Actual finance blog

On the back of a recent issue of Bon Appétit magazine, a group of attractive, smiling young people is gathered around a white-cloth covered table, sipping wine and laughing.

The tag line is "Guess who’s paying for dinner? Your points."

It’s an ad for a credit card and the implication is clear: Use your card often enough and you’ll get something in return.

Canadians are crazy for rewards programs. Collectively, there are 114 million active members of rewards programs in Canada, according to Colloquy, the market research arm of LoyaltyOne, the group that owns the Air Miles program.

That’s more than four rewards programs for every man, woman and child in the country.

"When you can take a whole family on a trip and not pay anything, I think that’s fantastic. That’s worth thousands of dollars. Why wouldn’t you do it?" says Lynda Fishman, a 52-year-old children’s camp director in North York.

Fishman has at least three credit cards with rewards programs on them, and an Air Miles card she can use on its own to collect points. None comes with annual fees and they’ve produced enough points to send her family of five to Florida for a week.

She also earns a $150 bottle of Chanel perfume every few months with her Shoppers Drug Mart loyalty card. "I shop there whenever they have the 20 times bonus points on everything in the store."

In the minds of most consumers, these rewards are "free." But, of course, they’re not.

They come out of the pockets of retailers like Jim Stonley and Zafar Khokhar, co-owners of the Esso station at Front St. E. and Sherbourne St. in Toronto.

The pair say they pay nearly $11,000 a month on average in credit card fees and see little benefit, even from Esso-brand loyalty cards.

Indeed, they say they pay twice when a customer swipes their Esso points card – once to process the transaction and again when the customer redeems them because the points do not cover the full cost of the product or service.

Stonley and Khokhar say they feel they have to accept any credit card the consumer presents or risk losing their business to competitors. But the costs are starting to add up.

Profit margins on gas average 5 cents a litre. Credit card processing fees are on average 2 per cent. So, when the price of gas goes up, the credit card processing fee also increases and eats into the margins.

"It’s quite a lot of money for a small business person," Stonley said.

Many loyalty programs are part of a retailer’s marketing program. Retailers pay to join Air Miles because it helps drive cardholders to their stores. Shoppers Drug Mart uses its Optimum card to attract customers and push selected merchandise by doubling or tripling the points on those items.

These kinds of loyalty programs make up about 80 per cent of the rewards program market in Canada.

Consumers don’t seem to mind that the costs may be hidden in the prices of things they buy. Indeed, the Consumers Association of Canada opposes anything that would reduce the value of rewards programs, such as caps on credit card interest rates and fees.

Nearly half of Canadians use a credit card simply because it offers rewards, citing first points, then flights and finally cash as their preferred rewards, according to Chicago-based research firm Mintel International Inc.

Retailers say there is a fundamental problem in the way credit card programs are funded. They foot the entire bill but they do not derive all the benefits and say they have no ability to negotiate the rates.

That’s because merchant "swipe" fees are based largely on something called the "interchange rate."

"I can tell you, without a doubt, that all of the credit cards that come with rewards programs are fully paid for by the merchants," says Diane Brisebois, president of the Retail Council of Canada. The council estimates such fees now cost merchants $4.5 billion a year, or roughly 2 per cent of the value of every purchase Faxless payday loans. That amounts to nearly $400 per household, assuming these costs are passed on to consumers in the form of higher prices.

The Bank of Canada concluded credit cards have become the most expensive form of payment for merchants. The average debit card transaction costs 12 cents, but a credit card transaction costs 2 to 4 per cent of the value of the sale, according to the central bank.

Credit card companies say interchange keeps the system running smoothly. In a two-way network, where both sides have to agree to participate, it ensures banks have an incentive to issue cards to consumers, and merchants have an incentive to accept them, they say.

The fee is collected by the merchant’s bank and paid to the cardholder’s bank to compensate the card issuer for the cost of bringing cardholders into the system, the credit card companies say.

"Interchange is determined by MasterCard and makes up part of the fee paid by the merchant," Kevin Stanton, president of MasterCard Canada, told a Senate committee hearing earlier this year.

