Dutch food group CSM has announced plans to sell off its bakery operations in Europe and North America and focus on bio-based ingredients.

CSM said yesterday (7 May) it expects there to be consolidation in the bakery supplies sector and growth in the bio-based ingredients industry.

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However, the company said it did not have the resources to “exploit” both trends and has decided to look to sell its bakery businesses.

CSM supplies donuts, cookies and muffins to customers including Starbucks and UK retailer Asda. It also sells bakery ingredients to major industrial bakers. However, volatile commodity costs, weak consumer demand and a shift by shoppers to buy more bread at major retailers than at artisan bakers has hit the business.

Profits from CSM’s bakery businesses slumped last year, prompting a restructuring programme to save costs. As part of the plans, CSM said it would look to offload 30% of its bakery assets in Europe.

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However, CEO Gerard Hoetmer said yesterday all of the company’s bakery business would be better off under new owners.

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“While bakery supplies is a well-run business with excellent market positions, its value and prospects would be enhanced under different ownership,” he said. “We intend CSM to be a focused, bio-based ingredients company, with strong financial performance and exciting growth prospects that should generate attractive total returns for shareholders.”

CSM’s bio-based ingredients business includes Purac, which supplies lactic acid for use in the food, polymers and chemicals markets. In food, for example, lactic acid is used on meat to prolong shelf life and improve its colour. Lactic acid can also be used as a fortification element in soft drinks.