Two opposing forces within the sweet biscuits market are at work globally, according to Innova Market Insights. The treat image of biscuits is driving the premium sector forward, while rising health concerns have also raised interest in better-for-you products.

Chocolate biscuits have been one of the main beneficiaries of rising interest in the treat image of biscuits and the market has continued to see growth in most countries despite ongoing financial and health concerns. According to Lu Ann Williams, research manager for Innova Market Insights, this is probably attributable to the ongoing demand for everyday treats and the continuing tendency to “trade off,” by mainly choosing healthy options but then having an indulgent product as a reward. “Biscuits with some sort of chocolate content accounted for a significant 48% of the global sweet biscuits launches recorded by Innova Market Insights in 2011, although this was down from over 60% five years previously, perhaps reflecting the greater choice of biscuits varieties and flavors now on offer,” she notes.

While indulgence is keeping the market for chocolate biscuits buoyant, health can still be a factor in purchasing decisions, although not to the same extent as for some other food and drinks products. Companies have been endeavoring to improve the nutritional profile of their standard products in many instances and this may have inhibited growth in the specific healthier or better-for-you biscuits market. Nearly 30% of global biscuits launches in 2011 were positioned on a health platform of some kind, rising to over 40% for savory biscuits and falling to just over a quarter for sweet biscuits.

By far the most popular health claims were those relating to naturalness and the lack of artificial additives and/or preservatives, reflecting rising levels of interest in clean labeling. Over 30% of launches carrying health claims used this type of positioning, equivalent to 12% of biscuits launches as a whole.

Private equity firms Blackstone Group and PAI Partners are reported to be considering splitting their United Biscuits business into two elements – one centred on biscuits and the other on bagged snacks. Blackstone and PAI offered the entire business for sale with a price tag of about £2 billion in 2010 but to no avail, although at one period they were in exclusive negotiations with Chinese food group Bright Foods.

The biscuits element of United Biscuits accounts for about 75% of sales and includes the McVitie’s brand. The snacks business incorporates brands such as Hula Hoops and McCoy’s crisps.

United Biscuits achieved EBITDA of £230.8 million on revenues of £1.3 billion in 2010 but had net debt of £1.14 billion. The snacks side of United Biscuits is estimated to be worth in the region of £500 million.

Kraft Foods plans to invest £50 million in its UK confectionery manufacturing operations while cutting the workforce by 200 people. The 200 jobs will be shed at Kraft’s sites at Bournville, Birmingham, Chirk in Wrexham, north Wales, and Marlbrook in Herefordshire. The cuts will be made through redeployment and voluntary redundancies over two years from March 2012.

Kraft will invest £6 million in a new biscuits line at its site in Sheffield, which produces sugar confectionery products such as Trebor, Maynards and Bassetts, to facilitate the manufacture of Oreo and BelVita biscuits in the UK for the first time.

The remaining investment will be made on a range of projects to upgrade infrastructure, speed up production, reduce waste and improve energy efficiency at three chocolate confectionery manufacturing sites. This includes £13.5 million at Bournville, £3.4 million at Chirk and £2.6 million at Marlbrook.

“The ambition is for Bournville, Chirk and Marlbrook to remain at the centre of British food manufacturing and of the Kraft Foods network,” says Neil Chapman, Kraft’s manufacturing director, UK chocolate. “We continue to invest in our people and facilities, so we can increase productivity and transform our business.”

Burton’s Foods, the UK’s second biggest biscuits manufacturer, is rebranding its business and changing its trading name to the Burton’s Biscuit Company. The move is intended to strengthen the company’s market standing.

The St Albans-based company, which manufactures biscuits such as Cadbury Biscuits, Jammie Dodgers, Maryland Cookies and Wagon Wheels, operates from production sites at sites at Blackpool, Edinburgh and Llantarnam and employs over 2,000 people.

“The past two years have seen progressive changes at Burton’s, as we’ve transformed ourselves into a successful and dynamic UK manufacturing business. The rebrand, as part of this transformation, represents not only our past achievements, but also our future ambitions as we continue to go from strength to strength,” explains Ben Clarke, chief executive of the Burton’s Biscuit Company.

