* Starbucks Corp. launched the mobile order and pay feature on its app for Chinese mobile users, in a nod to competition from the newly listed Chinese startup Luckin Coffee Inc. which mainly operates on the mobile order and delivery model. According to the release, the Starbucks Now feature is available to members of its Starbucks Rewards loyalty program and can be used at about 300 stores in Beijing and Shanghai. The coffee company plans to launch the service across China through 2020. Before its listing, Luckin Coffee had announced an ambitious plan to overtake Starbucks with its store-opening spree. Shares of Luckin Coffee had, however, fallen to $14.75 on May 22, below its IPO price of $17 on its May 17 debut.
* Walmart Inc.-owned Indian e-commerce company Flipkart Online Services Pvt. Ltd. is looking to open brick-and-mortar grocery stores in the country, The Times of India reported, citing sources. The potential move follows the launch of Flipkart's fifth online grocery store, Supermart, in Mumbai. The newspaper said Flipkart will likely take advantage of the relaxed law on food retail business, where foreign direct investments of up to 100% are allowed.
FOOD RETAIL & DISTRIBUTION
* Canadian retailer Alimentation Couche-Tard Inc. completed the first tranche of its asset exchanges with motor fuel distributor CrossAmerica Partners LP. Couche-Tard in December last year agreed to sell 192 of its Circle K convenience and fuel retail stores in the U.S., valued at around $184.5 million, to CrossAmerica in exchange for assets of the Pennsylvania-based company worth the same amount. According to the latest release, Couche-Tard transferred 60 convenience and fuel retail stores worth of about $58.1 million to CrossAmerica, while CrossAmerica transferred assets amounting to $58.3 million to the convenience store operator. The companies expect to complete the remaining exchange of assets before the end of the first quarter of 2020.
* The members of the National Coalition of Associations of 7-Eleven Inc. Franchisees, or NCASEF, are seeking tighter federal oversight of franchising, so that franchise operators are not exposed to "unfair, unconscionable or potentially predatory" contractual terms. According to a statement, owners of the association, which represents 7,000 7-Eleven franchise owners in the U.S., met with senior staff members of the House Education and Labor Committee and with their home-state congressional delegations to voice their concerns. NCASEF leadership also expressed concern over the labor shortage in the U.S., which can lead to a situation similar to Japan's, where it has created friction over keeping stores open 24/7.
* Seven & i Holdings Co. Ltd. President Ryuichi Isaka apologized and vowed to restructure its convenience store business Seven-Eleven Japan Co. Ltd., amid mounting pressure to abandon its 24-hour store policy, the Nikkei Asian Review reported. Due to increasing labor shortage in Japan, Seven-Eleven franchisees struggled with elevating operating costs that led to complications in keeping the stores open 24/7. In April, Seven-Eleven released an action plan to address the issue wherein it intended to 'radically reexamine' its way of opening new stores.
* British food retailer Waitrose Ltd. recalled 340-gram jars of Essential Waitrose Pickled Sweet Sliced Beetroot over concerns of safety risks due to the presence of glass. The affected jars have a best-before date of September 2020. No other products by the company have been affected. Waitrose is urging customers who have purchased the affected products to not consume these and return to their place of purchase for a full refund.
* German grocer Aldi Einkauf GmbH & Co. oHG's U.S. arm said it is recalling Bakers Corner All Purpose Flour, sourced from ADM Milling Co., due to the potential presence of E. coli. The affected flour bags weigh 5 pounds with a use-by date of Dec. 2. The affected products were sold across select stores in 11 states, including Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Ohio, and Pennsylvania. The company is advising consumers to not eat any raw products made with flour.
* Starbucks Corp. is facing two lawsuits alleging the company of exposing its customers and staff in New York City to a poisonous — and potentially lethal — pesticide toxin. According to the lawsuits, Starbucks uses Spectrum Brands Holdings Inc.'s Hot Shot No-Pest Strips that contain a clear odorless airborne toxin that is harmful to humans. The strips must not be used in places where there are people, as well as in kitchens, restaurants and food preparation areas. Starbucks and Spectrum Brands did not immediately respond to requests for comment from S&P Global Market Intelligence.
* Keurig Dr Pepper Inc. said Rodger Collins, president for direct store delivery, will be retiring in line with the company's succession plans, effective mid-July. He will remain with Keurig Dr Pepper in a consulting capacity. Chief Commercial Officer Derek Hopkins will fill in Collins' position, with direct store delivery Senior Vice President David McMichael reporting to him. Also, Meg Newman, chief human resources officer, has resigned to pursue opportunities outside the company. Her replacement will be named in June.
* Belgian brewer Anheuser-Busch InBev SA is expected to invest up to $400 million in its Sagamu brewery in Nigeria, Reuters reported, citing CEO Carlos Brito. AB InBev has already invested $250 million in the brewery and it will be expanded in phases, Brito said at a press briefing, the report added.
* Nestlé SA and Fonterra Co-op Group Ltd. will review strategic options for their Brazilian joint venture, Dairy Partners Americas Brazil, including a potential sale of their stakes, according to a joint announcement. The companies said the move is to ensure the long-term growth and success of the business. They expect to complete the review by the end of 2019. The JV markets brands such as Nestlé, Chamyto, Ninho, Chandelle, Chambinho, Neston and Molico in Brazil, where it has two plants and employ 1,400 people.