Merchants and small business owners say the system encourages a weird form of reverse competition in which credit card companies compete for the banks’ business by raising the interchange rate at the merchants’ expense.

This wasn’t a problem as long as merchants felt the rates were reasonable and negotiable, Brisebois says. That’s no longer the case.

Ever since most of Canada’s banks outsourced their merchant-acquiring business to third parties, it’s been a lot tougher for merchants to strike deals on credit card processing fees.

"The merchant used to deal directly with the branch manager of their bank. The merchant could negotiate with the manager, who wanted to keep the merchant’s banking business," Brisebois explains.

The situation took a turn for the worse after the credit card companies fiddled with their interchange rate structure and introduced a new class of "premium" cards. After years of relatively steady, predictable fees, both Visa and MasterCard expanded the number and kind of rates retailers pay from two or three rates to between 19 and 21.

The new premium cards, such as Visa’s Infinite card, come with more perks for consumers but cost merchants more to accept.

Retailers say these cards now represent 25 per cent of the value of all transactions and have a huge and unpredictable impact on the fees they face at the end of the month.

The bankers’ association says premium cards represent just 9 per cent of their credit card accounts and benefit the merchant by bringing in higher net worth customers.

Industry experts, such as Andrew Davidson of Mintel International Inc., say premium cards were created to offset banks’ rising loan losses during the economic downturn.

Add in other interchange changes and these new premium cards helped boost processing fees more than 10 per cent for Visa and nearly 20 per cent for MasterCard in the 12-month period ending last February, retailers say.

The credit card companies dispute the retailers’ figures, saying they have raised rates for some types of transactions and lowered them for others so the overall impact is neutral. The retail council says the new rates are designed to boost credit card use in grocery stores, gas stations and coffee shops where consumers prefer to use cash or debit.

Initially, credit cards were cheaper than cash or cheques and had the added benefit of reducing the risk of theft, says Andrew Ching, a marketing professor at the University of Toronto’s Rotman School of Management. Now, with the market saturated, banks began to use their reward programs to compete for market share, and to penetrate under-represented markets, such as grocery and gas.

Fishman, the points-collecting camp director, shrugs off retailer complaints. She accepts credit card payments from clients. "It’s just another cost of doing business."

Source

Carolina Diaz-Silva says she believes that learning a foreign language at an early age can give children a cognitive advantage in the future. Diaz-Silva is founder and director of International Schoolhouse, a Spanish-immersion preschool in Olivette. She started the school in August with 10 children and will be adding eight more in January.

Diaz-Silva, who speaks in English, Spanish, Italian and German, hails from Peru and moved to St. Louis 16 years ago. She spent her time teaching Spanish at MICDS in Ladue and also at Washington University.

In 2006, she received a master’s degree in Spanish Literature from Washington University and received an MBA from the university in May. She serves as an adjunct lecturer in the romance languages department of Washington University, teaching Spanish.

Diaz-Silva says she is trying to weather the economic challenges that come with her new venture and the competition from other preschools in the area.

Are the children enrolled in the program from different backgrounds?

We have a lot of diversity in our student body as well as our teachers. Out of 18 students, we have four Hispanic children, one Indian and one African-American.

What kind of economic challenges are you facing with the school?

I would say that I had a lot of interest in the school, because it is not a day care, it is only a preschool that has part-time hours.

But in today’s economy, preschool has become an option for a mother who stays home with her child. A lot of families are choosing not to make that expense. And that has an impact on the enrollment.

But I am happy that we are small and are able to gradually grow.

Has the performance of the school, so far, met your expectations?

I was naive no fax payday loan. I thought the school would fill up from the first day, because it is such a great idea.

It is also important to realize that I have to build trust with the parents. And that is exactly what we are doing right now.

We had an open house for children coming in January and we had the current parents be at the open house and talk to the prospective families. That made all the difference in the world. Because it wasn’t the director or the teacher selling what a great program we have, but the parents telling them how delighted they were with the program and how fantastic the teachers are.

Who are your competitors?

Preschool is very local. We did a lot of market research before starting the school and found out that families drive less than three miles for a preschool and a lot of families just walk.

