Blog: Sourcing criticism sours Dean's Alpro acquisition
Dean Best | 22 June 2009
After months of speculation – and, let's face it, M&A rumours have been pretty thin on the ground recently – soy business Alpro has joined Silk soy milk and UK organic dairy business Rachel's in the stable of Dean Foods, the largest dairy processor in the US.
Dean Foods chief Gregg Engels called the EUR325m (US$449.9m) deal a “winning acquisition” for the company and labelled Belgium-based Alpro “the most strategic asset we could have acquired in the world”.
On paper, the acquisition looks a good piece of business for Dean Foods. The US company gets an established business, one that has a strong presence in Europe (a market in which Dean Foods is under-represented) and one that, as executives at Dean Foods pointed out, can help the group boost its soy business back home.
Nonetheless, a company the size of Dean Foods is, for some, there to be shot at. US research group The Cornucopia Institute took some of the gloss off the Alpro buy last week with some fierce criticism of Dean Foods' sourcing practices. Cornucopia accused Dean Foods of “refusing” to work with US organic soybean farmers, of looking abroad for cheaper imports and of even using “toxic” chemicals in certain Silk products.
Dean Foods was quick to defend its sourcing policies, claiming Cornucopia's research proved an “inherent bias and lack of objectivity”. Dean Foods is often in Cornucopia's firing line but the latest spat demonstrates once again that food manufacturers, so keen to emphasise their CSR strategies, are constantly scrutinised by a range of stakeholders in our sector – as the recent Greenpeace investigation into Brazilian beef sourcing also highlighted.
Last week, Kellogg was keen to promote its work on the environment in a briefing in London. Some may question the industry's commitment to green initiatives during a recession but Greg Peterson, the head of Kellogg's business in the UK, was quick to point that consumers still “care” about such issues. Kellogg, meanwhile, insisted it was also tackling another issue close to the heart of cost-conscious consumers – value. Innovation and promotions were key to meeting the threat of private label head on, Kellogg claimed, as the business looks to protect a brand that has lasted for over a century.
UK retailer Sainsbury's, 140 years old this year, has leaned on nostalgia in its recent ad campaigns but, last week, the company chose to look forward – and outlined some ambitious expansion plans, despite the downturn. And retailer expansion remains on the agenda elsewhere – with Carrefour last week opening its first hypermarket in Russia and management consultants A. T. Kearney proclaiming India's the world's most attractive retail market.
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