In business, some of the most critical decisions involve when to quit a venture, exit a market or sell an asset.
Go deeper with GlobalData
At times, that decision becomes all the more crucial when that asset has been central to a company’s history but has become of secondary importance to the future of the business. Hard-headed calculations need to be made and nostalgia ignored.
Last week, UK food ingredients business Tate & Lyle took the plunge and decided to leave the sugar sector, an industry at the heart of the company’s origins.
Tate & Lyle’s deal with American Sugar Refining grabbed the wider news headlines in the UK, in part due to the apparent echoes of Cadbury’s move into US ownership earlier this year and due to sugar’s central role in the history of the business.
See Also:
Henry Tate, the forefather of the company, made his first foray into refining in 1859. However, any hand-wringing at the loss of an ‘iconic’ UK brand and a piece of the country’s manufacturing ‘heritage’ should be tempered by the fact that the deal could be the first step on the road to developing a stronger UK business.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSugar had been Tate & Lyle’s problem child. The division was not where long-term growth lay and was beset by the volatility in the sector. The company should now be able to focus on “value-added” ingredients, to expand its customers beyond a core client base of large food manufacturers and to boost its presence in emerging markets – all key goals under new chief executive Javed Ahmed.
It will take a while for Ahmed to fully turn Tate & Lyle into the company he wants it to be, but walking away from sugar is a sure step in the right direction.
In food retail, South Africa’s Pick n Pay has decided to walk away from Australia with the sale of supermarket chain Franklins, eight years after it snapped up the business.
The sale – to Australian grocery wholesaler Metcash – marks the end of a challenging time for Pick n Pay, which oversaw a period of losses for Franklins.
The local characteristics of Australia’s grocery sector, including the dominance of Woolworths Ltd and Coles Group, the country’s two largest grocers, and the need for high investment in warehousing due to the size of the country, meant Pick n Pay found the going tough.
The deal beefs up Metcash’s IGA chain as Australia’s third-largest banner and allows Pick n Pay to focus on its operations in South Africa and other markets on its home continent. Pick n Pay is planning to make further moves into African markets outside its domestic base and has set out plans for more stores in markets like Mauritius, Mozambique and Zambia.
On Friday, Tesco held its AGM against the backdrop of public criticism from some investors over, among other things, the performance of one of its own overseas adventures.
Tesco’s US business, Fresh & Easy, is often the target of sceptical shareholders and analysts. The retail giant has battled a fierce local downturn on the West Coast of the US and continues to face criticism that Fresh & Easy has still to make a profit.
However, as just-food’s Petah Marian argued last week, we should not be calling the death knell on Fresh & Easy just yet.
Petah has joined just-food from Planet Retail and has hit the ground running with her defence of Fresh & Easy and her analysis of online retail giant Amazon’s venture into selling food in Germany.
Amazon, Petah argues, faces an uphill battle in one of Europe’s most competitive markets. The venture will certainly be one to watch.
