Weekly News Update
Published: Saturday, December 01, 2001
OTA: Organic Seafood Rules Under Attack; Senate Action Requested
The Greenfield, Mass.-based Organic Trade Association (OTA) is urging its members to contact their senators immediately regarding an amendment to Senate bill S. 1731, which was introduced by Sen. Ted Stevens, R-Alaska. The bill, if adopted, would give the U.S. Secretary of Commerce the exclusive authority to certify and label wild seafood as organic and make the certification and labeling of wild seafood as organic not subject to the provisions of the Organic Foods Production Act of 1990.
OTA noted that the National Organic Standards Board has already considered the issue and concluded that wild-caught fish cannot be considered organic for several reasons including the inability to control water quality and the impossibility of providing organic feed. A vote on the bill is expected at any time, and OTA suggests industry members contact their senators asking them to not vote for S. 1731 with the amendment intact.
NBTY Inc. to Acquire Assets of Internet/Mail Order Catalog Company
NBTY Inc. (NBTY) has announced it will acquire certain assets of Emeryville, Calif.-based HealthCentral.com and its affiliates for $2.8 million in cash pursuant to a bankruptcy auction. Assets include the customer list of a mail-order operation, L&H Vitamins, and the customer list and URLs of Vitmains.com and WebRx.com. The acquisition has already been approved by the bankruptcy court and is expected to close within the next two weeks. The business was originally founded by Robert Haft as a Washington, D.C.-based retail operation and sold to HealthCentral.com nearly two years ago.
Boston-based Adams, Harkness & Hill (AHH) analyst Scott Van Winkle noted that HealthCentral.com generated $15 million of trailing 12-month sales and that ""given NBTY's 30 percent EBIT margin on mail-order sales and its history of integrating mail order lists, the deal should be accretive almost immediately."" AHH raised its FY02 EPS estimate to $.81 from $.80 and FY03 estimate from $.95 to $.98. AHH also reiterated its Buy rating on NBTY with a $15 price target, noting that the stock is now selling at 5.8x AHH's FY02 EBITDA estimate.
White Wave Case Dismissed
The Chicago Tribune has reported that a federal judge in Denver dismissed the lawsuit filed by Boulder, Colo.-based soy manufacturer, White Wave, against Dean Foods (DF) and Suiza Foods Corp. (SZA). White Wave filed the suit against the two dairy processors after DF and SZA announced plans to merge, because DF owns 36 percent of White Wave's privately held common stock, and SZA, which makes Sun Soy, is White Waves largest competitor. U.S. District Judge Richard Matsch said White Wave didn't seek enough protection when it entered the partnership with Dean in 1999, according to The Tribune. Calls to White Wave were not returned at press time.
Survey: Terrorism Has Increased Consumer Focus on Personal Health and Wellness
A survey of 1,912 Americans conducted the week of Nov. 12 by the Harleyville, Pa.-based Natural Marketing Institute found that almost 30 percent of those interviewed have increased their focus on personal health and wellness in the aftermath of the Sept. 11 terrorist attacks, with 20 percent stating that they want to find lifestyle products and services that help them deal with stress and anxiety. Additionally, 30 percent admitted they had concerns about food safety, and 8 percent noted that they plan to increase their purchase of organic and natural foods. Family seems to be more of a focus as well, with 58 percent of those surveyed saying that the effects of terrorism have strengthened their own family values 63 percent saying the attacks had given them a new focus on home and family. For more information on the study, visit: www.nmisolutions.com/pages/hbiweb.pdf.
Wild Oats' Co-founders Resign from Board
Wild Oats Markets Inc. (OATS) announced that former CEO Michael Gilliland and his wife, Elizabeth Cook, have resigned from the board of directors effective Dec. 6. Gilliland and Cook were co-founders, along with Randy Clapp, of the natural and organic foods retailer and have said they are leaving to pursue other interests and diversify portfolio investments. Cook served as executive VP of the company until May 2001. Gilliland resigned as CEO on May 14, 2001.In 1Q01, the Company borrowed $2 million from Cook and Gilliland.
""Both of us have reduced our day-to-day involvement with the company in recent years,"" said Gilliland in a company press release, ""and now we feel it is time for us to completely move on to other endeavors ... We are pleased with the new management and the progress they have made in improving the financial performance of the company.""
Stocks & Financial News:
RBC Capital Markets has intiated coverage of the following companies: Gaiam Inc. (GAIA) at Buy; Hain Celestial Food Group (HAIN) at Buy; Horizon Organic (HCOW) at Strong Buy; NBTY Inc. (NBTY) at Neutral; United Natural Foods (UNFI) at Strong Buy; Whole Foods Market (WFMI) at Buy; and Wild Oats Markets (OATS) at Neutral.
