A year on from its acquisition of snack and confectionery maker Glisten, Finnish food company Raisio has made another move for a UK firm. The company has snapped up Big Bear Group, the owner of brands from Sugar Puffs cereal to Fox’s confectionery. In this month’s just-food interview, Michelle Russell spoke to Raisio CEO Matti Rihko about his company’s latest acquisition.
The announcement of a significant acquisition usually heralds the start of a hectic day for a chief executive and, for Raisio CEO Matti Rihko, Friday (4 February) is no exception.
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Raisio, the Finnish food group behind the Benecol dairy brand, has announced its next move in the UK, with a EUR95.3m (US$130m) deal to buy Big Bear Group, owner of brands ranging from Sugar Puffs cereal to Fox’s confectionery.
The announcement comes almost a year to the day since Raisio snapped up UK snack and confectionery maker Glisten and, in a statement to mark the move for Big Bear, Raisio has already stated its latest move will support its aim to become “the leading provider of healthy snacks in Europe”.
As Rihko heads to his next meeting, he explains to just-food the key rationale behind Raisio’s move for Big Bear. “The purchase allows us to grow in the healthy ecological snacking business in Europe,” Rihko says, coining something of an unusual phrase.
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For Raisio, the firm’s website tells us, “ecological snacking” encompasses products that are “plant-based, natural and healthy”, in addition to having a low carbon footprint and being produced using ingredients from farms with reduced emmissions.
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By GlobalDataRihko says that the combination of producing a snack that is both healthy and ecological, is “unique”.
“Snacking so far has been dominated by say [products containing] salt, sugar and fat, but we can provide a good taste, convenience, combined with healthiness and also being ecological. And we are the first company in the world that has been able to calculate and label a product with carbon footprint and water footprint. So this is part of the story, you need to be able to measure, not just say you are green, you need to be for real.”
Raisio says that rather than Big Bear having “ecological snacking” properties – having ownership of it and Glisten – will allow Raisio to now build the “ecological snacking” business in the UK. In the past, the company says it has “innovated new products to meet consumer need”.
He continues: “In particular we are enthusiastic about Honey Monster as it is a strong local brand and a strong player in the snack and breakfast category.”
Honey Monster, Honey Waffles and Sugar Puffs are the latest brands to join a growing stable of UK products for Raisio. The purchase of Glisten in February last year saw the inclusion of Dormen’s nuts and Fruitus fruit snacks into Raisio’s portfolio. The firm produces cereal, fruit snack bars and health bars and holds the UK rights to make SunMaid raisins and Weightwatchers products.
Some might wonder how the Honey Monster and Sugar Puffs brands might fit into this healthy snacking portfolio Raisio is building. Rikho, however, is confident that Big Bear will sit nicely with Raisio’s Glisten assets.
“It all fits very well with our existing business in the UK, so we will become stronger in confectionery but especially we are happy about becoming stronger in the snack bars and breakfast category,” Rihko explains.
The breakfast category is not a new venture for Raisio. The firm already has a strong presence in the breakfast market in Finland, in both hot and cold cereal with the Elovena brand. But for Raisio, the cold cereals that come with the Big Bear buy offer the firm an entry into the cold cereal market in the UK.
“We are in that [cold breakfast] category already in Finland with healthy products, for example Elovena, which is the second strongest food brand in Finland,” Rihko says. “In the UK we were not in that category. But the way in which we define snacking is actually breakfast and in-between meals. We are historically stronger in hot cereals….but we think cold breakfast cereals fit very well into our portfolio.”
However, within the healthy snack category, Rihko says the focus for growth is less about the different products, and more about the sourcing of raw materials and traceability, which comes back to the idea of ecological snacking.
Raisio says this includes “the continuous improvement of its operations and analysis behind the CO2 calculations”. Sourcing and traceability are also important for the firm and ecological snacking, Raisio says, includes “the whole grainchain and research and development is an important part of it”.
And of course Raisio isn’t new to the healthy snacking category. The company began its switch in 2008 as part of a new strategy that the firm said focused on the growing importance of mobile snacking for consumers.
And despite the category, at the time, being what Rihko describes as a smaller part of the business, the CEO says it had a “very interesting role to play” in the company’s portfolio as a whole – a role that is now evolving considerably.
As for Raisio’s broader ambitions for further acquisitions, Rihko says its focus remains on the UK and the European markets.
“For healthy snacking it is more Europe. I think we have quite a good mass of business in the UK and with the position of Big Bear, we do not need to make a new [acquisition] to gain size,” Rihko says. “But you have to judge each acquisition separately and if there is a good deal in the UK to be made, of course we will be interested. But it is the wrong impression that we are only interested in the UK, we are active all over Europe.”
As for entering new categories, Rihko again remains open-minded.
“We are focused on the categories we have, but at the same time you have to integrate the businesses you have,” Rihko says. “But yes, we are looking to continue the growth with acquisitions, and as for new categories, the focus is on healthy ecological snacking. This is our core but if a target company has something else….then we don’t mind.”
So with all of these brand buys coming with the purchase of Glisten and Big Bear, is there less of a focus on business-to-business now for the firm?
While Raisio’s main products are foods and functional food ingredients, the firm also produces feeds and malts. In the first nine months of 2009, B2B accounted for 48% of Raisio’s total net sales and 8.5% of total EBIT.
“B2B is local and it is an important cash generator for us,” Rihko says. “But it is local and the growth opportunities are more restricted, so for the B2B it is around feed, feed companies and bio-energy. Of course the bio-energy is interesting, there are prospects for growth, but it is more organic growth and not through acquisitions. Whereas in the branded business it is a combination of acquisitions and organic growth.”
As for future growth, it appears inevitable that another acquisition could be on the horizon for the Finland-based firm. A coy Rihko acknowledges that this is “probably” the most important period of his tenure at Raisio, which began in November 2006. His next major task will be to concentrate on the integration of Big Bear. What comes after, it seems the market will have to wait and see.
