Tescos business in South Korea generates annual sales of GBP4bn

Tesco's business in South Korea generates annual sales of GBP4bn

As football lovers waited for the start of the World Cup in South Africa last week, a clutch of leading food companies set out their stall for overseas success.

Bakery giant Aryzta struck two acquisitions in the US for a combined US1.1bn. The deals, the most significant moves since Ireland's IAWS and Switzerland's Hiestand merged to form Aryzta in 2008, look set to make the company more global and more broad-based in terms of its distribution channels.

The acquisition of Fresh Start Bakeries will see Aryzta attain some 29 production facilities in markets including Germany and Australia and bolster the group's client base among quick-service restaurant and large retail customers.

The second deal for Great Kitchens, though smaller, will give Aryzta a larger presence in the pizza category, a more fledgling business for the group but one CEO Owen Killian believes has potential.

Above all, Killian sees the acquisitions, which reduce European sales from two-thirds to under half of total turnover, as leaving Aryzta in a better position to grow.

In dairy, the CEO of Saputo, the Canadian group, said the company was ready for further acquisitions and reaffirmed its interest in entering the Australian market.

Recent reports had linked Saputo to Australia's Warrnambool Cheese and Butter Factory, which has seen off a takeover bid from local rival Murray Goulburn. An unnamed party had also been interested in WCB, although Saputo had never been publicly confirmed as a suitor for the business.

Nevertheless, Saputo boss Lino Saputo Jr admitted Australia is a "very attractive" market for the business and remains on the company's "radar screen".

However, while French giant Danone recently announced its entry into Australia through a venture to sell fresh dairy products with Murray Goulburn, Saputo is more likely to see the country as a source of cheap raw milk for its cheese on sale in international markets.

Elsewhere, Hershey's local partner in India said the venture between the two companies was set to enter the country's chocolate sector. Godrej Beverages and Foods said the venture is looking to launch one of Hershey's flagship brands, Kisses, locally.

The news, though welcome from Hershey's perspective, reinforced the perception that the US chocolate giant is too dependent on its domestic market and needs to pick up the pace of its expansion into markets like India. Hershey CEO Dave West has defended the company's overseas strategy but indicated the business was looking for more deals overseas.

However, as Hershey looks set to wave goodbye to some of its past in the company's hometown, it needs to more forcefully embrace the future in order to thrive in the world's chocolate business.

One company in our sector that has made a series of forays overseas is retail giant Tesco. As you know, last week saw the announcement that CEO Sir Terry Leahy is set to leave the business next spring (what this means for Tesco was analysed at length on our pages) but, on Friday, came news that the UK retail giant could be set to expand once again in South Korea.

The Asian market is a critical overseas territory for Tesco; in April, Leahy took time to point out that the country had become a "major engine of growth for the group". Sales there are now a not insignifcant GBP4bn.

Tesco has yet to publicly confirm whether it will bid for local supermarket chain Kim's Club Mart but another sortie abroad will bring respite from a stagnant domestic market.

This week, Tesco and Sainsbury's will report their latest sales figures and both are likely to report challenging trading conditions here in the UK, with food inflation and consumer confidence weak. Maybe an England victory would provide a fillip to shoppers. We will, though, have to wait until Friday (at least) for that.