The rebranding is in line with the company’s development strategy of focusing on delivering quality products, driving innovation in the biscuit category through its power brands and expanding its international presence.

Reflecting its strategy of expanding in emerging markets, PepsiCo is reported to have acquired Mabel, one of Brazil’s leading biscuit manufacturers, in a deal worth between 800 million and 900 million reals ($460-517 million). PepsiCo is believed to have outbid international food group Bunge and Mexican bread maker Grupo Bimbo to secure Mabel.

Mabel operates five plants acrossBraziland produces 1.5 million packs of biscuits a day. The Brazilian biscuit and cracker market was worth about 6.6 billion reals in 2010.

Pobeda, the leading manufacturer of biscuits and mini cakes in Bulgaria, is to expand output by a third following investment of lev 10 million (Eur5 million) in two new production lines. About 46% of the investment was provided by the European Regional Development Fund. Based at Bourgas, Pobeda had flat sales in 2010 of lev 26.2 million, with about 95% generated in the domestic market.

Kraft Foods is investing $36 million to build a biscuit factory in Ukraine. Based at Trostyanets, in central Ukraine, the new facility is due to commence operations in the fourth quarter of this year.

Kraft Foods already has two factories in Ukraine. Its plant at Trostyanets produces chocolate and coffee, while its facility at Stari Petrivtsi manufactures potato chips.

Belgium-based biscuits and cakes manufacturer Lotus Bakeries increased consolidated turnover by 5% to Eur133.6m in the first half of 2011. On a like-for-like basis, taking into account the termination of the Jaffa Cake bars contract with McVities, internal growth was over 6%. The recurrent operating result (REBIT) was flat at Eur17.3m. However, lower charges meant the net result for the first half was up 18.7% to Eur11.3m compared with the corresponding period in 2010.

During the first half Lotus Bakeries achieved strong sales growth in Belgium. As in previous years, Lotus Bakeries France again reported good growth during the first half. The main segments for Lotus in France are caramelised biscuits and waffles.

The group invested Eur6.5m during the first half of 2011 as it commenced construction work on a major expansion of its caramelised biscuit factory in Lembeke. Lotus Bakeries operates production facilities in Belgium, the Netherlands, France, Sweden and Canada, and has its own sales organisations in nine European countries.

With sales of biscuits, cookies and crackers having increased 22% over the past five years to reach a delicious £2.2 billion in 2010, Mintel forecasts that the UK biscuit market will grow a further 15% to reach £2.6 billion by 2015.

Mintel estimates the biscuits, cookies and crackers market will grow by 2.7% this year to reach £2.3 billion in 2011. Sweet biscuits continue to dominate the sector and are forecast to represent 83% of the market in 2011.

The ritualistic nature of eating biscuits appeals to consumers, with over half (54%) eating sweet biscuits with a hot drink, demonstrating how ingrained this occasion is within British culture but emphasising the need for the category to expand beyond the tea-drinking audience.

With snack/individual packs appealing most to the 16-24s for sweet biscuits and 25-34s for savoury, packaging innovation such as Fox’s Party Rings (six 25g bags per pack) and Ryvita’s Crackers for Cheese (which comes in four packs of six) is helping to attract a younger consumer base.

“The UK biscuit industry has benefited from consumers reaching for the biscuit barrel throughout the recession, although rising commodity costs and an inability to appeal to a younger and more discerning consumer base are threatening the market,” says Amy Lloyd, senior food & drink analyst at Mintel.

Advertising campaigns that focus on quality and taste in order to fend off competition from own-label, should find favour with the third of consumers that believe that branded sweet and savoury biscuits actually taste better, Mintel points out.

However, consumers are willing to experiment with flavour, particularly women, therefore new flavour variants need to appeal to this demographic who are more likely to be buying sweet and savoury biscuits and who most enjoy experimenting with new variants.

