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.
With inflation easing from the levels of the last two years, investors in the publicly listed majors are looking to see how companies can drive sales without the support of price increases. General Mills’ latest quarterly numbers, out yesterday (26 June), underlined the challenges food manufacturers are facing.
Staying in North America, private-equity firm Swander Pace Capital announced its latest acquisition, snapping up a manufacturer of frozen ready meals that supplies both the US and Canada.
Moving down to Asia, not long after Mondelez and Lotus Bakeries set out plans to team up to expand in India, one of their major domestic competitors said it would close one of its factories in the country.
And Mondelez itself revealed its operation over the border in Pakistan is looking to source more of the inputs it uses domestically, which, when looking at the growth forecasts for the country’s chocolate market, isn’t much of a surprise.
General Mills speaks volumes
In the three months to 26 May – General Mills’ Q4 – the US group’s net sales dropped 6%, with lower volumes a factor. In its core North America Retail business, volumes slid 6%.
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“As we move into fiscal 2025, our top priority is to accelerate our organic net sales growth, and specifically our volume growth,” General Mills CEO Jeff Harmening said.
On an investor call with analysts, he added later: “Improving value is really the number one mission we have to get competitiveness.”
This is an issue that isn’t specific to General Mills or even the US. All food manufacturers will be wrestling with how to drive unit sales – and it will be common topic on investor calls as we start to see companies report their calendar-year Q2s (McCormick & Co.’s numbers have just hit the wires; it saw group volumes dip 1%).
Might SKU rationalisation efforts help?
North America’s appetite for frozen ready meals
Swander Pace Capital is one of the more active private-equity firms in North America’s food and beverage market and, this week, the buy-out house revealed its latest investment.
North American frozen-meals manufacturer Inovata Foods has received an undisclosed level of investment from Swander Pace Capital.
While the terms of the deal were not announced, Swander Pace Capital did confirm to Just Food it is now the majority shareholder of Inovata Foods.
The Canada-based manufacturer, which was founded in 1989, sells its frozen-meals in Canada and the US to retailers and foodservice customers.
Inovata Foods founder Steve Parsons said the backing will “accelerate our capacity expansion plans”.
The company has a 45,000 sq ft manufacturing facility in Edmonton, Alberta, and a 95,000 sq ft manufacturing facility located 100 miles from the US border in Tillsonburg, Ontario.
The Ontario-based company produces a variety of frozen ready-meals, ranging from pasta and noodle dishes to Indian-style curries and paella.
And Swander Pace Capital has backed a business operating in a growing market on both sides of the border, particularly in the US.
“As the demand for premium private-label meal solutions continues to grow, we see Inovata as the ideal platform to capitalise on these trends,” Tyler Matlock, managing director at Swander Pace Capital, said.
India’s biscuit major Britannia to close plant
It emerged this week India’s Britannia Industries is set to shut a factory in a Kolkata suburb after all of its permanent workers at the site accepted voluntary retirement schemes.
The biscuit facility in Taratala, which was established in 1947, is set to close. Britannia reportedly had around 150 employees at the facility, according to The Times of India.
The company has three other biscuit manufacturing plants in the eastern states of Bihar, Odisha and Assam.
India’s market for sweet biscuits looks set to remain relatively buoyant, which underlines why Mondelez and Lotus announced their recent manufacturing and distribution tie-up in the country.
In the year ended 31 March 2024, Britannia Industries generated revenue of Rs165.46bn ($1.98n), marking a 3.5% rise on the previous year. Operating profit grew 10.1% to Rs28.69bn.
Vice chairman and managing director Varun Berry said after the group revealed its results in May: “In a tepid consumption scenario, our performance this year signifies resilience and competitiveness. Over the past 24 months, we have achieved a strong 19% growth in revenue, accompanied by a notable 43% increase in operating profit.
“Our market share rebounded as the year progressed as a result of strategic pricing actions to maintain competitiveness and intensified investments in brands, supported by distribution expansion.”
Mondelez seeks resilience in Pakistan
Meanwhile, over the border in Pakistan, Mondelez is set to invest around $5m in its local operations in an effort to source more inputs domestically in the country.
The US confectionery and snacking giant is aiming to source in Pakistan 50% of all the raw materials it uses for the finished goods it makes in the country.
The group has two manufacturing plants located in Hub, Baluchistan, which will receive the fresh investment.
Mondelez said in its statement: “Due to severe macro-economic pressures and a foreign exchange liquidity crunch in the country, Mondelez Pakistan took proactive steps to mitigate the impact by initiating measures to localise 50% of the materials previously imported, with the exception of imports like cocoa beans, which are not locally harvested.
“Mondelez Pakistan is working on plans to future-proof its business in the country through localisation, prioritising export growth, and cementing its long-term presence in the market. By investing in local capabilities, the company is poised to drive sustainable growth, boost exports and solidify its position as a key player in Pakistan’s economy.”
