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.
A rare upbeat development for the beleaguered alternative-proteins sector emerged as the Wicked Kitchen plant-based brand attracted a pan-US-Asia bankroll.
Ahimsa Companies, a holding unit of the Colorado-based Ahimsa Foundation, which has the Ahimsa VC fund in India under its wings, bought the diversified brand in pursuit of an objective to consolidate the category through M&A.
On the other side of proteins in the animal pasture, there was a surprise announcement from Danish Crown. Its CEO Jais Valeur is to depart, deciding his long-term future is not with the predominately pork and beef processor.
Over the border, Vion Food Group manoeuvres to exit the German market in preference for the Benelux countries. Vion, headquartered in the Netherlands, has already sold assets in its neighbour’s backyard and plans more.
Campbell Soup Co., meanwhile, posted flat third-quarter organic growth for its core operations but with a sizeable contribution from Sovos Brands, which was acquired roughly halfway through the reporting period.
In New Zealand, troubles mounted for dairy company Synlait Milk, which was forced into a debt bailout, with a warning over meeting future obligations.
Wicked Kitchen fillip
The Ahimsa cohort, which has struck a deal for Wicked Kitchen, came out and said what has been apparent for a while – that plant based is ripe for consolidation as too many players vie for limited shelf space in a softening category.
Matt Tullman, the group CEO of Ahimsa Companies, said the investor will target further brand acquisitions beyond Wicked Kitchen to “vertically integrate and leverage resources to build momentum”.
He added: “We've said all along that consolidation will drive success for the plant-based industry. As Ahimsa Companies brings together more brands, it can leverage this strength to help stabilise and shape the new landscape for the plant-based industry.”
New start-ups have entered the plant-based arena to take a slice of what was a booming category. Demand has, however, waned in the last couple of years, linked to factors such as taste and price, along with criticism some products on the market are overly processed.
Consequently, financing started to dry up and a number of companies have gone to the wall – The Tattooed Chef and The Very Good Food Company in the US and Canada, respectively, and Plant & Bean and The Meatless Farm in the UK, to name a few examples.
Wicked Kitchen had already instigated a consolidation exercise of its own in the past two years – snapping up seafood alternatives Good Catch and Current Foods, both based in the US. The pair are included in the Ahimsa deal.
They fit into Wicked Kitchen’s portfolio encompassing the whole meal occasion. From frozen and chilled ready meals, plant-based burgers and sausages to ice cream and desserts, snacks and seasonings.
A retail and foodservice supplier, Wicked Kitchen’s key markets are the US and UK, with Thailand added to the menu in 2022.
Danish Crown loses CEO
Outgoing chief Jais Valeur said he had informed the Denmark-based meat processor earlier in the year that he did not see himself as the “longer-term” CEO to drive through an upcoming new strategy.
Valeur has sat on the CEO crown since 2015 and now the Randers-headquartered business is searching for a replacement before the details on the fresh objectives are known, which is expected to be in the autumn.
He suggested there will be challenges ahead: “Danish Crown has come a long way while I’ve been at the helm, but there is still a huge and also highly exciting task facing the company in the coming years.
“It will call for a massive and persistent effort by the executive board.”
While Danish Crown’s annual revenues have generally been on the upward slant, the bottom line has been pressured in the past two years.
Chairman Asger Krogsgaard, the replacement for Erik Bredholt who left under a cloud last year, said: “Both the board and Jais have come to the conclusion that Danish Crown needs a new leadership and one that will be in place for the duration of the comprehensive task ahead of us.”
In its most recent financial results, the half year to 31 March, Danish Crown reported revenue of DKr33.5bn ($4.8bn), a decrease of 2.9%. Gross profit fell 2.7% to DKr4.7bn, while net profit was down 15% at DKr764m.
Vion’s Germany exit
The Netherlands group is to review its strategic options in Germany, where the meat processor still operates 11 sites following earlier plant closures and disposals.