According to Mintel, products with a healthy eating message, such as low-calorie or high-fibre, can be used to tap into the 37% of consumers who are cutting down on the amount of sweet biscuits they eat because of health reasons and the 26% of consumers who buy low-salt/wholemeal/high-fibre varieties of savoury biscuit.

Savoury biscuits should do more to push cross category promotion with complementary products such as cheese and particularly British cheese (which has seen growing popularity), maximising on the current trend towards all things British.

The European Bank for Reconstruction and Development has invested Eur10m to acquire a minority stake in Hlebprom, a leading Russian cake and biscuit producer which has developed its own national distribution system. The funding will mainly be used to upgrade the privately-owned company’s existing plants so as to increase efficiency and productivity.

The acquisition by the EBRD, a significant investor in Russia’s agribusiness sector, will encourage Hlebprom to purchase more raw materials from domestic suppliers, particularly cream and butter, thus stimulating the development of higher-grade products by Russian dairy farmers in order to meet the company’s quality standards.

“This transaction is a good example of how the EBRD can stimulate primary agricultural production in Russia through its investments in processing and other segments of the agribusiness sector,” says Gilles Mettetal, the EBRD’s director of agribusiness.

Hlebprom, founded in 1982 and privatised in 1994, specialises in producing flour-based confectioneries and chilled cakes which are mainly sold through supermarket chains. The company’s main plant is in the city of Chelyabinsk, in Russia’s industrial heartland.

In the agribusiness sector alone the EBRD has directly committed over Eur6.4b (in over 420 projects across Central and Eastern Europe and the Commonwealth of Independent States since 1991).

Chinese food conglomerate Bright Food Group is reported to be in pole position in the race to acquire PAI Partners’ 50% stake in Yoplait. Rivals for the shareholding in the French and international yoghurt producer are believed to include Switzerland-based Nestle and General Mills of the US. The other 50% of Yoplait is owned by Sodiaal, the French farmers co-operative.

Last year, Bright Food Group held exclusive talks to acquire United Biscuits, the British and international biscuits and snacks manufacturer which is owned by PAI Partners and another private equity firm Blackstone Group, but these ended with no formal offer forthcoming. PAI Partners and Blackstone Group put United Biscuits up for auction earlier in 2010.

Benoit Testard, group chief executive of United Biscuits.

United Biscuits, leading European manufacturer of biscuits and snacks, has appointed Benoit Testard as its group chief executive, effective from Monday, 21st February. Formerly, Benoit Testard successfully led the group’s Northern Europe operations and then from 2004 the UK region, which represents 70% of United Biscuits’ business.

Prior to joining UB in March 1999 as managing director of UB France, he spent 13 years with Fromageries BEL, where he began as marketing manager, moving into a sales director role and later becoming head of business.

David Fish, currently executive chairman of United Biscuits, will move to the role of non-executive chairman.

Burton’s Foods, the second largest biscuits manufacturer in the UK, is to close one of its factories. The company is closing its factory at Moreton, which makes Jammie Dodgers and Wagon Wheels, with the loss of 342 jobs. A further 70 redundancies are proposed at the company’s factory in Llantarnam in South Wales.

“The proposed job losses are deeply regrettable, but, along with the new £25m investment we are making in our UK manufacturing capability, will help deliver sustainable profitable growth for the company in a highly competitive and challenging market,” says Ben Clarke, chief executive of Burtons Foods.

The £25m capital investment programme will take place over three years and includes £5m on chocolate enrobing and robotics at Burton’s Edinburgh site and £2m on chocolate moulding at Llantarnum. The company also plans to consolidate its Knowsley multi-site distribution operations into a single new location.

The exclusive talks to acquire United Biscuits, the British and international biscuits and snacks manufacturer, between its owners and Chinese food conglomerate Bright Food Group are reported to have ended with no formal offer forthcoming. The co-owners of United Biscuits, private equity firms Blackstone Group and PAI Partners, have now opened talks with other potential bidders as they seek to auction off the business. Blackstone Group and PAI Partners acquired United Biscuits for £1.6b four years ago but put is up for sale earlier this year.

