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European Business News – Week ending April 8, 2011

 Breaking News
  • Sysco Grows European Business Sysco Corporation is to acquire Kent Frozen Foods, a successful UK-based food service distributor with revenue in the year ended 31st December 2016 of £47 million. The acquisition, which is conditional upon approval from the Competition and Markets Authority, will see Kent Frozen Foods join Sysco’s other UK businesses, including Brakes, Fresh Direct and M&J [...]...
  • Nestlé Nominates Three New Independent Directors to its Board Nestlé has announced that it proposes Pablo Isla, Chief Executive Officer of Inditex; Kasper Rorsted, Chief Executive Officer of adidas; and Kimberly A. Ross, former Chief Financial Officer of Baker Hughes, for election to its Board of Directors. The elections will take place at the company’s Annual General Meeting on April 12, 2018. At that time, three current directors, [...]...
  • Increased Funding For Promoting Europe’s Agricultural Products The European Commission has launched the calls for proposals for programmes to promote European agricultural products throughout the world and within the EU. A total of €169 million is available to co-finance the programmes, up from €142 million in 2017. Programmes can cover a wide range of issues from general campaigns on healthy eating to [...]...
  • The Coca-Cola Company Announces New Global Vision to Help Create a World Without Waste The Coca-Cola Company has announced that it is fundamentally reshaping its approach to packaging, with a global goal to help collect and recycle the equivalent of 100% of its packaging by 2030. This goal is the centerpiece of the Company’s new packaging vision for a World Without Waste, which the Coca-Cola system intends to back with a multi-year investment that [...]...
  • Partnership that Mitigates Cross Contamination Fits Like a Glove Two world leaders in their respective fields have combined their expertise to create Europe’s first bona fide antimicrobial nitrile gloves. Unigloves new Fortified single use gloves incorporate silver ion technology from BioCote®, which has been scientifically proven to destroy 90% of bacteria within just 15 minutes and 99.5% in only two hours – BioCote is also proven effective [...]...

European Business News – Week ending April 8, 2011

April 11
08:01 2011

The biggest news story of the week was Diamond Foods’ $2.35 billion (Eur1.6b) takeover of Pringles to triple in scale and become the second largest savoury snacks manufacturer in the world, behind PepsiCo. The move means that Diamond Foods has completed deals worth $3 billion since last year and has been transformed from being a US-based business into a global player with revenues of $2.4 billion. Pringles is available in more than 140 countries and has production operations in the US, Europe and Asia. Last year, Diamond Foods acquired the Kettle Foods businesses in both the US and the UK from private equity group Lion Capital for $615 million in cash.

Diamond Foods is also now one of the top five players within the Eur12 billion savoury snacks market in Western Europe, and the Pringles deal accelerates industry consolidation with the top ten manufacturers, headed by PepsiCo, controlling more than two-thirds of the market. Further concentration of ownership is expected as United Biscuits, the British and international biscuits and snacks manufacturer, is up for auction and is likely to be broken up when it is eventually sold off by private equity firms Blackstone Group and PAI Partners.

The Pringles acquisition also provides Diamond Foods with access to key growth markets around the world, including Asia, Latin America and Central Europe. International sales will account for approximately 49% of the enlarged group’s turnover.

Massive Growth in Private Label

The severity of the current economic recession is likely to have long-term consequences for food manufacturers. In the past, consumers have turned to private/own label products during times of austerity, only to return to branded products when the economic climate improved. However, recovery this time will be different.

Rabobank predicts that private/own label food products will double their global market share from a current level of 25% to 50% by 2025 because of greater consolidation by retailers, increased consumer acceptance of private label after recession and further expansion by the hard discount sector. A-brands will continue to be important for retailers in establishing price levels for different categories and in providing consumers with choice and familiarity. Smaller secondary brand (B-brand) producers will be squeezed from both sides and will have to strategically reposition to survive.

B-brands suppliers will either have to invest in quality and target the premium market, or specialise in private label, according to Rabobank. Consolidation among private label specialists is consequently inevitable as they strive to achieve the necessary economies of scale to compete effectively.

Chocolate and Scotch Whisky

The economic gloom is obviously driving some consumers to indulgence and comfort eating and drinking. According to Barry Callebaut, the global chocolate market grew by 3.6% in the last six months to the end of February. Scotch whisky export sales remained buoyant throughout 2010 with global shipments rising by 10% to reach £3.45 billion, reflecting continued premiumisation across the industry, as sales value increased despite a marginal decrease in volume. Eight of the top ten markets grew in value, with a strong performance in the US (+19%), which remained Scotch’s largest export market by value. The ‘BRIC’ markets continued to develop, with exports growing to Brazil (+12%), China (+24%), India (+46%) and Russia (+61%).

The Scotch whisky industry has been investing heavily for growth in recent years. Distillers, including the major players such as Diageo, John Dewar (Bacardi), Glenmorangie and Edrington, have spent in the region of £600 million during the past two years in extending production capacity – including distilling, bottling and warehousing.

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