There aren’t any Spanish-immersion preschools in our area, but there are a couple in St. Charles and Ballwin. My direct competition are other preschools in the area.

How do you publicize the school?

Most of our publicity comes from word-of-mouth. But we also do some advertising, like in St. Louis Kids Magazine, Ladue News, direct mailing, postcards.

We need to do more effective marketing. But I don’t believe marketing is going to get me more students. It is going to be my current families talking to their friends. Basically, I have 10 advocates, and I will have 18 in January.

Source

Retailers are praying that holiday sales will finally turn around after two hard years. Last year was terrible, with the downfall of well-known retail chains such as Circuit City and Linens ‘n Things. This year hasn’t been much better.

But the near-term outlook doesn’t appear positive to Robert Buchanan, assistant professor of finance at St. Louis University. He sees glum sales through the first half of next year. And Buchanan doesn’t expect consumers to return to their free-spending ways in the long run.

Unlike many academics, Buchanan hasn’t been confined to an ivory tower. He spent 23 years in equity research, scrutinizing the financial statements and strategies of retailers. Before turning to teaching, he was vice president and Retailing Industry Research Group leader at A.G Edwards.

Yet, he didn’t start in equity research. He had been a journalist, working for wire service United Press International.

"There is a lot of commonality between a good reporter and a good analyst," Buchanan says.

How do you project this year’s holiday season to be, compared to 2008?

I think it is going to be a slow Christmas. If you look at the industry, it is certainly not depressed, but I think the industry is in slow spirits. What we’ve been seeing is same-store sales growth in the -1, -2 percent area throughout the year. I think that trend will continue through the holiday, and certainly into the first half of next year.

There are two reasons, number one is the debt — personal, corporate and government debt. Debt has become an acute problem for individuals.

Second thing has to do with the stock market. The total returns for the stock market during the 26 years ending with 2007, they ran right around 13 percent per year (which made consumers richer). … My suspicion is that kind of super market will not apply during the next 26 years.

What would be your advice for retailers this season?

A lot of them are acting very intelligently, starting with Walmart and individual retailers like Nordstrom, Kohl’s, Target, Costco cheap payday loan. What they are doing is smart, they have cut way back on their inventory levels and their expense levels. Those retailers in particular are positioned to make decent a return even if the sales stay slow.

A number of retail companies filed for bankruptcy in the past year. How will this affect retailers in the long run?

I think the days of heady growth for American retailers are over. Moving forward, the game is going to be about the market share. … A given retailer has to punch another retailer in the nose to take their market share away in order to survive. It has become and will remain a ruthless Darwinian struggle.

Do you think the recession has marked the death of customers?

My hunch is that (for) the high end of American retailing, like Neiman Marcus, Saks Fifth Avenue and parts of Nordstrom, the customer mindset … has permanently changed.

I think the days of freewheeling spending are over, particularly at the high end. It never made a whole lot of sense for someone to spend $2,000 on a business bag, for example, and yet, people did anyway … I think now it absolutely makes no sense. Frugality is the word.

If I am wrong about the (stock) market, and the stock market goes on a sustained (strong growth) for the next 26 years, then people might go back on spending $4,500 on a handbag.

What do you think will be the state of retail business over the next 20 years?

I think strong and superior value propositions will carry the day. To me, the best retailing concept in the world … is Costco’s.

Most typical retailers are working anywhere between a 30 percent to 60 percent mark up (on) the cost of their merchandise; Costco is working anywhere between a 10 to 15 percent markup. They don’t carry everything, they only have about 4,000 items at one point in time versus 150,000 items at a Walmart super center. But what they have … is very sharply priced.

Source

The biggest U.S. business organization has fallen out with influential parts of Corporate America because of its trenchant opposition to climate-change legislation making its way through Congress.

The U.S. Chamber of Commerce’s opposition to the climate bill has already cost it prominent members including Apple Inc and California utility PG&E Corp.

And this week two of the lobbying group’s most powerful members, the conglomerate General Electric Co and the telecommunications equipment provider Cisco Systems Inc told Reuters they do not see eye-to-eye with the group on climate regulations.

