Alongside our daily news coverage, features and interviews, the Just Food team sifts through data sets to bring you a round-up of the week in numbers.
After months of wrangling, Italy food group Newlat finally nailed a deal for UK-based Princes, the canned food and shelf-stable drinks business that turned to an annual loss in the 2022-23 financial year amid a hefty impairment charge.
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Newlat, a bakery, dairy and pasta supplier, had aborted its takeover bid in February due to disagreements over the purchase price with Princes’ Japanese owner Mitsubishi Corp. A deal was struck this week for £700m ($890m).
In the US, Campbell Soup Co. had some bad news for workers as the food heavyweight plans to shutter a manufacturing plant in Oregon as part of an exercise to improve efficiencies.
General Mills, which like Campbell has seen pressure on volumes linked to inflation-induced pricing, indicated through its CEO Jeff Harmening that a longer-term sales goal will be a “tough” nut to crack.
And in yet another blow to meat-alternatives, a category undergoing a reset as consumer demand wanes, Proform Foods in Australia called in administrators.
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By GlobalDataNewlat nets Princes
Princes was reeled in to Newlat’s portfolio as an agreement over price was finally reached, with a target to achieve a combined turnover of €5bn ($5.4bn) by the end of the decade.
The Italian business publicly confirmed its interest to buy Princes from Mitsubishi in December after speculation emerged in September of a bid by Newlat, which joined a host of private-equity funds vying for the company.
Newlat, which also owns UK business Symington’s, pulled out of the process in February this year as Mitsubishi rejected a revised offer, which was lowered to partly compensate for the pull back in inflation.
Princes will now merge with Newlat to become the New Princes Group.
In the latest accounts available at Companies House, Princes delivered a loss of £42.7m in the year to 31 March 2023, against a profit of £17.2m a year earlier.
Princes’ loss was influenced by an impairment charge of more than £57.7m, along with higher finance charges and rising costs.
CEO Simon Harrison said this week: “This is an exciting prospect for Princes and we are delighted that Newlat share our confidence in the group’s strategic growth plans, brand strategy, operational excellence and people culture. The intended sale remains an ongoing process and further information will be shared in due course.”
Campbell scales down
The soups and snacks business, which gained approval to purchase Italian sauces maker Sovos Brands earlier this year, said 415 jobs could be impacted as it shuts one factory and downsizes another.
Campbell plans to close the Tualatin, Oregon, facility in stages before the final closure in mid-2026. The first phase, scheduled for August this year, will affect 120 of the plant’s 330 employees.
Meanwhile, Campbell’s site in Jeffersonville, Indiana, will in future only produce tortilla chips, with the manufacture of crisps shifting to the company’s Charlotte and Hanover plants. The change will come into effect in July and will impact approximately 85 of the 230 employees there.
Campbell, which like other global food producers is fighting to restore volumes, said the moves are “another significant step in transforming Campbell’s supply chain into a competitive advantage”, saying it is “closing inefficient sites and shifting production to more modern and effective plants”.
Dan Poland, Campbell’s chief supply chain officer, said: “To fuel growth and transform our manufacturing and distribution network, we must invest and further strengthen our supply chain.
“By leveraging our best-in-class in-house capabilities combined with the expertise of trusted manufacturing partners, we will continue to make the highest quality products, with a more agile, flexible, and cost-effective manufacturing network.
“We continue to evaluate optimisation opportunities across the network to build our supply chain of the future.”
General Mills sales challenge
Jeff Harmening, the chairman and CEO of the US food major, suggested restoring volumes will be a key requisite in getting back to its long-term sales growth algorithm of 2%-3%.
General Mills notched up a 1% increase in organic sales to $15.1bn in the first nine months of the financial year but they were down 1% in the third quarter. Fiscal 2024 ended last weekend and the final annual results will be published on 26 June.
Speaking at a fireside chat event with AllianceBernstein’s Alexia Howard on the year ahead, Harmening said: “I think we'll see a steady improvement in volumes over the course of the year in a pricing environment that's going to be challenging [and] also an inflation environment that’s not going to be particularly high either.
“That'll put a little bit of pressure on our long-term sales algorithm. I’d love to say that we're going to get back to our long-term sales algorithm of 2% to 3% top-line growth next year but given the gradual improvement I would see in volumes, I think that's going to be a little bit tough to come by.”
While Harmening does not expect a “step change” in volumes linked to any one event he said they are moving in the “right direction”.
The Cheerios and Häagen-Dazs brand owner saw volumes decline two percentage points in the third quarter, taking the year-to-date decline to 3%. Price/mix was up 2% and 3%, respectively, over the two periods.
Harmening suggested consumers will eventually adjust to the new pricing landscape as costs went up due to the pandemic-linked supply chain challenges and then the war in Ukraine.
“It takes consumers a while to adjust to pricing. It’s probably a 12-to-18-month process before consumers really land on what is the true price of this good going to be.
“Consumers are stressed financially right now. I think that’s why we haven’t seen a step change and that’s why I don’t think we’re going see a step change in volumes either, for our categories or for our business.”
Proform Foods collapses
A sales process has been initiated for Australia’s Proform Foods after the meat-free business went into voluntary administration.
KPMG administrators Gayle Dickerson and James Dampney said they will be “working with all stakeholders, including employees, suppliers and customers, to maximise the outcome for all parties”.
Sydney-based Proform Foods was set up in 2005 and employs around 30 workers. Proform is behind the brand Meet, stylised as MEET, which was launched in 2008.
MEET offers beef-free mince and burgers and chicken-free tenders. Its products are sold via the country’s largest supermarket groups, Woolworths and Coles, and via food delivery service Hello Fresh.
Meat-alternatives are a relatively small proposition in Australia in value terms versus other global markets in the US and Europe.
While sales values and volumes by weight are expected to increase in real terms in the coming years, growth in both is forecast to slow considerably by Just Food’s parent company, GlobalData.
Proform Foods also owns the Protein Plate and Bad Hunter brands and supplies foodservice operators, including burger chains.
The company claims its “competitive edge” is its PHMC Proform High Moisture Cooking technology, which delivers plant-based cuts of meat with “superior taste and texture”.