United Biscuits is one of the world’s leading branded biscuits and snacks businesses. The group’s products range from biscuits and crackers to cakes and savoury snacks and its portfolio of brands includes McVitie’s, Jacob’s, Carr’s, McCoy’s, Hula Hoops, McVitie’s Jaffa Cakes, KP, Mini Cheddars, go ahead!, Verkade, Sultana, BN, and Delacre. In 2009, United Biscuits increased EBITDA by 13.7% to £223.4m on turnover up 5% to £1.26b.

The group has £1.2b of debt and the asking price is believed to be in the region of £2b. Potential suitors for United Biscuits include Campbell Soup, Krafts Foods, PepsiCo and Kellogg.

Northern Foods and Greencore, two of the UK’s leading convenience food processors, are to merge to create Essenta Foods, a £1.7b turnover business with strong positions in private label production along with significant band strength in biscuits and frozen pizzas, respectively through the Fox’s and Goodfella’s brands. The merger is expected to yield cost synergies of £40m per annum within three years, with at least half being realised within the first 12 months after completion. The merger is scheduled to be completed during the second quarter of 2011.

Essenta Foods will be owned equally by Northern Foods’ and Greencore’s shareholders. The combined business will have a high quality asset base with 33 facilities in the UK, eight facilities in Ireland and two facilities in the US.

It will benefit from strong market positions in growing segments of the market such as sandwiches and ready meals, which in the UK have experienced 9.8% and 7.7% market growth respectively in the last year. Greencore and Northern Foods have invested significantly in their respective businesses in recent years and consequently the combined group will have sufficient capacity to support further market growth in these and other segments of the market.

“The proposed merger is a great opportunity to develop fully the potential of both companies. It will create a sustainable, top tier organisation which will be capable of delivering best in class food products and innovative solutions to its customers,” says Anthony Hobson, chairman of Northern Foods.

Patrick Coveney, chief executive of Greencore.

Patrick Coveney, chief executive of Greencore, who will head the merged group, comments: “Essenta Foods presents a compelling opportunity for all stakeholders. It creates a substantial chilled prepared food company in fast growing categories in the UK which is enhanced by strong branded positions in biscuits and frozen food. The investment case is underpinned by tangible cost synergies and the platform for further growth in the UK, Ireland and the US. The time is right for both companies to build a real ‘better than both’ business and I look forward to bringing together the teams from Greencore and Northern Foods to deliver on this opportunity.”

Northern Foods recently reported an operating loss of £9.5m including restructuring charges and a drop in turnover for the six months to October 2nd 2010 as improvements in its chilled foods and bakery businesses were offset by a loss in frozen foods. Although like-for-like sales grew 2.7% in the first half, and by 6% in the second quarter, total sales were £453.0m against £466.9m in the corresponding period in the previous year. Operating profit (pre-restructuring) was £17.5m (down from £20.5m in the previous year), reflecting chilled food profits up from £7.2m to £11.8m, bakery profits up from £8.2m to £10.3m but the frozen foods recording a loss of £4.6m, against a profit of £5.1m in the first half of 2009/2010.

The exclusive talks to acquire United Biscuits, the British and international biscuits and snacks manufacturer, between its owners and Chinese food conglomerate Bright Food Group are reported to have stalled over the asking price of around £2b. United Biscuits was put up for sale earlier this year by its private equity owners Blackstone Group and PAI Partners, which acquired the business for £1.6b four years ago.

United Biscuits is one of the world’s leading branded biscuits and snacks businesses. The group’s products range from biscuits and crackers to cakes and savoury snacks and its portfolio of brands includes McVitie’s, Jacob’s, Carr’s, McCoy’s, Hula Hoops, McVitie’s Jaffa Cakes, KP, Mini Cheddars, go ahead!, Verkade, Sultana, BN, and Delacre. In 2009, United Biscuits increased EBITDA by 13.7% to £223.4m on turnover up 5% to £1.26b.

Kraft Foods has opened a European Gum and Candy Research & Development Centre at Eysins in Switzerland. The $14m state-of-the-art facility will focus on innovation and new product development for many of Kraft Foods’ confectionery brands, including the world’s leading gum brand Trident and the world’s leading candy brand Halls, as well as other brands like Bassetts, Carambar, The Natural Confectionery Co, Trebor and V6.

