Blog: The challenge in China for Weetabix
Dean Best | 5 November 2012
Chinese food group Bright Food kicked off this morning (5 November) with confirmation of its acquisition of 60% of UK cereal firm Weetabix, a deal first announced in May.
Bright Food chairman Zongnan Wang said the agreement was a "landmark acquisition" for the Chinese company.
"Bright Food will increase the level of investment in Weetabix brands and product innovation to facilitate its development in the international markets. In particular, Bright Food is committed to leveraging its resources and extensive experience across all aspects of the food industry to underpin Weetabix’s expansion in Asia, in particular China," he said. "We are confident that with support from Bright Food, Weetabix's sales in China will outperform the growth of the Chinese cereal market."
Weetabix's previous owner, private-equity firm Lion Capital, was equally upbeat, with partner Lyndon Lea insisted he was "excited" about partnering with Bright Food "in extending the track record of growth that Weetabix has posted over the years".
Lion Capital and Weetabix's management will own the remaining 40% of the company. And while Weetabix CEO Giles Turrell was confident about the company's prospects, he hinted at the challenge that could lie ahead in China when he talked of developing "additional products which cater for the Chinese market".
As just-food reported when the deal was first announced in May, it remains early days for breakfast cereal in China. Ready-to-eat cereals, consumed with cold milk, have not been widely accepted by Chinese consumers.
Could Weetabix's Ready Brek brand, then, be the one to push and build on in China?
There has been a rise in the number of food companies in the UK filing for insolvency - and the intensification of competition between the country's grocers has been blamed....
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