Associated British Foods believes it can prosper in a “fragmented” sports nutrition sector, a market the UK-based conglomerate has just entered through the acquisitions of two local firms – H5 Ltd and Reflex Nutrition.
The company behind UK food brands including Kingsmill bread and Jordans muesli revealed the purchase of the two companies this morning alongside its half-year financial results.
The transactions, struck for undisclosed sums, mark ABF’s entry into sports nutrition, a sector with some significant players including Glanbia but one that has seen a series of acquisitions in recent quarters. In March, private-equity firm Lion Capital bought a majority stake in UK-based sports nutrition start-up Grenade Holdings. In December 2015, Real Good Food, the UK bakery-to-desserts business, has bought the ISO2 Nutrition sports supplements brand. Two months earlier, UK private-label supplier and Ginsters pasties owner Samworth Brothers entered the country’s sports nutrition market through the acquisition of local firm SCI-MX.
Speaking to just-food today, ABF finance director John Bason said the company had targeted a growing category. “It is a market segment that is high-growth. There are some big players but it’s still quite a fragmented market,” Bason said. “We’ve moved with two high-profile brands in their niche. If you’re a cyclist or an endurance athlete, then, for hydration, you would probably know High5. And then, for protein-based recovery products, Reflex is high-protein bars, powders and so on. They’re great brands and I think what we’d do with both of these businesses is see how we can develop them.”
According to the High5 website, the company behind the brand is called Leicestershire-based H5 Ltd. Products in the High5 range include electrolyte sports drinks and whey protein. Stockists include outdoor retailer Millets and independent cycling stores, predominantly in south-east England.
The Reflex range includes protein powder, bars and drinks. Its powders also include a plant-based SKU. Products are available through channels including the Reflex site and the brand has a presence in overseas markets.
Some of the UK’s mainstream supermarket chains have been giving more shelf space to sports nutrition products in some of their larger stores but Bason preferred to speak in general terms when discussing how ABF planned to increase the presence of the High5 and Reflex brands.
“Rather than say specifically on major multiples I think broaden their distribution is certainly one of the things we will do and then obviously investment in their brands themselves,” Bason said.
Reflex Nutrition has an international presence, selling into markets including continental Europe and the Middle East. While ABF only completed the acquisitions of both businesses in the last six months, Bason indicated the group could use its operations outside the UK to try to grow its new assets internationally, highlighting its subsidiaries in North America and Australia.”
“If you look at the US, I’d also throw Canada into the piece. I’d certainly throw Australia into there. And, for that matter, a number of the markets in continental Europe. For example, Jordans and Twinings are big in France. We’ve got presence and capability through our other businesses to develop the international side, international sales of these businesses,” Bason said.
The US and Australia are two notable markets for sports nutrition products. Asked if ABF could look to make similar acquisitions in those countries, Bason said: “I think this is our first move. It will be an area that we look at with interest.”
Bason did concede ABF had weighed up a move for Weetabix, the UK-based breakfast cereal business sold to US group Post Holdings. ABF had been reported to have been one of the companies interested in Weetabix, although the business had not commented publicly.
He told just-food: “We looked at Weetabix but we decided it wasn’t for us.” Asked if the value placed on Weetabix was too high for ABF, Bason added: “I’m not going to go there. You make your decisions on these things. Weetabix is a wonderful brand, we did look at it but decided we would not proceed.”