Worth $23 billion annually, the global gum market has grown by almost a quarter since 2005, and is one of the fastest-growing categories within confectionery. Kraft Foods has a number of gum brands with leading positions in markets across Europe, such as Hollywood in France, Trident in Spain, Greece and Portugal, and Stimorol in Denmark and Switzerland.

The new centre will be home to a team of product and package developers and quality experts who are responsible for breakthrough gum and candy innovation, such as the new Fresh & Clean gum product which is currently launching in markets across Europe. As the European Centre for innovation and technology for gum and candy, the team based in Eysins will collaborate closely with the Kraft Foods Global Gum & Candy Centre of Excellence, based in New Jersey in the US, to drive innovation and new technologies that support the company’s European gum and candy business and global category growth platforms.

The Center in Eysins joins 14 other Kraft Foods R&D Centres supporting the company’s global businesses including beverages, biscuits, cheese, chocolate, coffee and gum and candy.

Due to rising export sales of its biscuits and cakes in France, Netherlands, UK, US and Asia, Lotus Bakeries is investing Eur27m to expand production capacity at its Belgian operations over the next three years. The group’s site at Lembeke will be extended and all caramelized biscuit production will be centred there. Lotus will also consolidate all cake production at its plant at Oostakker. Both projects are expected to be operational in 2013. Some 20 jobs will be created in the medium term.

Chinese food conglomerate Bright Food Group is reported to be holding exclusive talks to acquire United Biscuits, the British and international biscuits and snacks manufacturer, for more than £2b. Private equity owners Blackstone Group and PAI Partners put United Biscuits up for sale earlier this year.

United Biscuits is one of the world’s leading branded biscuits and snacks businesses. The group’s products range from biscuits and crackers to cakes and savoury snacks and its portfolio of brands includes McVitie’s, Jacob’s, Carr’s, McCoy’s, Hula Hoops, McVitie’s Jaffa Cakes, KP, Mini Cheddars, go ahead!, Verkade, Sultana, BN, and Delacre. In 2009, United Biscuits increased EBITDA by 13.7% to £223.4m on turnover up 5% to £1.26b.

Meanwhile, the Chinese group’s dairy business Bright Dairy & Food is acquiring 51% of Synlait Milk, the New Zealand dairy company, for $82m, paving the way for the construction of a second milk powder plant to begin operations within 12 months. The plant will produce value added products, such as infant formula and other high specification formulated milk powders, and is part of Synlait’s ambition of tapping the Chinese market.

Kraft Foods has just outlined its new global development strategy and expects to deliver organic revenue growth of 5% or more, margins in the mid- to high-teens and earnings per share (EPS) growth of 9% to 11%. Following its $18.4b acquisition of Cadbury earlier this year, Kraft Foods became the undisputed world leader in snacks, a high-growth, high-margin category that now accounts for more than half of the group’s total revenue.

The enlarged Kraft Foods has an exceptional portfolio of global snacks power brands – led by Milka and Cadbury chocolates, Oreo and LU biscuits and Trident gum – with leading market shares in every major region, a full pipeline of innovation and a clear opportunity to grow its presence in what Kraft describes as the point-of-purchase ‘hot zone’.

Complementing the US-based food giant’s snacks portfolio are well-loved iconic regional and local brands in the beverage, grocery, cheese and convenient meals categories. Roughly 80% of these ‘heritage’ brands hold number one or number two positions in their respective categories and are household names among consumers who tend to be extremely brand-loyal. They also carry high margins and generate strong cash flow.

Irene Rosenfeld, chairman and chief executive of Kraft Foods.

“Today’s Kraft Foods is a global snacks powerhouse with an unrivaled portfolio of leading regional and local brands,” points out Irene Rosenfeld, chairman and chief executive of Kraft Foods. “This unique and complementary combination, together with our significant presence in high-growth developing markets, will deliver consistent growth in the top tier of our peer group.”

