And more acquisitions are on the cards, said HMT& F partner Lyndon Lea, who led the £642m deal to buy Weetabix, Alpen, Weetos and Ready Brek. “After
Ambrosia and Weetabix, I’d say we’re done for this year, but there is more to come.”
Although Weetabix had “not suffered particularly from under- investment” said Lea, it would be far stronger as part of HMT&F’s Premier Foods stable which includes such British stalwarts as Gales Honey, Ambrosia, Branston pickle and Typhoo tea.
He added: “It’s more a defensive move on their part. There is a huge pressure on suppliers as retailers consolidate. Food businesses are all about scale and category focus. I’m not saying we can go to retailers now and demand better terms, but we certainly won’t get poorer ones.”
The main thing HMT&F could bring, said Lea, was category focus. “We are big in breakfast lines with Hartleys, Typhoo and Gales and Weetabix is also trending towards snacks.
“We could do promotions combining the two or all sorts of things. There are also opportunities for line extensions and cross-brand innovation.” Although the group was operating mainly in ambient packaged groceries - a sector where growth was “generally flat or mixed”, said Lea, they were good cashflow generators and cheaper to distribute than temperature-controlled goods. “With a brand as attractive as Weetabix in the Premier stable, there will definitely be an opportunity to take it public, though I can’t say when.”
Employees and managers at Weetabix are to be retained, while the chief executive Sir Richard George, whose family has run the business since the 1930s, will stay on as the non-executive chairman of Weetabix, Premier Foods and biscuit manufacturer Burtons.
A new product Weetabix had expected a third party would have to manufacture under contract could now be developed and produced at one of Premier Food’s facilities, said Sir Richard. “The great thing about this deal is that we can put more resource into research and developing new brands.”
In the UK, Weetabix’s turnover is about £76m, Alpen £27m, Weetos £20m and Ready Brek £13m. The rest of the company’s sales (£362m in the year to August 2002) came from own label and overseas sales.