The privately-owned company rejigged its set-up last year by kicking off separate business units for Germany and the Benelux countries. Vion plans to now focus on the latter.
Setting out its plan to leave the German market, Vion, which turned over €5.3bn ($5.8bn) in 2022, said its remaining German assets and businesses “have a strong future, benefitting from well-established regional facilities and leading brands”.
CEO Ronald Lotgerink said: “We are strongly committed to securing the most capable partners for our German portfolio, providing the best concept for prosperous future development of these businesses. This is our promise to our employees, our farmers and our customers.”
On its broader strategy to focus on the Benelux markets, Vion said: “To accelerate its strategy of establishing sustainable integrated chains in times of changing markets and strong competition from non-EU markets, Vion has taken the decision to focus on production and sourcing in the Benelux region.
“[A] successful transformation programme [and] recent and potential divestment steps in Germany lay a robust foundation for the future growth and resilience of Vion.”
Campbell bolstered by Sovos
The US consumer goods giant reported another quarter of subdued organic growth but with positive undertones from the recently acquired Sovos Brands.
Underlying growth in Campbell’s third quarter to 28 April was flat. However, Sovos Brands contributed two percentage points to both sales and volume/mix on a proforma basis, with the transaction only completed on 12 March.
Finance chief Carrie Anderson said that over the long term, Sovos Brands own net sales, from Rao’s Italian pasta sauces to ready meals, soups, frozen pizza and pasta, are likely to grow in the mid-single-digit range.
Analysts at US investment bank Stifel suggested the business will contribute 12.5% to Campbell’s overall sales growth in the final quarter of fiscal 2024, with a 28% benefit to the meals and beverages business segment alone.
Campbell reported the division also posted flat organic sales growth for the third quarter, which would otherwise have been up 5% with the Sovos Brands component included, on a proforma basis.
“We continue to expect the Sovos Brands acquisition to be nicely accretive to Campbell's organic revenue, adding over one percentage point to the overall company,” the Stifel analysts wrote in a research note.
To reflect the incorporation of Sovos Brands, Campbell upgraded its full-year guidance yesterday for reported sales to 3-4%, compared to the March outlook for sales to be down 0.5% to up 1.5%.
Elsewhere, Campbell said the Noosa yogurt business, inherited from the Sovos Brands deal, will be disposed of, president and CEO Mark Clouse confirmed.
“The Noosa business has been one of the more positive surprises in the Sovos Brands acquisition. It is an excellent product and brand that continues to perform very well,” Clouse told analysts.
“Even though we have decided to explore strategic alternatives for the business as yogurt’s not a strategic category for Campbell’s, the business has truly exceeded our expectations.”
Synlait debt woes
The dairy business was bailed out by its largest shareholder to meet a debt payment, which was missed in March before the deadline was extended.
While China’s Bright Dairy, which holds 39% of Synlait and will provide a NZ$130m ($79.7m) loan, the company said it was also talking with creditors over further debt waivers as it struggles to meet deleverage commitments.
Meanwhile, Synlait’s farmer suppliers have threatened to withdraw from service agreements when contracts expire in two years unless the Christchurch-headquartered company reduces its debt.
Synlait had NZ$559m in debt at the half-year juncture, when it reported a net loss after tax of NZ$96.2m through to 31 January. A year earlier it was a NZ$4.8m profit, a result that was down 83%.
EBITDA dropped to NZ$19.9m from NZ$51.5m in the corresponding period.
However, while Synlait said this week it would retain its full-year EBITDA guidance of NZ$45-60m the infant-formula maker and B2B supplier warned the final result is likely to come in at the lower end of the range.
Meanwhile, Synlait has also abandoned the sale of its Dairyworks cheese business, which would have brought in extra funds to pay down debt.
“While the board has received interest in the business from a number of parties, a binding offer has not materialised at a level that would be acceptable. Although the company would consider credible offers, the sale process no longer remains formally open,” Synlait said.