“The Chamber does not represent our views on the urgent need for climate legislation,” said Peter O’Toole, a spokesman for GE, the largest U.S. conglomerate. “We need climate legislation and a price for carbon in the U.S. now.”

The Chamber, which represents some 3 million U.S. businesses ranging from massive multinationals to mom-and-pop operations, says its positions take into account the needs of many sorts of businesses across a range of industries.

“Our goal is to have the positions that we actually take stances on be reflective of the democratic majority of the broad majority of the business community,” said Eric Wohlschlegel, a Chamber spokesman. “There are cases, not just with energy, where companies are going to peel off and take different positions than the Chamber.”

The bill making its way through Congress aims to reduce emissions of carbon dioxide — a greenhouse gas that contributes to global climate change — through a cap-and-trade system that would allow companies a limited amount of emissions. Those that emit more would need to buy additional credits; those that emit less would be able to sell credits no teletrek payday advance.

The Chamber has raised concerns that the bill is not comprehensive enough and is not international in scope while seeking to tackle a global problem.

Its opposition to the climate bill, as well as to proposed health care reforms, has become enough of a concern to the White House that U.S. President Barack Obama met with Chamber officials on Thursday.

NEED TO “MODERNIZE”

Apple, which makes Macintosh personal computers and iPod music players, as well as utilities PG&E, Exelon Corp and PNM Resources Inc, quit the Chamber outright over this issue, while giant sportswear maker Nike Inc stepped down from the board but remains a member of the group.

Even companies that are keeping up their memberships said they would like to see change.

Cisco, the world’s largest maker of equipment for networking computers, aims to work with the Chamber “to modernize their position,” said spokeswoman Jennifer Greeson.

Duke Energy Corp Chief Executive Jim Rogers has long advocated regulation of carbon dioxide emissions and threw his weight behind the House version of the bill. He has no plans to give up his seat on the Chamber’s board, a spokesman said.

“We work with the Chamber on lots of different issues, but we don’t always see eye-to-eye with them,” said Tom Williams, a spokesman for the Charlotte, North Carolina-based company. 

Read more

General Motors told white-collar workers Friday that it is restoring temporary pay cuts made May 1.

The 3 percent to 10 percent pay cuts to salaried workers’ pay came at a time when GM was desperate to save cash to keep the company operating prior to its bankruptcy filing June 1.

The pay cuts depended upon an employee’s level.

Source

Bank of America Corp and the U.S. Securities and Exchange Commission on Wednesday made a third attempt to persuade a skeptical judge to approve their settlement over Merrill Lynch & Co bonuses. But experts said they may not have done enough.

The largest U.S. bank separately rejected allegations brought Tuesday by New York Attorney General Andrew Cuomo that it is hiding behind attorney-client privilege as a defense for its decisions over Merrill. Cuomo has threatened to sue top executives if the bank by September 14 is not more forthcoming.

Bank of America agreed last month to pay $33 million to settle SEC charges it misled investors about $3.6 billion of bonuses paid to Merrill employees, which lost $27.6 billion last year.

Yet U.S. District Judge Jed Rakoff in Manhattan has twice refused to sign off on the settlement, demanding more details about who knew what about the bonuses.

He has expressed incredulity at the SEC’s allowing the bank to avoid disclosures by asserting that top officials relied on lawyers to make decisions about the disclosures. The bank did not admit wrongdoing in agreeing to settle.

Wednesday’s filings, which do not assign responsibility to individual executives, may not change the judge’s mind.

“We’re getting from the SEC a bureaucratic stonewall, and from the bank an opaque silence about what went on,” said John Coffee, a Columbia University law professor who reviewed the briefs. “The SEC hopes the court will rubber-stamp the settlement, but it has to face that all events are tipping in the direction that no one other the SEC and the bank want this settlement to go forward. The public wants more disclosure free credit score online.”

Coffee teaches a class at Columbia with Judge Rakoff.

The judge could hold a hearing on the matter, the bank and the SEC could try to renegotiate the settlement, or more litigation could ensue. Indeed, Bank of America said it “stands ready to litigate” if the settlement is turned down.

