DAIRY PRODUCTS

AMERICAS: The US dairy trade deficit widens to more than $1 billion.

US dairy imports and exports rose to record levels in 2005 whilst the trade deficit widened to more than $1bn. The growth in exports was driven by strong global demand for skimmed milk products; the US was the only significant exporter with surplus stocks. The value of cheese imported increased 3.7% to $1,006m, more than three-quarters of which originated in Europe. The growth in artisanal cheese making, especially in key dairy states such as Wisconsin, is further evidence of growing demand for quality products in this sector.

JAPANESE RETAILING

ASIA: Ageing population will impact the structure of Japanese retailing.

The Nomura Research Institute recently reported that the Japanese retail industry was approaching its fifth significant 'turning point' since the Meiji restoration. This will be instigated, inter alia, by demographic factors ( ageing population, declining birthrate), polarising incomes and planning reform. It was found that the 'seniors' market is less inclined to travel to shop for specialist and luxury items and is more attracted to the concepts of leisure pursuits and safety. The neighbourhood shopping centre was identified as a key beneficiary.

MANAGEMENT CONSULTANTS

EUROPE: UK public sector expenditure on management consultants continues to grow.

The UK Management Consultancy Association has published figures showing that public sector expenditure on management consultants increased by 23% in 2005 to £2.2bn. The wider drive to contract out services by local and central government and their agencies has been estimated to lead to an outsourcing market that will be worth £64bn by 2009. This is, however, not a risk free environment; Accenture recently quit the controversial NHS IT modernisation project and, in the process, made a provision of £240m against potential losses.

ALCOHOLIC DRINKS

ASIA: The Chinese beer market is huge but far from homogeneous.

China became the largest beer market by volume in 2003 and is expected to show future growth of c.10% per annum; per capita consumption is, however, still low compared to that in Europe and the USA. InBev have forecast that "In the coming 10 years, half of the world's demand for beer will come from China."

It is important to note that the Chinese market is not national but an aggregation of local markets with specific regional variations and preferences. This is reflected in the dominance of local brewers some of whom are protected by anti-competitive legislation preventing the sale of non-locally brewed beers.

Although the vast majority of global players are represented, primarily through production and distribution joint-ventures, premium international brands represent only 3% of the market.

INSURANCE

EUROPE: MiFID offers both opportunities and burdens.

The Market in Financial Instruments Directive (MiFID), to be implemented in November 2007, aims to create a single market for financial services in Europe. Amongst its myriad aims are the creation of genuinely competitive and consistently well regulated markets for financial services throughout the EU.

Although implementation raises significant IT and Compliance burdens it will be important to focus equally on the business opportunities that are offered.

The EU Commission and national regulators envisage that most benefit will accrue to the prime movers. The predicted advantages are the ability to distribute products into other national markets and the uniform regulatory landscape and its concomitant reduction in the costs and difficulties of doing business in non-native markets. However, there is a feeling that it will be hard for retail-focussed institutions to gain significant advantages in the short-term as existing distribution channels will continue to predominate.

M&A ACTIVITY

BRIC: BRIC corporations to significantly increase their impact on global M&A activity

In a PwC study of 1,410 CEOs released earlier this year, nearly 71% indicated that they planned to expand operations in BRIC countries over the next three years.

What is becoming very evident is the increase in high-profile cross-border acquisitions by BRIC domiciled corporations.

In December 2004 Lenovo (China) announced the $1.75bn acquisition of IBM's PC division. Two other significant Chinese acquisitions of US entities failed - CNOOC's offer for Unocal and Haier's offer for Maytag.

Aecelor attempted a white-knight merger with Russian steelmaker Severstal to fend-off the attentions of Mittal Steel. Severstal, together with fellow Russian steelmaker Evraz, Brazil's CSN and Gerdau and Tata Steel of India have all been proposed as potential acquirers of Anglo-Dutch Corus.

The board of Canadian Inco recently recommended that shareholders accept the $17bn offer from Brazilian Companhia Vale do Rio Doce.

These are by no means the only deals, successful or otherwise, to have emerged and I would suggest that it is a phenomenon that will have an increasing impact on global M&A statistics.

ALCOHOLIC DRINKS

AMERICAS: Enduring popularity of cocktails drives growth in super-premium spirits

Figures released by the Distilled Spirits Council of the United States show that imports of whiskey and vodka rose year-on-year to June 2006 by 22.4% and 14.9% respectively by value whereas imports of rum declined by 0.7% and brandy and gin imports were virtually static showing increases of 1.1% and 1.8%.

Figures for exports are equally varied with whiskey up 21.7%, rum up 120.6%, brandy up 27.7%, vodka up 78.6% and gin down 13.1%.

The enduring popularity of the cocktail drove the 23% growth in sales of super-premium spirits in 2005.

INSURANCE

ASIA: Rise in middle-class prosperity drives growth in the Chinese insurance market

Growth in the Chinese insurance market will be driven by the growth in the middle-class - those who are sufficiently prosperous to take a long-term view of their own financial security.

Although the insurance industry is by definition about risk, this inherent risk is exacerbated when entering developing markets with huge potential such as China. Specific issues are the difficulty in recruiting experienced local staff, the sheer size of the country which creates problems in providing national coverage, the regulatory and corporate governance environment and low interest rates leading to paltry returns on fixed-income investments

MEDIA

EUROPE: Changing trends in communications consumption and the potential impact of convergence emerge in Ofcom's Communications Market report.

On 10 August 2006 the Office of Communications (Ofcom), the UK's communications industry regulator, published their third annual Communications Market report.

Total retail revenue in the UK communications sector in 2005 increased 5% to £50bn whilst average household spend on communications rose by less than 1% to £87.67 per month; mobile communications was the largest component, representing 35% of total spend. The proportion of household expenditure spent on communications service fell for the first time in 5 years from 4.63% in 2004 to 4.60% in 2005 due in the most part to falling pric

Media coverage of the report has focused on the evidence relating to the divergent consumption patterns of the key 16-24 year age group who spend on average 21 minutes more time online per week, send 42 more SMS text messages, but spend over seven hours less time watching television than the average for the population as a whole. The Simultaneous Media Usage Survey (SIMM), conducted by BIGresearch in October 2003 for the American Press Institute noted similar trends in the US when they observed that for "simultaneous online users, TV viewing is down 8.8% among 18 to 24 year-olds and down 12.2% among 25 to 34 year-olds in favor of video games."

The emergence of converged services has continued into 2006 with the bundling of fixed-line and broadband offerings predominant alongside internet television, television to mobile and internet telephony.

INSURANCE

AMERICAS: Market liberalisation drives Latin American premium growth

Total insurance premium income is growing at a faster rate than the economy as a whole in Latin America. One of the reasons suggested for this dynamism is market liberalisation and consequent growth in competition from subsidiaries of overseas companies. For example the market share by premium of foreign controlled insurance companies in Mexico grew from 0% to over 50% between 1993 and early 2005.