There’s been a sense of boldness from the world of food this past week, with companies making interesting moves into new products, acquisitions and territories. Perhaps with yet more economic turmoil on the horizon, food companies have decided that attack is the best form of defence in terms of weathering the financial storm.
First up, B&G Foods finalised its US$325m purchase of four food brands from Unilever.
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B&G called the deal a “game changer” and predicts Mrs Dash salt-free seasonings, butter sprinkles brand Molly McButter, calorie-free sugar substitute Sugar Twin and Baker’s Joy, a baking spray with flour, will dovetail with their existing portfolio and result in logistics efficiencies. It also acquired household goods Static Guard and Kleen Guard, a first foray into household goods that will also link in handsomely with their existing distribution network, the company said.
Meanwhile, Spar International has opened its first supermarket in Abu Dhabi, the 35th country the retailer operates in and part of a bold plan to expand rapidly into the Middle East and north Africa.
It remains to be seen how the the company’s business model of working with local businesses to penetrate emerging markets will work in the region, but it’s worth considering the company’s recent success in sub-Saharan Africa and China.
More plans for international expansion from Portuguese retailer Jeronimo Martins. As well as increased investment in its successful operation in Poland, the company last week announced plans to invest EUR400m (US$551.1m) in Colombia, with its first stores due to open next year.
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By GlobalDataAlso in South America, PepsiCo’s Brazilian unit is reportedly set to buy local biscuit manufacturer Mabel, which produces more than a hundred products across five industrial plants, supplying more than 35 countries. Brazilian newspaper O Estado de S. Paulo reported PepsiCo paid as much as BRL900m (US$518.1m) for the company.
Over the Pacific, the Singapore arm of US agribusiness giant Bunge also entered a new market after forming a joint venture with Bumiraya Investindo, an Indonesian company that operates four palm plantations. It also announced plans to construct a crude palm oil mill in the Kalimantan region.
Palm oil production appears to be an attractive proposition. In August New Britain Palm Oil revealed it almost trebled profits in the first half of the year.
The past week saw a flurry of financial results – as will this week – revealing winners, losers and some mixed results.
Fresh Del Monte enjoyed a rise in operating income in its third quarter, despite higher costs and unfavourable exchange rates.
Mohammad Abu-Ghazaleh, chairman and chief executive officer, said emerging markets, and cost efficiencies drove the growth.
Food producer Kraft booked an operating income of $1.7bn in its third quarter, up from $1.5bn in the same-year period in 2010. This strong result once again prompted questions about why the company is splitting into a North American grocery business and an international snacks firm. To paraphrase one analyst, if it ain’t broke, why are we fixing it?
CEO Irene Rosenfeld once again defended the move. “We do see two very distinct portfolios between our global snacks business and our North American grocery business.
“They’re different brands, they have different profiles, they have different margin structures”, she said.
UK ingredients firm Tate & Lyle admitted acquisitions could be on the horizon following higher half-year sales and profits, while retailer Metro booked a third-quarter EBIT rise of 37.9% despite turmoil at the top. Current CEO Dr Eckhard Cordes said: “I will be here for as long as the company needs me”, on a recent conference call about the results, despite questions over his ability from shareholders.
Companies that have struggled include Finland-based meat processor HKScan, which posted a fall in EBIT in its third-quarter, despite an easing in European pork problems, such as over-supply issues, and a substantial rise in net sales.
Meanwhile, one-off charges relating to pensions and divested units pushed Sara Lee into a net loss of $215m in the second half of its fiscal year, compared with a profit of $194m a year earlier.
Chiquita Brands International has posted a net loss of $29m in its third-quarter, on the back of a decline in sales and an increase in costs.
Finally, US salty snacks manufacturer Snyder’s-Lance posted a net income of $8.8m for the three months ending 1 October, down from $10.2m in the same period in 2010. Once again, dreaded high raw material prices hit the bottom line.
