Grocery brand manufacturing is a sector rife with acquisitions and consolidation. Former PepsiCo UK president Martin Glenn is leading the consortium widely tipped as the favourite to buy the Birds Eye brand from Unilever, while Premier Foods recently announced a £460m takeover of the UK and Irish businesses of Campbell Soup, adding Fray Bentos meat pies and Oxo gravy to a raft of classic brands that
Premier has sought to rejuvenate.
But away from the headline-grabbing mega-deals, another wave of consolidation is taking place involving little-known companies and bespoke vehicles buying niche and secondary brands - or the companies that own them.
The most recent example was this week's Investec-funded Big Bear acquisition of Sugar Puffs cereals and Harvest cereal bars from
PepsiCo. Acorn Brands, chaired by Dixons Group creator Lord Kalms of
Edgware and backed by Fleming
Family & Partners Private Equity, is another company that has been active in this arena.
It owns the OJA 100% pure fruit juice brand, currently stocked by Asda in the UK and Carrefour in France, and has positioned itself as a specialist in the non-alcoholic drinks sector. It plans to launch a second brand, a yoghurt-based drink, towards the end of the year. Acorn's avowed strategy is to build a portfolio of non-alcoholic beverages via a combination of acquisition and creating and launching proprietary brands. CEO Brendan Harris, a former senior executive at Coca-Cola, says that a recent E100m equity injection from FF&P has put in place the means "to make substantial mid- market acquisitions and take advantage of the range of opportunities" that Acorn has identified.
"We're looking now at a variety of opportunities in all of the major markets: Germany, Austria, the UK, France, Italy and Spain," adds Harris. "We see opportunities for profitable growth across the whole soft drink market - even in carbonates, which in some quarters appear to have been written off. While it's true that healthier beverages will probably grow faster overall, good carbonates brands will respond well to great marketing - which is what Acorn is all about."
Leeds-based Glisten has been even more acquisitive, building a strong presence in the confectionery and snack market. Last December it bought Lyme Regis, manufacturer of organic cereal and fruit bars and other snacks, which supplies Sainsbury's, Tesco, Waitrose and health food outlets such as Holland and Barrett.
A year earlier Glisten snapped up Halo Foods, another cereal bar manufacturer and, in the year or so prior to that, the company busied itself with four separate acquisitions in the confectionery sector. As well as being highly acquisitive, the group has achieved organic growth of 10% or more over the past three years.
"Glisten is very much about building positions in emerging or growing food markets, sometimes on the edge of larger markets," says Glisten finance director Rob Davies. "We're not looking to challenge the confectionery giants. We think that there is more value in having different positions in adjacent markets in snacking and confectionery."
With Lyme Regis positioned as an organic brand, Halo marketed for its fair trade credentials and Victoria developed as a tertiary retailer brand, Glisten has a clearly demarcated portfolio. Its strategy is to build a focused, flexible food business, in part through ongoing relevant acquisitions.
Inter Link Foods, meanwhile, has made 11 acquisitions since 1994 and now has a £130m-a-year turnover. The company, which sold 120 million mince pies last Christmas (and expects to sell 140 million this Christmas), is the number two supplier in the UK cake market. It specialises in private label and licensed products, having licensing agreements with giants such as Disney, but in February 2003 it bought the Soreen malt loaf brand from Warburtons and has extended it into the snacking category in the shape of Soreen Go bars.
"Our involvement in brands at the moment is limited to Soreen, but this has been a resounding success for us," says Inter Link chief executive Paul Griffiths. "Growth has been so strong that we have been unable to satisfy all the demand for Soreen."
A new 30,000 sq ft production facility close to the existing factory in Manchester is due to open shortly - and will effectively double capacity. There are also plans to take the Soreen brand into the Christmas and steam puddings market in 2007. Inter Link clearly views puddings as a promising sector: it is intending to produce all-year-round puddings for its Mrs Peek's brand. "The more business you have with a customer, the more influence you can exert," says Griffiths. "That's why the big brands enjoy success. But in our main market, the cake market, it is dominated by private label."
It is a position with resonance in other sectors. "We are very much focused around private label," says Bernard Hoggarth, Cranswick chief executive, food. "Only 5% of our business is from brands."
