Birds Eye's new ice block billboard

Nomad’s emergence as a new player in the global food industry consolidation game is fascinating.

There’s a parallel with 3G, the Brazilian Berkshire Hathaway private equity consortium, which recently merged Kraft and Heinz. On a smaller scale - and intriguingly as a publicly quoted company - it’s looking to create pockets of global scale in undervalued categories, in this case frozen, through consolidation.

It’s also interesting to compare and contrast with the recent strategy of Birds Eye Iglo Group - chosen by Nomad as its first acquisition, and on which it is hoping to build its conglomerate - under private equity owners Permira.

Spurning the opportunity to float BEIG, Permira believed it could achieve a higher valuation through hugely ambitious organic growth targets and fired its highly respected CEO Martin Glenn. He subsequently went on to do a stellar job turning round United Biscuits at breakneck speed - even attracting the attention of the Football Association in the process. Meantime, as we report this week, sales and profits at Birds Eye have actually gone backwards. And Elio Sceti, who replaced Glenn as CEO and promised to deliver riches unparalleled, has mysteriously quit to join Coty.

” As Elio Sceti and Permira slope off, what a relief for BEIG to find Nomad”

Adam Leyland, Editor

I’m not criticising Birds Eye UK for its performance. It’s continued to deliver great innovation. And it’s in a desperately tough market. Even Glenn struggled to grow sales despite a strong NPD programme and award-winning advertising, and arguably his greatest achievements at BEIG revolved around the bottom line, cashflow and the successful integration of acquisitions.

But it was sheer folly to expect a frozen food giant to grow sales at the levels Sceti so confidently predicted. And it’s only because the market is valuing food businesses more highly - following the example set by the likes of 3G - that Permira has been able to achieve a price broadly similar to the one it could have achieved through an IPO a couple of years ago. 

Now, under new management, the team at Birds Eye have an opportunity to prove what they can do. And it’s an exciting one. Distracted by unrealistic growth targets from the main chance, they’ve lost out on some acquisitions, such as the recent sale of Copenrath & Wiese. But there are plenty more where they come from. The obvious one is Findus (albeit that it would likely have to dispose of the UK business). But the acquisition of, say, Quorn would be every bit as compelling. Under the ownership of Nomad the team has the cash to consolidate the market. More importantly, Nomad has the credibility to make it work.