Food Processing - May 2008 - (Page 11)

NEWS BITES IN THIS SECTION: • Low-price strategy may hurt store brands • integrated marketing awards • sanderson farms plans $127m complex •MERGERS & ACQUISITIONS• Mars’ Wrigley purchase will reshape the candy industry Blockbuster $23 billion offer comes with help from warren Buffett. Mars Inc. on aprIl 28 announced an agree- gum category has grown an average of 4 percent annually in ment to acquire Wm. Wrigley Jr. co. for approximately $23 volume and 8 percent in sales. “and we have performed even billion – $1 billion more than Mars’ total worldwide sales and better than that,” he wrote. Wrigley president/ceo William perez added: “Wrigley is a 28 percent premium over Wrigley stock’s selling price. about $2.1 billion of financial backing would come from Warren Buf- china’s largest confectionery company. With our early commitment to this geography, we have built fett’s Berkshire Hathaway Inc. greater retail distribution than any The purchase should reshape the candy inother consumer product company. dustry, as well as privately held Mars, The leading gum brand in china, Mclean, Va., which has been largely Wrigley’s doublemint, continues reliant on bar candy and almost ento resonate with consumers and extirely on chocolate. pand consumption with new flavors and The deal involves Mars offering Wrigpackaging innovations. our revenue in china ley stock holders $80 a share. despite the continued to grow dramatically and by [last year] expanding our shaky state of the investment banking community, goldman sachs group Inc. and J.p. Morgan chase & production plant in shanghai, we further strengthened the ecoco. also are providing financial backing. Berkshire Hathaway will nomics of our business there.” Mars, of course, is no slouch on the international scene eihold a small ownership stake in Mars following the transaction. “The transaction is fully underwritten and not subject to ther. Food Processing’s 2007 processor of the Year derives 60 financing conditions,” said a Mars statement, which also noted percent of its sales outside of “the americas.” the combined company would have a strong foundation of established brands in six core growth categories: Food For ThoughT chocolate, non-chocolate confectionery, gum, food, Fewer shopping Trips drinks and pet care. Just as china and India have been in focus recently annuaL shopping househoLd for changing food consumption patterns, which are Trips peneTraTion putting a squeeze on world grain markets, those counRetail channel 2001 2006 2007 2001 2006 2007 tries played a role in this acquisition, according to several analysts. While Wrigley has struggled a bit in the all outlets 181 170 164 100% 100% 100% u.s. market, overseas sales, particularly in those two grocery 72 61 59 100 99 99 countries, have been growing. so has their consumpmass merchandise 24 16 15 93 84 82 tion of confections. only one-third of Wrigley’s sales supercenter 20 26 27 53 62 65 are from north america. William Wrigley Jr., executive chairman, wrote in drug 15 14 14 86 82 81 the company’s 2007 annual report: “In less-developed convenience/gas 15 14 14 45 41 41 countries, which collectively account for three-quarters dollar 11 13 12 59 65 64 of the world’s population, income is on the rise in many areas. This translates to significant growth potential in warehouse 10 11 11 50 52 51 demand for confections in these marketplaces, including Source: Nielsen Consumer Panel Services asia (where chinese consumers alone spent more than A new Nielsen Co. survey finds U.S. consumers making fewer shopping trips $6 billion on confectionery in 2006) and eastern europe across most retail outlets as they look for ways to combine errands and (where local consumers spent $12 billion) – geographies minimize gasoline use. Traditional grocery stores still hold onto their 99 where Wrigley already enjoys a substantial presence.” percent household penetration. Use of mass merchandisers has dropped Mr. Wrigley also claimed gum is the fastest growconsiderably, but shopping at supercenters is rising. For more information about the Channel Blurring Study, e-mail todd.hale@nielsen.com. ing confectionery sector. over the past five years, the www.foodprocessing.com may 2008 food processing • 11 http://www.foodprocessing.com

Table of Contents Feed for the Digital Edition of Food Processing - May 2008

Food Processing - May 2008 Editor’s Plate NewsBites The Trends Rollout Food Biz Kids Product Developer turned Bean Counter The top-selling new products of 2007 The open road Back to the Big Easy Managing the global plant A new column with answers to your plant-fl oor questions New Supplier Products Toops Scoops

Food Processing - May 2008

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