generate 100% of the electricity needs for Mars’ U.S. operations — comprised of 70 sites, including 37 factories.

Based near Lamesa, Texas, Mesquite Creek Wind was developed by Sumitomo and BNB Renewable Energy. With an annual output of more than 800,000 megawatt-hours, the 118-turbine wind farm will produce energy for 24% of Mars’ total global factory and office carbon footprint, equivalent to the electricity required to power 61,000 households.

This commitment moves Mars toward its goal of achieving more sustainable operations and eliminating greenhouse gas emissions by 2040.

“We are committed to doing our part to limit climate change,” said Barry Parkin, chief sustainability officer at Mars. “We are therefore delighted to be announcing this major renewable project that takes us a big step towards our goal of becoming carbon neutral in our operations. This is an innovative approach that makes great business and environmental sense.”

The 25,000-acre site has been under development since 2008, commercial operations are expected to begin in mid-2015.

Mars is a Wal-Mart supplier with a sales office in Rogers.

• Kraft predicts sluggish consumer environment to continue
A sluggish consumer environment in 2013 for the packaged foods business has bled into 2014 and is likely to continue for the near term, according to W. Anthony Vernon, CEO of Kraft Foods Inc.

Vernon gave an update on the food business in the company’s May 1 conference call with investors.

“We expected to see some of the same headwinds that impacted the North American food and beverage market in 2013 continue as we enter 2014, and what we saw in quarter one was indeed consistent with our expectations,” he said. “Industry consumption growth lagged population growth, both in the US and Canada, and we would expect unit growth to remain below population growth in the near term.”

Kraft Foods Group reported first quarter net income of $513 million, equal to 86 cents per share on the common stock, up 13% from $456 million, or 77 cents per share, in the first quarter of 2013.

Sales revenues were $4.36 billion, down 3.3% from $4.51 billion in the comparable quarter last year.

Breaking down the 3.3% decline in total revenues, Kraft said organic revenues were down 2.4% including a 2.8% decline attributable to lower volume/mix partly offset by 0.4% point of higher pricing. The company attributed virtually the entire decline to the later timing of Easter shipments in 2014 versus 2013 and “normalization of retail customer inventories” from unusually high levels at the end of 2013.

Vernon said many of the factors weighing on consumer demand in 2013 remained in play in the new year.

“The impact of reductions to the SNAP program continue to be significant for the many American families receiving those benefits, and the employment ratio and underemployment continue to lag the improvement in the headline unemployment rate,” he said.

He also cited evidence of cost pressures on lower- and middle-income households due to higher heating bills and even middle- and upper-middle-income consumers incrementally impacted by larger 2013 tax bills.

“This was most visible as we got into March and April, but we’d expect these more recent factors to fade as we move forward into the remainder of the year,” Vernon said.

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Looking to the second quarter, he said the period will feature a “rejuvenation campaign” for Maxwell House coffee, new Planters flavored peanuts and a campaign touting the new Philadelphia soft cream cheese.

Kraft is a major supplier to Wal-Mart Stores Inc. and has a large sales office in Bentonville.

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