WSJ reported on HJ Heinz (HNZ) who produce most of the ketchup served in U.S. restaurants, including those of Burger King and Wendy's. But the company has been locked out of virtually all of McDonald's (NYSE:MCD) 13,700 U.S. restaurants since the company failed to give it enough ketchup during a tomato shortage 33 years ago. Now the company follows McDonald's officials around the globe, trying to convince them they can shorten lines at cash registers and make it easier for customers to dip french fries in ketchup while driving. The stakes are high. McDonald's uses 250 mln pounds of ketchup a year in the U.S. -- equal to about 11% of what the co sells worldwide. In the past two years McDonald's has agreed to replace its ketchup with the co's at nearly 4,000 restaurants -- in Canada, the United Kingdom, Ireland, Portugal, Spain, Australia, Russia, Belarus and the Ukraine -- saying customers in some of those countries prefer the brand's taste. In the U.S., however, McDonald's sees no reason to switch. [briefing.com]
Basketball players still want to be like Mike, but shoe companies want to be like Nike (NYSE:NKE). Nike is the world's #1 shoemaker and controls more than 20% of the US athletic shoe market. Nike reported a 5% slip in income to $332 million as heavy spending around the World Cup and the effects of higher raw materials costs ate into its sales and margins. Nike posted record sales of $15 billion for its fiscal year, up 9 percent from $13.7 billion the previous year.
Nike's margins slipped as they set prices in advance and when there is a price increase for oil or labor, it starts to move into their cost structure over time. Nike is working to build lagging sales in Japan, France and the United Kingdom. Those markets were offset by improvements in China and the United States. In fact, Nike has doubled their business in China over the last two years to over $600 million.