Sector News

Pioneer to use dried-fruit skills in UK snack food acquisition

August 4, 2016
Consumer Packaged Goods

Pioneer Food Group has bought UK snack maker Streamfoods for £7.5m to bolster its product range in Britain with branded goods.

The group says the acquisition will leverage its UK private-label portfolio and its recently upgraded manufacturing capabilities. Streamfoods is wholly owned by the Wellness Group and exports its core Fruit Bowl brand snack products for children to China and Europe.

“Pioneer Foods has extensive competence in the fruit snacking category, which bodes well for the development of the category and its brand position,” Pioneer Foods said on Monday.

Streamfoods makes fruit shapes, fruit flakes, yogurt fruit flakes, yogurt raisins, and school bars. It offers its products through supermarkets in the UK, as well as through Ocado, an online British supermarket.

The buyout seems to be an add-on in terms of the bigger picture for Pioneer.

“(It is) a very small bolt-on acquisition, not important in the overall group, (at a) R140m acquisition price, which is 0.3% of (the group’s) market cap,” Standard Bank analyst Sumil Seeraj said on Monday. “It’s just another dried-fruit business, basically, which is branded to grow operations in the UK.”

Pioneer Foods is SA’s second-largest producer of staples including bread, rice, maize meal, and cereals.

It warned earlier that achieving growth at a time when most consumers in SA were expected to remain squeezed would be difficult. It reported revenue growth of 9% to R10bn for the six months to March.

It also faced substantial gains in input costs as a result of drought. White maize raw material prices shot up more than 90% in the reporting period, which hit market share in the bread category. The rand lost nearly 30% against the dollar during the period.

Pioneer Foods CEO Phil Roux said earlier in 2016 that he did not see an upside for the maize price this year.

Pioneer lost market share in the fruit juice category — which includes the Liqui-Fruit, Ceres, and Fruit Tree brands — to new entrants Coca-Cola, which launched its Just Juice category, and Rhodes Food Group.

By Mark Allix

Source: BDLive

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