Blog: A bold statement or two from Hero's boss
Dean Best | 7 April 2010
With the FTSE in London yesterday (6 April) reaching an almost two-year high, there is growing confidence that the worst of the global recession is behind us.
In theory, economic recovery should mean growing consumer confidence and, for food makers, growing demand for premium products.
Indeed, last week, retail analysts Kantar Worldpanel signalled better sales of Tesco's upmarket own-label range Finest.
However, for some, the worst economic crisis for over 70 years will cause a sea-change in how consumers shop.
Some industry executives do not see consumers returning to the way they shopped before the summer of 2008.
The boss of Swiss food maker Hero Group, owner of UK firm Organix and US baby-food maker Beech-Nut Corp. is one.
Speaking to just-food, Stefan Heidenreich was pretty forthright in his thoughts on the new, post-recession consumer, labelling any notion that shoppers will revert back to the heady days of the boom as "bullshit".
Heidenreich was also open about the impact the recent acquisition of private-label baby-food maker PBM will have on the competitive landscape in the sector.
For Heidenreich, the US$808m paid for PBM demonstrates the attractiveness of infant nutrition, although he suggests Hero would have shied away from paying that kind of money for the business.
"For a $300m business, they paid a price of $800m. I can't think of a better category than infant nutrition, it's a wonderful category. We as a family would never have paid such a price but it is not out of the world that someone gets interested in that and I think that Paul Manning [PBM's founder] has done a wonderful job," Heidenreich said.
The Hero boss also suggested that, with PBM's business predominantly in milk, the transaction will have little impact on his baby-food business. But he warned that some in the sector will be affected by the deal.
"We are not in milk. The US market is plit between milk and baby food. As far as we are concerned, I don't think that deal will affect us big time. That's a relatively milk-driven deal. These guys are not in baby food. They are two different worlds and very differrent in the US. It's more a question of the Abbott and Mead Johnson of this world and not for us."
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