The combination of Kraft Foods and Cadbury provides the scale necessary to grow sales and distribution in new and existing markets, delivering a projected $1b in incremental revenue synergies. Kraft also expects to realise $750m of cost savings from integrating Cadbury by 2013.

More than half of Kraft Foods’ revenue now comes from markets outside of North America, such as Brazil, China, India and Mexico, where GDP and demand growth are strongest. Accordingly, by 2013, the proportion of business in developing markets will increase from a quarter of total revenue to roughly one-third.

Additional savings over the next three years from procurement, manufacturing and logistics will drive productivity gains in excess of 4% of cost of goods sold, according to Kraft Foods. These productivity gains, combined with flat overhead growth and pricing to offset input costs, will contribute to the expansion of gross margin.

“At Kraft Foods, we’re hitting our sweet spot,” she adds. “We’ve built a solid foundation for growth. By leveraging our scale, making strategic investments in marketing, sales and innovation and establishing a world-class cost structure, we will take our performance to the next level.”

Spanish food group Grupo Siro has opened a new Eur6m research and development facility at El Espinar in northern Spain. The 3,000 sq m facility, which will house a team of 30 researchers, will focus on new product development. It will also undertake contracts for other food manufacturers. Grupo Siro operates across five food categories – pasta, biscuits, snacks, bakery/cakes, bread and patisserie.

Belgium-based biscuits and cakes manufacturer Lotus Bakeries increased current operating profit by 8.8% to Eur17.5m in the first half of 2010 as consolidated turnover edged up 1% to Eur127.2m. On a like-for-like basis, taking into account the termination of the Jaffa Cake bars contract with McVities, turnover for the first half of 2010 was up 2% over the same period in 2009, and slightly more for the branded products.

However, net profit for the first half of 2010 was Eur9.5m against Eur12.2m in the corresponding period in 2009. The first half of 2010 was adversely impacted by write-downs of US dollar hedging instruments while the first half of 2009 figure was boosted by an exceptional gain from a disposal.

Employing 1,220 people, Lotus Bakeries operates production facilities in Belgium, the Netherlands, France, Sweden and Canada, along with its own sales organisations in nine European countries and in North America.

US-based Campbell, the world’s largest soup company, is reported to be preparing a £1.5b break-up bid for United Biscuits, the British and international biscuits and snacks manufacturer. Campbell’s interest is in the biscuits part of United Biscuits, which includes the McVitie’s, Penguin, Jaffa Cakes and HobNobs brands. United Biscuits is also a major snacks manufacturer with a brands portfolio that incorporates McCoy’s crisps, Hula Hoops, KP Nuts and Twiglets.

In 2009, United Biscuits increased EBITDA by 13.7% to £223.4m on turnover up 5% to £1.26b. Current owners, private equity firms Blackstone Group and PAI Partners, which acquired United Biscuits for £1.6b four years ago, have put the company up for auction.

Three other US-based food groups – Krafts Foods, PepsiCo and Kellogg – are also believed to be potential bidders for United Biscuits.

Private equity firms Blackstone Group and PAI Partners are reported to be seeking to sell British and international biscuits and snacks manufacturer United Biscuits for £2b or more. In 2009, United Biscuits increased EBITDA by 13.7% to £223.4m on turnover up 5% to £1.26b.

United Biscuits is one of the world’s leading branded biscuits and snacks businesses. The group’s products range from biscuits and crackers to cakes and savoury snacks and its portfolio of brands includes McVitie’s, Jacob’s, Carr’s, McCoy’s, Hula Hoops, McVitie’s Jaffa Cakes, KP, Mini Cheddars, go ahead!, Verkade, Sultana, BN, and Delacre.

United Biscuits holds leading or strong number two positions in its core markets of the United Kingdom, the Netherlands, France, Belgium and Ireland. Moreover its brands and products have global appeal, and the group’s rapidly growing international business unit serves consumers from North America to the Middle East, Africa, and Australia.

The sale process is due to begin in the autumn and to be concluded early next year. Blackstone Group and PAI Partners acquired United Biscuits for £1.6b four years ago.