“I hope the judge rejects the settlement,” said Charles Murdock, a law professor at Loyola University of Chicago. “There was a failure to adequately disclose terms of the transaction and Merrill’s financial situation.”

CUOMO THREATENS LAWSUIT

Bank of America has faced months of anger by shareholders and in Congress over the shotgun Merrill merger, which resulted in a federal bailout and restrictions on executive pay.

The merger has also called into question the leadership of Chief Executive Kenneth Lewis, who this year ceded his role as chairman and lost half of his supportive board of directors.

In threatening to sue individual executives, Cuomo accused them of failing to reveal material information about the Merrill merger. This includes the bonuses, Merrill’s $15.8 billion fourth-quarter loss and the bank’s efforts to back out of the transaction before it closed on January 1.

He said the bank’s former general counsel Timothy Mayopoulos testified to having advised executives four days before a shareholder vote as to whether the bank could invoke a “material adverse change” clause to cancel the merger — but was not allowed by the bank to say what he advised. 

Read more

While the Toronto International Film Festival is renowned for showcasing the world’s finest movies, Jeffry Roick’s glittery parties are known to occasionally eclipse the main event.

Roick, 43, is the event planner of choice for Hollywood North. But a tough recession means that this year’s festival, which starts next Thursday, , seems destined to be less glamorous this time – even with the presence of luminaries such as George Clooney and Oprah Winfrey.

At this time last year Roick had 13 confirmed bookings. This year he has two.

"Companies are really toning things down because of the economy," says Roick. "Even if they do have the money it’s just not fashionable right now to spend a lot on what they think may be an over-the-top event."

Pamela Smith, publisher of TSEvents, considered the bible of the events business in Toronto, says this year has been particularly bad for the industry.

"It really is a sad state. A lot of businesses are just devastated," says Smith. "This is affecting everyone from the hotel to the caterer to the cab driver."

Organizers say the festival, considered the second-most important movie industry event after Cannes, has an estimated $135 million economic impact on Toronto. More than 470,000 people are expected to attend 335 film screenings throughout the city.

Michael Harker, founder and senior partner of Toronto-based Enigma Research, says the festival may vie with other events such as the Canadian National Exhibition for the bragging rights as the annual event with the largest economic footprint in the city.

"They fit the perfect criteria of having a huge attendance, having a lot of people from out of town and their patrons do a large amount of spending when they’re in the city," Harker says.

It is also one of the single most important annual events for the hospitality industry. This is typically when the most glamorous parties are held in the city during the year. With the stars out in force, sponsors and patrons are willing to pay big bucks to up the glamour quotient.

But Smith says the hospitality industry is still recovering from a big tumble last Christmas after Wall St. imploded, with the reverberations on Bay St. here in Toronto.

"They suffered cancellations at Christmas, and that business hasn’t come back," Smith says.

Case in point: Last year Roick’s company McNabb Roick & Associates threw the festival’s most high-profile soiree. The One X One fundraiser for 800 guests used Maple Leaf Gardens as a dinner venue for the first time. Hosted by The Bourne Identity star Matt Damon, the event raised funds for children’s charities.

While a concert is still planned for the charity this year, the dinner portion is dramatically slimmed down to about 200 people with a cocktail party held in a private residence, Roick says.

"People are still having events, but the feeling is much more subdued and likely held in smaller venues and restaurants," he says auto loans for bad credit.

Roick will not disclose who will be at his parties, but in the past he’s hosted guests such as Gwyneth Paltrow, Clint Eastwood and Brad Pitt.

Despite the challenging economy, Jennifer Bell, vice-president of communications for TIFF, says organizers are confident the festival is "well-positioned to weather the economic storm."

Unlike other non-profit annual events such as Tennis Canada’s Rogers Cup, TIFF does not disclose sponsorship details.

"We do not discuss specific figures or details associated with sponsorship arrangements," Bell says. "However, it would be irresponsible for us as an organization to suggest that we are immune to the pressures facing the arts sector globally."

Roick says sponsors are crucial to the festival, especially since they underwrite many of the costs of throwing a big party.

"When you’re not getting dozens of cases of fine wine donated for your party in return for sponsorship, that makes a huge difference to the size and scope of your event," Roick says.