* CJ Cheiljedang Corp. has agreed to sell a 27% stake in its U.S. unit, CJ Foods America, to U.S. private equity fund Bain Capital LP for $320 million, Reuters reported, citing a regulatory filing by the South Korean conglomerate. The move comes about three months after CJ, through CJ Foods, completed its acquisition of U.S. frozen food company The Schwan Food Co. Inc. for $1.84 billion.
* New Zealand-based dairy group Fonterra Co-op Group Ltd. revised its earnings forecast due to slower-than-expected recovery in key markets. It cut its fiscal year 2020 EPS to be between 10 New Zealand cents and 15 cents, from 15 cents to 25 cents earlier. The co-operative added that it expects farmgate milk price for the fiscal year 2020 to be in the range of NZ$6.25 to NZ$7.25 per kgMS, or kilogram milk solid. For the third quarter ended April 30, the group reported a 1% year-over-year increase in revenue to NZ$15 billion, while normalized EBIT declined 9% to NZ$522 million. Sales volume during the period rose 4% to 16.6 billion liquid milk equivalent.
* Tyson Foods Inc. is mulling a multibillion-dollar investment to set up a beef processing plant in Kazakhstan to maintain steady sales to China by avoiding high tariffs imposed by the country on U.S. exports, the Financial Times reported, citing three sources familiar with the matter. According to the sources, Tyson's move comes as the Kazakh government is seeking investment in its agriculture sector to benefit from trade tensions between the U.S. and China. The initial investment could be about $200 million and the plant is expected to have an annual processing capacity of up to 5 million tonnes of beef, the report added.
* Mondelez International Inc. appointed Sandra MacQuillan as its executive vice president for integrated supply chain operations, effective June 10. She succeeds Daniel Myers, who decided to retire and will report to Chairman and CEO Dirk Van de Put. MacQuillan has previously worked with Kimberly-Clark Corp. and Mars Inc.
* Tate & Lyle PLC said it expects fiscal 2020 EPS growth to be broadly flat to low single digit, as it reported diluted EPS of 52 pence for fiscal 2019 ended March 31. This was up from 49.4 pence in the previous year and surpassed the S&P Global Market Intelligence normalized EPS consensus estimate of 51 pence. The British ingredients and solutions producer's net sales grew 2% year over year to £2.75 billion from £2.71 billion, driven by a boost in sucralose, food and beverage solutions segments.
* Hormel Foods Corp. lowered its outlook for fiscal 2019 despite reporting second-quarter earnings that surpassed analysts' expectations. It now expects full-year EPS to come in at $1.71 to $1.85, versus its previous guidance of $1.77 to $1.91 and net sales to range between $9.50 billion and $10 billion, compared to its prior outlook of $9.70 billion to $10.20 billion. For the quarter ended April 28, Hormel Foods said adjusted diluted EPS was 46 cents, above the S&P Global Market Intelligence consensus normalized EPS estimate of 45 cents. Net sales inched up 0.6% year over year to $2.34 billion from $2.33 billion. Operating margin for the period was 13.3%, compared to 12.9% in the year-ago period.
TOBACCO & SMOKING PRODUCTS
* The government of Brazil has filed a lawsuit against tobacco companies British American Tobacco PLC and Philip Morris International Inc. to recover public health expenses related to the treatment of tobacco-related diseases over the last five years, Reuters reported, citing the country's solicitor general's office, or the AGU. According to the report, the AGU said the lawsuit aims to retrieve the costs of treating patients for 26 diseases linked to smoking and second-hand smoke. The costs will be calculated if the government wins the lawsuit, the news wire said. Philip Morris and British American Tobacco did not immediately respond to requests for comment from S&P Global Market Intelligence.
* Japan Tobacco Inc. posted a 6.4% year-over-year increase in domestic sales during April. The Tokyo-based company's sales during the month came in at ¥42.5 billion, up from ¥39.9 billion in April 2018. The company sold 6.6 billion cigarettes in April, compared to 6.7 billion cigarettes sold in the same period a year ago.
* Brazilian Ministry of Agriculture has prohibited three laboratories, which were involved in a food safety testing scandal at BRF SA, from conducting food inspections, Reuters reported, citing an official statement. The laboratories, run by Merieux NutriSciences Corp., reportedly assessed food samples from BRF. In February, the labs lost their ISO 17025 accreditation. Now their authorization to conduct tests on samples under the ministry's official program has been revoked, Reuters said. BRF and the ministry did not immediately reply to requests for comment to the newswire.
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The day ahead
Early morning futures indicators pointed to a lower opening for the U.S. market.
In Asia, Hang Seng fell 1.58% to 27,267.13, while the Nikkei 225 was down 0.62% to 21,151.14.
In Europe, around midday, the FTSE 100 was down 1.35% to 7,235.19, and the Euronext 100 decreased 1.45% to 1,033.16.
On the macro front
The jobless claims report, the PMI Composite FLASH index, the new home sales report, the EIA natural gas report, the Kansas City Fed Manufacturing index, the Fed balance sheet and the money supply report are due out today.
Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.
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