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June 14, 2022updated 28 Oct 2022 12:12pm

Cerealto Siro Foods future secured as investors, workers agree terms

Last week, the company paused production after potential investors walked away from a deal.

By Andy Coyne

The future of Cerealto Siro Foods, the Spain-based co-manufacturing and private-label business, has been secured after investors and employees agreed a deal.

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The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
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Last week, the Madrid-based biscuits and pasta maker paused production after potential investors walked away from a deal.

The move came after workers at most of its plants rejected the company’s cost-saving “competitiveness plan”, which included an employee pay freeze.

But now the country’s Ministry of Industry, Commerce and Tourism has announced it has brokered a deal that will see EUR100m (US$104.3m) of investment cash pumped into Cerealto Siro Foods and the guaranteed future employment of the company’s 1,700-strong workforce.

In an announcement from the Ministry yesterday (13 June), Industry Minister Reyes Maroto said she is “enormously satisfied” with the agreement.

“It provides an opportunity for an industrial future for the company and guarantees a future job for 1,700 families. In addition, this agreement is a good example of commitment to the opportunities and future of rural Spain, in this case Castilla y León, one of the priorities of the government of Spain,” he said.

Last week Cerealto Siro Foods admitted the situation was “critical” after workers at most of its plants rejected the company’s competitiveness plan, a necessary condition of investors Davidson Kempner from the US and Turkey’s Afendis Capital Management taking a majority stake in the business.

It said at the time: “The current situation means that we cannot legally continue to increase our level of debt with suppliers, so we have responsibly decided to temporarily stop production activity in the coming days and only manage the cash flow with the stock of finished product we have.”

The stoppage covered both the company’s domestic and foreign operations. Outside Spain, Cerealto Siro Foods is active in Portugal, Italy, the UK, the US and Mexico.

The halt in production followed the company – which is reputed to have debts of EUR300m – announcing it was to close a biscuit facility in Venta de Baños in Palencia province and relocate the 197-strong workforce to other group factories in Castilla y León as part of a cost-saving plan revealed in March.

Following the Ministry of Industry’s intervention, a deal has been struck which evidently satisfies both the investors and the company’s employees.

Cerealto Siro Foods has also agreed the Venta de Baños facility will stay open for at least two years.

The agreement includes a salary incentive after four years for workers at plants that have maintained 2021 production levels to recover, and add 2% to, the salary freeze agreed for the period of the competitiveness plan.

Cerealto Siro Foods declined to comment on the deal when approached by Just Food.

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Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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