Still, the festival remains seductive for some sponsors. Toronto-based Porter Airlines signed on for the first time this year.

"The film festival really creates a buzz," says Robert Deluce, CEO of the commuter airline known for its emphasis on style. "I guess you could say we’re bucking the trend by spending more on marketing this year than last year."

Unlike some other businesses, Porter is in expansion mode, taking on six new airplanes by the end of the year while upgrading its terminal.

The airline is also the official carrier of other arts and cultural organizations, such as the Toronto Symphony Orchestra and Luminato.

"We feel that cultural events like the film festival are where our passengers are," Deluce says.

Deluce says he’s not sure if he’s going to throw a party, but he’ll likely attend a few. Models dressed in Porter Airlines flight outfits will also be on show at different events.

"We’re going to try and participate in every way," he says.

That may be good news for planners such as Roick, whose events could cost more than $1,000 per plate. While there is no Maple Leaf Gardens event planned for this year, the big-ticket item will be a black-tie fête planned by Roick and held at the art-moderne-style Carlu, of which he is also the managing partner.

Roick promises that it will be the party that everyone will remember this year. And who knows, he says, perhaps a little optimistically, with the festival less than a week away, things could still turn around.

"It’s all about whether the stars’ schedules can come together. Then it’s `hurry-up and book that club,’" he says. "It could still happen."

Source

Bankrupt U.S. media group Tribune Co could emerge from bankruptcy in the autumn without a major overhaul of its present top management, the New York Times said, citing people briefed on the restructuring plans.

The status of Tribune’s chief executive Sam Zell is however not clear, the paper said.

People close to the talks told the paper that major creditors have not made it clear whether they want Zell to leave the company or work in another capacity. Zell’s plans are also unclear, the paper said.

A Tribune spokesman could not be immediately reached for comment by Reuters.

The publisher of the Chicago Tribune and Los Angeles Times filed for bankruptcy in December 2008 after going private in a deal led by Zell that resulted in the company having $13 billion in debt.

Last week, Tribune bondholders asked a bankruptcy judge to investigate the 2007 buyout by Zell, saying it caused the company’s demise, court documents showed.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)

Read more

Anheuser-Busch InBev, the world’s biggest brewer, managed to squeeze more profits from smaller beer sales in its second quarter.

Thanks to cost savings in North America, the company blew through analysts’ profit predictions. Its beer sales — measured by liquid sold — fell 1.1 percent worldwide. But revenue rose 1.4 percent to $9.5 billion, and profit margins widened as the company posted $1.07 billion in quarterly earnings.

"Profits were higher than expected with the excellent cost management — again — from their side," said Wim Hoste, analyst at KBC Securities in Belgium. "This was a good set of results."

In the first half of the year, North America chipped in nearly half of the company’s global earnings. The company now reports its financial results in dollars and New York serves as a shadow headquarters. (Officially, it is still based in the university town of Leuven, Belgium.)

"When it comes down to basics, these guys basically care about three markets: Brazil, China and the U.S.," said Rob Mann, consumer goods analyst at Liberum Capital in London. "This is now an American business with a very powerful Latin American franchise."

The company said the $52 billion takeover of Anheuser-Busch continues to yield cost savings, with integration running ahead of schedule. The combined company delivered $315 million in synergies in the second quarter and $610 million in the first half of the year by cutting costs —

including jobs — implementing InBev’s famously strict budgeting procedures and using its size to get better terms from suppliers. The company said it is on pace to deliver $1 billion in cost cuts from the Anheuser-Busch takeover this year — a goal Hoste said is starting to look "conservative," given the company’s track record.

In the first six months of the year, Anheuser-Busch InBev sold $3.56 billion of assets, including brewing assets in China and South Korea, as well as packaging plants in the U.S. The company said it remained focused on reducing its debt and selling off assets in a "disciplined" manner.

The company is reducing its ratio of debt to earnings and is in the enviable position of not needing to sell assets in a fire sale, said Hoste. "They are not a forced seller," he said. "They can choose their deals or just let them go if the price is not right or the structure is not right payday advance lenders."