The Ontario, Canada-based Martin Health Group Inc. announced it will issue 300,000 common shares, valued at $.10/share. The transaction is subject to regulatory approval and the shares will be subject to a four-month hold period from the date of issue.
Zila Inc. (ZILA) announced a 1Q02 net loss of $991,000 or $.02/share on revenues of $19.7 million vs. a 1Q01 net loss of $163,000 or $.00/share on revenues of $18 million.
Martek Biosciences Corp. (MATK) announced a 4Q01 net loss of $3.5 million or $.18/share vs. a 4Q00 net loss of $4 million or $.23/share. For FY01, MATK reported a net loss of $13.7 million or $.73/share. Additionally, MATK announced it has signed a non-binding letter of intent to acquire certain assets and assume certain liabilities of FermPro Manufacturing L.P., a South Carolina-based toll fermentation and recovery technologies firm.
Whole Living Inc. (WLIV) announced revenues of $594,380 for the month of November vs. $569,583 for October.
Hauser Inc. (HAUS) announced it has amended and restated the existing credit agreement with its bank to provide for a $10.75 million revolving credit line and a $7.8 million term note facility, maturing June 30, 2002, with principal payments of $3 million on April 30, 2002, and $4.7 million on June 30, 2002.
U.S. Bancorp Piper Jaffray downgraded Whole Foods Market Inc. (WFMI) on Dec. 10 from Strong Buy to Buy and raised its price target from $45 to $50 based on the hope that WFMI will continue to post strong top- and bottom-line results over the next several quarters. Analyst George Dahlman said, ""We continue to believe that Whole Foods will post first-quarter comparable store sales at the top end of or better than the company-provided value range … The company's stock valuation is approaching its strategic peer group."" Dahlman also noted that despite WFMI's December quarter comp guidance of 7 to 8 percent, he believes comps may be running closer to 10 percent.
Briefs:
Nutraceutix Inc. (NUTX) has sold its production rights for its Micro-Cell animal health products to Lallemand Animal Nutrition, North America, a subsidiary of Lallemand Inc. As part of the deal, Nutraceutix will retain the intellectual property rights and production of its Cobactin microbial feed additive product, while Lallemand Animal Nutrition will have the exclusive rights to distribute it. Additional terms of the agreement were not disclosed. The transaction allows NUTX to focus on its drug delivery and probiotic businesses.
Londonderry, N.H.-based Stonyfield Farm has closed the sale of a minority stake to Groupe Danone, according to The Wall Street Journal. Danone holds the option to acquire a majority stake of Stonyfield in 2004. According to sources, Stonyfield sold a 40 percent interest to the French food conglomerate for $50 million.
The Hain Celestial Group Inc. (HAIN) has completed its previously announced acquisition of Belgian natural and organic foods manufacturer, Lima NV. Terms of the deal were not disclosed. Lima's chairman, Philippe Woitrin, was appointed managing director of Hain Celestial Europe.
Green Mountain Coffee Inc. (GMCR) announced it has signed a long-term supply agreement with Dona Mireya Inc., which will supply GMCR with Guatemalan estate coffee from a fifth-generation family-run estate in the La Reforma region of San Marcos, Guatemala.
Nature's Sunshine Products Inc. (NATR) announced it has entered into a marketing agreement with HealtheTech Inc., based in Golden, Colo., to make personal health-monitoring tools available to its customers.
Cetalon Corp. (CETA) announced it has secured Wells Fargo Van Kasper to complete work on a merger/acquisition deal identified by the company and to raise up to $25 million in new equity financing. Separately, CETA announced it has entered into an agreement with On-Site Wellness Osteographics Medical Associates to supply professional staff and diagnostic testing equipment for screening of health conditions.
Johnston, R.I.-based Micro Laboratories, a manufacturer of children's vitamin sprays, announced a joint venture agreement with Overland Park, Kan.-based American Media Group Inc. to produce a one- to two-minute direct-response commercial for its product.
According to The Wall Street Journal, Coca-Cola Co. (KO) has plans to manufacture a vitamin-enhanced line of bottled water called Dasani Nutriwater. The drinks will include added vitamins such as calcium, magnesium, and B vitamins.
Fort Lauderdale, Fla.-based Health Express USA has announced that groundbreaking and construction on its second Healthy Bites Grill in Boca Raton, Fla., a healthy fast-food restaurant, will commence in 2002, following final approvals from Palm Beach County.
General Nutrition Centers, based in Pittsburgh, announced it would expand its line of vegetarian supplements to provide a larger selection of animal-free products. The expansion will bring GNC's herbal and nutritional supplements products to a total of more than 100.
The American Herbal Pharmacopoeia has issued quality control standards and a therapeutic compendium for the herb bilberry vaccinium myrtillus, which is used to support the integrity of the vascular system as well as protect against eye disease.
Frontier Natural Products Co-op has leased a 19,000-square-foot space in Louisville, Colo. According to the Boulder County Business Report, the company will either move its Boulder office to the new location or keep both locations, depending on the extent of its expansion.