Meat products specialist Cranswick owns the Jack Scaife and Lazenby's brands, as well as producing sausages under licence for Duchy Originals and The Black Farmer. Lazenby's is frequently used as a promotional vehicle in sausages, says Hoggarth, as a means of protecting the prestige of some of the more upmarket private label offerings.
In January 2005, Cranswick acquired Perkins Chilled Foods, a leading provider of cooked meats and poultry. The deal, its largest to date, was flagged as representing an important step in Cranswick's strategic development. The company, which leads the field in premium sausages, is now one of the two major players in cooked meat and has moved into sandwiches.
Hoggarth believes continuing consolidation is inevitable and says that he is able to cite examples in every sector in which the company is active - including the pigfeed agribusiness where it has its roots. "Right across the piece, suppliers have got bigger and we are seeing fewer players," he says.
Further acquisitions are being looked at. Hoggarth says these will be in "businesses we understand" - which is to say meat products.
The big beasts of fmcg will continue to steal the headlines, with deals such as Procter & Gamble's US$57bn purchase of Gillette last year. Yet a less obtrusive wave of consolidation is sweeping through suppliers keen to strengthen their position and acquire clout in particular categories. ngoing big on acquisitions
Acorn Brands: owns the OJA juice brand and plans to build a strong presence in the non-alcoholic soft drinks sector, with private equity backing.
Bakkavör Group: this Iceland-based vehicle has become the UK's leading provider of fresh prepared foods and produce. Last year it acquired Geest for £623m and Hitchen Foods for £44m - and this year chilled foods companies Laurens Patisseries (desserts) for £130m and New Primebake (bread) for an undisclosed amount.
Cranswick: has enjoyed a 38% climb in revenue to £441m for the year to 31 March 2006. Acquired Perkins Chilled Foods in January 2005. Saw its Duchy Originals sausages business, for which it is the licensee, grow 42%. Owns the Jack Scaife and Lazenby's brands, but most of its business is supplying private label product.
Glisten: Leeds-based confectionery and snack foods specialist that owns Halo Foods. Acquired Lyme Regis Fine Foods at the end of 2005. A trading update on 30 June 2006 said the group expected to achieve record sales of £56m.
Inter Link Foods: manufacturer of private label, branded and licensed cakes. Turnover rose 32% to £130m for the year to 6 May 2006. In 2003 it paid £8.2m to acquire the Soreen malt loaf brand. It is entering the market for puddings.
Premier has sought to rejuvenate.
But away from the headline-grabbing mega-deals, another wave of consolidation is taking place involving little-known companies and bespoke vehicles buying niche and secondary brands - or the companies that own them.
The most recent example was this week's Investec-funded Big Bear acquisition of Sugar Puffs cereals and Harvest cereal bars from
PepsiCo. Acorn Brands, chaired by Dixons Group creator Lord Kalms of
Edgware and backed by Fleming
Family & Partners Private Equity, is another company that has been active in this arena.
It owns the OJA 100% pure fruit juice brand, currently stocked by Asda in the UK and Carrefour in France, and has positioned itself as a specialist in the non-alcoholic drinks sector. It plans to launch a second brand, a yoghurt-based drink, towards the end of the year. Acorn's avowed strategy is to build a portfolio of non-alcoholic beverages via a combination of acquisition and creating and launching proprietary brands. CEO Brendan Harris, a former senior executive at Coca-Cola, says that a recent E100m equity injection from FF&P has put in place the means "to make substantial mid- market acquisitions and take advantage of the range of opportunities" that Acorn has identified.
"We're looking now at a variety of opportunities in all of the major markets: Germany, Austria, the UK, France, Italy and Spain," adds Harris. "We see opportunities for profitable growth across the whole soft drink market - even in carbonates, which in some quarters appear to have been written off. While it's true that healthier beverages will probably grow faster overall, good carbonates brands will respond well to great marketing - which is what Acorn is all about."
Leeds-based Glisten has been even more acquisitive, building a strong presence in the confectionery and snack market. Last December it bought Lyme Regis, manufacturer of organic cereal and fruit bars and other snacks, which supplies Sainsbury's, Tesco, Waitrose and health food outlets such as Holland and Barrett.
A year earlier Glisten snapped up Halo Foods, another cereal bar manufacturer and, in the year or so prior to that, the company busied itself with four separate acquisitions in the confectionery sector. As well as being highly acquisitive, the group has achieved organic growth of 10% or more over the past three years.