But Anheuser-Busch InBev issued a cautious outlook, warning that demand was weaker and the overall environment "challenging." Executives said the beer industry is resilient in most key regions but is susceptible to economic pressures and won’t improve quickly.

Shares of Anheuser-Busch InBev fell more than 5 percent on Thursday — the most since April — after the company said it didn’t expect to keep boosting profits at the same rate.

Competitors are weathering the same stagnant beer market: London-based SABMiller’s recent sales volumes were flat, and Danish brewer Carlsberg reported that volumes dropped 6 percent in the latest quarter.

"All the brewers are getting hurt from the global economic downturn," said Hoste. "A-B InBev is no exception."

The company gained market share in the U.S., its largest single market, but only because its sales fell less dramatically than its competitors’. Sales of Anheuser-Busch InBev beer from wholesalers to retailers fell 0.8 percent — "sluggish" results, according to Beer Marketer’s Insights.

Still, the company credited its "diverse portfolio" with helping it weather the difficult environment.

Anheuser-Busch InBev said its "focus brands" did better than its overall stable of 300 brands. Sales volumes of the focus brands rose 1.5 percent in the quarter. That group included Brahma and Skol from Brazil, China’s Harbin and the Bud Light family from the U.S. The brewer vowed to keep investing "significant sales and marketing resources" in its biggest brands.

The company gained market share in Argentina, Belgium, Brazil, South Korea, Ukraine, the U.K. and the U.S.

For Anheuser-Busch InBev, the past three months represent a marked improvement over the past few years, said Mann. InBev suffered some troubling missteps before and shortly after taking over Anheuser-Busch. Russia was a disaster for InBev for some time, and Stella Artois stumbled badly in the U.K., for example.

"It was difficult to find any bright spots," said Mann. "But then they did a very large deal (with Anheuser-Busch), and bought themselves some stability. Those (profit) margins are pretty stunning."

Source

Large U.S. food companies have been pushing the Obama administration to ease sugar import curbs, citing forecasts for unprecedented sugar shortages that could result in higher retail prices and possible job losses.

In a letter to U.S. Agriculture Secretary Tom Vilsack dated August 5, companies and groups that include Kraft Foods Inc, General Mills Inc and Hershey Co warn that “our nation will virtually run out of sugar,” if a USDA forecast is accurate.

The letter was written a week before the Agriculture Department on Wednesday said the closely watched stocks-to-use ratio in the U.S. sugar market for 2009/10 stood at 6.7 percent, up from 3.4 percent in last month’s report.

The situation is seen easing because of increased beet sugar and cane sugar production, according to the USDA.

U.S. sugar industry officials say importing sugar into the United States would not be cost effective because there is now little difference between the world price and the price in the U.S. domestic market.

In any event, analysts say, rising sugar costs are unlikely to boost prices of food products because prices for other ingredients such as grains have declined since last year.

Still, the USDA prefers the stocks ratio at 15 percent and the government has used a figure below that level as a reason to order imports, as it did in August 2008.

The Sweetener Users Association, representing companies that use sugar, called on Thursday for an increase in the U fast cash.S. sugar import quota of 450,000 short tons for this marketing year, which ends on September 30.

The association said the sugar supply will be unduly tight despite USDA’s forecast of slightly larger domestic output.

Food industry analysts say inflation should be contained for an industry that sharply increased prices in the past year as costs for commodities such as vegetable oil, wheat and corn surged.

Many commodity prices have retreated, and manufacturers are trying to defend the price increases as consumers and retailers try to rein in costs in a weak economy.

“For every ingredient that has gone up in price, there’s probably two or three that have gone down in price,” D.A. Davidson analyst Timothy Ramey, said.

Lee Linthicum, global food research manager at Euromonitor International, likened the food industry’s concern over sugar prices to warnings manufacturers raised when oil futures rose to about $140 a barrel last year. NYMEX light crude futures traded at $71.51 on Thursday.

“Nobody thought that oil would ever go below $100 a barrel ever again and now, look where we are,” he said.

Sugar prices have been at record highs as a weak monsoon season raises concern about production in India and Brazil. 

Read more