London-based Braes Group, a natural foods ingredients company, has acquired U.K.-based Overseal Foods, a supplier of natural colors for the food and beverage industry, for $35.8 million.
Monterey Pasta Co. (PSTA) has been chosen by Oak Brook, Ill.-based supermarket, Dominick's Finer Foods Inc., a subsidiary of Pleasanton, Calif.-based Safeway Inc., for distribution of six new items in 51 stores.
People News:
Twinlab Corp. (TWLB) announced that Executive VP Dean Blechman will resign at the end of the year to pursue other interests. He will stay through Dec. 31 to ensure a smooth transition and will then remain on the board of directors.
Connecticut-based BIN Sales and Marketing announced that it has promoted Shelly Ansag to merchandising manager and that Wendy Van Aken has joined the company as its western New England sales representative.
Legal & Regulatory Briefs:
The Columbus Dispatch reported that health-food stores in Ohio are asking the state to allow them to teach nutrition and wellness classes. A bill introduced by Rep. Linda Reidelbach, R-Columbus, pending in the state legislature, would allow store operators to offer classes by certified nutritionists. The Ohio Board of Dietetics is fighting the legislation, saying the classes would offer unproven information from people ""with no minimum standards for education or training,"" according to The Dispatch.
The Federal Trade Commission announced that it has reached a settlement with Springville, Utah-based Christopher Enterprises of $100,000 for claiming through Internet and retail store advertisements that comfrey could cure asthma, arthritis and cramps.
Des Moines, Iowa-based Kemin Foods has filed a lawsuit against Chicago-based chemical company, Cognis Corp., claiming that Cognis continues to make false claims that make the differences between lutein esters and the purified form of lutein that is only manufactured by Kemin, difficult to distinguish.
FDA has released the revised 2001 Food Code, which includes updates for retail food establishments, such as changes and clarifications regarding fresh juices, the refrigeration and labeling of eggs, hand-washing procedures, and the shelf life of ready-to-eat foods. The document, which is reviewed every two years, was released late this year and FDA officials said they would not accept comments on this edition. Comments for the 2003 Food Code, however, are being accepted.
Reuters reported that holiday sales growth continues to be limited as the Labor Department reported last week that the U.S. jobless rate spiked to a six-year high of 5.7 percent in November. Sales at U.S. stores open at least a year, or same-store sales, rose 2 percent in the 17 days following the Thanksgiving holiday, according to data from check-acceptance company TeleCheck Services Inc. A year ago, sales in the same period rose 2.9 percent, according to Reuters. Additionally, many retailers are trying early discounts and promotions to draw shoppers in.
Research Briefs:
A study conducted by the National Institutes of Health has found that garlic supplements can interfere with drugs used to treat AIDS. The trials gave individuals who do not have the AIDS virus Saquinavir, a drug used to treat AIDS, and then measured the levels of the drug in the bloodstream. Following this, researchers administered the drug and garlic supplements simultaneously for three weeks and found that blood levels of the medication dropped 51 percent. The report was published last week in the journal Clinical Infectious Diseases.
A European study found that the supplement creatine accelerates recovery in leg muscles. The findings from researchers at the Catholic University Leuven in Belgium, the Copenhagen Muscle Research Center and the University of Nottingham in the U.K. were reported in the October issue of the Journal of Physiology.
According to researchers at Tufts University and the Jean Mayer USDA Human Nutrition Research Center on Aging, grain products fortified with the B vitamin folate could help to reduce memory loss in people over age 60. The survey, titled NHANES III, focused on whether there is a relationship between memory loss and blood homocysteine levels, a by-product of amino acid metabolism already linked to vitamin B intake, and concluded that elevated homocysteine levels are associated with memory loss.
A new ecological study conducted by the National Institutes of Health showed that seafood consumption and the Omega-3 fatty acid content of mothers' milk could predict the likelihood of postpartum depression (PPD) across countries. The data directly linked the amount of fish (in pounds) with the percentage of women who had PPD and found that the more fish with Omega-3 fatty acids consumed, the lower the percentage of women with PPD. The study analyzed 14,532 subjects and was published in the October 2001 Journal of Affective Disorders.
The United Soybean Board (USB) has found that consumers are not influenced by messages being disseminated by anti-biotechnology groups. The findings, part of USB's ""2001-2002 Annual Report on Consumer Attitudes About Nutrition,"" indicate that while the voices of the activist groups ring loud and clear, not very many people are listening. Forty-eight percent of consumers who replied said that they do not know enough about biotechnology to say how they view the use of genetically modified ingredients in food products. Of the 62 percent who were familiar with the term ""genetically modified,"" only 19 percent were aware of activist groups linked to the issue, and of that 19 percent, 80 percent said they have not taken any action based on information provided by activist groups.