"Glisten is very much about building positions in emerging or growing food markets, sometimes on the edge of larger markets," says Glisten finance director Rob Davies. "We're not looking to challenge the confectionery giants. We think that there is more value in having different positions in adjacent markets in snacking and confectionery."
With Lyme Regis positioned as an organic brand, Halo marketed for its fair trade credentials and Victoria developed as a tertiary retailer brand, Glisten has a clearly demarcated portfolio. Its strategy is to build a focused, flexible food business, in part through ongoing relevant acquisitions.
Inter Link Foods, meanwhile, has made 11 acquisitions since 1994 and now has a £130m-a-year turnover. The company, which sold 120 million mince pies last Christmas (and expects to sell 140 million this Christmas), is the number two supplier in the UK cake market. It specialises in private label and licensed products, having licensing agreements with giants such as Disney, but in February 2003 it bought the Soreen malt loaf brand from Warburtons and has extended it into the snacking category in the shape of Soreen Go bars.
"Our involvement in brands at the moment is limited to Soreen, but this has been a resounding success for us," says Inter Link chief executive Paul Griffiths. "Growth has been so strong that we have been unable to satisfy all the demand for Soreen."
A new 30,000 sq ft production facility close to the existing factory in Manchester is due to open shortly - and will effectively double capacity. There are also plans to take the Soreen brand into the Christmas and steam puddings market in 2007. Inter Link clearly views puddings as a promising sector: it is intending to produce all-year-round puddings for its Mrs Peek's brand. "The more business you have with a customer, the more influence you can exert," says Griffiths. "That's why the big brands enjoy success. But in our main market, the cake market, it is dominated by private label."
It is a position with resonance in other sectors. "We are very much focused around private label," says Bernard Hoggarth, Cranswick chief executive, food. "Only 5% of our business is from brands."
Meat products specialist Cranswick owns the Jack Scaife and Lazenby's brands, as well as producing sausages under licence for Duchy Originals and The Black Farmer. Lazenby's is frequently used as a promotional vehicle in sausages, says Hoggarth, as a means of protecting the prestige of some of the more upmarket private label offerings.
In January 2005, Cranswick acquired Perkins Chilled Foods, a leading provider of cooked meats and poultry. The deal, its largest to date, was flagged as representing an important step in Cranswick's strategic development. The company, which leads the field in premium sausages, is now one of the two major players in cooked meat and has moved into sandwiches.
Hoggarth believes continuing consolidation is inevitable and says that he is able to cite examples in every sector in which the company is active - including the pigfeed agribusiness where it has its roots. "Right across the piece, suppliers have got bigger and we are seeing fewer players," he says.
Further acquisitions are being looked at. Hoggarth says these will be in "businesses we understand" - which is to say meat products.
The big beasts of fmcg will continue to steal the headlines, with deals such as Procter & Gamble's US$57bn purchase of Gillette last year. Yet a less obtrusive wave of consolidation is sweeping through suppliers keen to strengthen their position and acquire clout in particular categories. ngoing big on acquisitions
Acorn Brands: owns the OJA juice brand and plans to build a strong presence in the non-alcoholic soft drinks sector, with private equity backing.
Bakkavör Group: this Iceland-based vehicle has become the UK's leading provider of fresh prepared foods and produce. Last year it acquired Geest for £623m and Hitchen Foods for £44m - and this year chilled foods companies Laurens Patisseries (desserts) for £130m and New Primebake (bread) for an undisclosed amount.
Cranswick: has enjoyed a 38% climb in revenue to £441m for the year to 31 March 2006. Acquired Perkins Chilled Foods in January 2005. Saw its Duchy Originals sausages business, for which it is the licensee, grow 42%. Owns the Jack Scaife and Lazenby's brands, but most of its business is supplying private label product.
Glisten: Leeds-based confectionery and snack foods specialist that owns Halo Foods. Acquired Lyme Regis Fine Foods at the end of 2005. A trading update on 30 June 2006 said the group expected to achieve record sales of £56m.
Inter Link Foods: manufacturer of private label, branded and licensed cakes. Turnover rose 32% to £130m for the year to 6 May 2006. In 2003 it paid £8.2m to acquire the Soreen malt loaf brand. It is entering the market for puddings.
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