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Asda buys meat suppliers outright

Alice Foster

By Alice Foster+

08-Jan-2016
Last updated on 08-Jan-2016 at 16:31 GMT2016-01-08T16:31:37Z

Asda announced the deal earlier today (January 8)
Asda announced the deal earlier today (January 8)

Asda has bought outright two multi-million pound meat manufacturing firms – Kober and Forza AW – in which it previously owned a stake.

The UK’s third largest supermarket announced the deal today (January 8) after a five-year joint venture with the companies’ owner Max Smith-Hilliard.

The sister companies based in Yorkshire have been sole Asda suppliers since 2011 and entrepreneur Smith-Hilliard will now run a protein division for Asda.  

The businesses have been added to the portfolio of Asda’s subsidiary International Procurement and Logistics (IPL) based in Normanton.

Asda announcement

“Our one defining strategy that drives our business model is to simplify supply chains by cutting out the middle man and then passing these cost savings onto Asda customers.

  • Nick Scrase, ceo of Asda’s subsidiary IPL 

‘Simplify supply chains’ 

IPL ceo Nick Scrase said: “Our one defining strategy that drives our business model is to simplify supply chains by cutting out the middle man and then passing these cost savings onto Asda customers.

“We have had a hugely successful partnership with Max Smith-Hilliard over the last five years which has driven significant savings and created a world-class business which we are proud to be bringing into the IPL family.

‘Run our protein division’ 

“Max has worked hard to build these businesses and he will therefore join IPL to run our protein division.”

Forza, based in Normanton, produces cooked meats and Kober, based in Cleckheaton, produces bacon, steaks and joints.

Since Asda invested in the companies three years ago they have both have enjoyed consistent revenue growth , according to Julie Palmer from Begbies Traynor.

“Relatively recent acquisitions such as Kober and Forza demonstrate Asda’s long-term strategy of ‘cutting out the middle man’,” she told FoodManufacture in July.

The deal is likely to reignite the debate over retailers owning manufacturing facilities. City analysts have been divided on Morrisons’ heavy investment in food manufacturing.  

Julian Wild, head of the food team at Rollits, has said Morrisons must sell the company’s manufacturing facilities  and focus on retail in order to thrive. 

But Shore Capital analysts Clive Black and Darren Shirley advised the retailer to make more of its food manufacturing capabilities and turn them into a “weapon”.  

IPL, which was acquired by Asda in 2009, sources products for Asda customers and builds direct relationships with producers to simplify the supply chain. 

Meat companies at a glance

Forza AW – Turnover exceeded £300M, achieving a year-on-year increase of 9.3%, in 2014.

Kober – Turnover rose by £1.4M to £140.9M in 2014. There was a small fall in volume year-on-year.