While many exporters longingly look at promising markets in the Far East, some companies literally look the other way. These companies don’t just choose a growth strategy based on the growing and ever-richer population of India and China, they see their chances in the USA. The companies often crossed the pond to the US years ago, but recent takeovers strengthen their footholds on this market. Using two companies as examples of having strengthened their position on the American market due to takeovers in recent years, we’d like to paint a picture of this trend.
Total Produce: global fruit giant
It’s the latest major takeover in the sector. Just after New Year’s, it was announced that Total Produce from Ireland would take over the American Dole Foods Inc company. Forty-five per cent to start with, but the Irish have the option of increasing their share of the company in the next few years, and eventually even to take Dole over completely.
The Irish giant closed their books over 2017 before news of the takeover was announced. The takeover had a turnover of 4.3 billion euro, resulting in an increase of 14 per cent compared to 2016. In 2013, the Irish had their first steps on American soil. Since then, their portfolio on that market gradually continued to grow. Last year, Total Produce expanded its share in Oppy by 30 per cent. Because of this, Total Produce now owns 65 per cent of the shares of Oppy. Besides, 50 per cent of the share of The Fresh Connection were bought. The parts in the North American sector represented a gross turnover of 1.4 billion dollar (1.2 billion euro) for the complete companies.
Dole is the proper hit for the multinational, and that will also result in shifts in the books of Total Produce. Over the 12 months ending in September 2017, Dole reported a turnover of 4.6 billion dollar (3.9 billion euro). A first calculation results in a combined turnover of 7.4 billion euro, according to a presentation of Total Produce about the takeover.
Besides a larger total turnover, shifts will also become visible for other points. At product level, for example, Dole gets 43 per cent of its turnover from the banana market. For Total Produce, bananas had a share of 11 per cent in 2017’s turnover. It’s quite similar for pineapple. This fruit represented eight per cent of Dole’s turnover and one per cent of Total Produce’s turnover. Both categories reported growth figures around 23 per cent in the number of boxes sold between 2012 and 2016.
Perhaps the biggest shift will become visible in geographically distributing turnover. By far the largest part of Total Produce’s turnover, 81 per cent, is realised in Europe. Markets outside of Europe, the North American market being one of those, supply the remaining 19 per cent of turnover. For Dole, it’s the opposite. Figures show that 61 per cent of turnover is realised in North America. The European market has a share of 28 per cent in turnover, and the remaining 12 per cent is realised on other markets. The combination of Total Produce and Dole results in a more balanced distribution of turnover. Europe is still good for the largest part of turnover, 55 per cent. North America contributes 29 per cent of turnover, while the share of the other countries amounts to six per cent.
Bonduelle: convenience giant
Traditionally, Europe is the domestic market for Bonduelle. The French tinned foods giant still gets by far its largest share of turnover in Europe, although that share has come under pressure. In fiscal year 2012/13, the American market was good for 22 per cent of turnover, which amounted to 1.8 billion that year. In the books over 2016/17, the last complete fiscal year for which figures are available, the share of the US alone is at 23 per cent. Canada accounts for another 12 per cent. Turnover of that fiscal year amounted to nearly 2.3 billion euro.
For fiscal year 2017/18, which will be closed in June, the takeover of Ready Pac Foods will be taken up for the first time. In February 2017, the French convenience giant announced the takeover of the American company specialised in salads. That was in the middle of fiscal year 2016/17. In their annual report, Bonduelle writes about the results of the takeover, besides an increase in turnover of about three billion euro.They mention three points in this regard. Firstly, the US will become the biggest market for the group on a country-level. The market in North America and the EU will be the same size, and finally, a shift will become visible because the share of cooled products will become larger than that of tinned foods.
The figures over the first nine months of 2017/18 show this shift. In that period, the company had a turnover of 951.8 million euro in the Euro zone. This was a growth compared to the 947.3 million euro earned in the same period a year earlier. Turnover outside of the EU nearly doubled. While 605.1 million euro was achieved in turnover outside of the Euro zone in the first nine months of 2016/17, in the first nine months of 2017/18, that figure is at 1,141.4 million euro. In total, Bonduelle achieved a turnover of nearly 2.1 billion euro over the months mentioned earlier.
The rise of cooled products is also reflected in these figures. Despite a growth of 1.2 per cent in the tinned food segment so that turnover over the first nine months of 2017/18 amounted to 753.2 million euro, turnover of cooled products surpassed that figure. The turnover within this segment reported an explosive growth of 168.9 per cent and amounted to 861.8 million euro (2017: 320.5 million euro).
That the growth is mostly thanks to the integration of the figures of Ready Pac Food is clear from the growth figures on comparable basis. The market outside of the Euro zone grew by 0.7 per cent, mostly as a result of fewer promotions in Russia and eastern markets.
In February of this year, about a year after it was announced Ready Pac Foods would become part of the Bonduelle group, the company announced another takeover across the pond. Del Monte Canada, part of Conagra Brands, will become part of Bonduelle. The company is specialised in processing fruit and vegetables. Because of the takeover, Bonduelle will also get the right to use brand name Del Monte for processed fruit and vegetables. The stocks will also become part of Bonduelle. The deal doesn’t include industrial assets and staff, because the French company will use their own production facility.