Premier Foods has confirmed reports that it is in talks with US supermarket chain Wal-Mart in a bid to launch its Power Brands on the US market.
A report emerged this week on This is Money that Britain’s largest food group is planning to join forces with US food manufacturer Hain Celestial and Japanese manufacturer Mizkan in a bid to break into the lucrative US market.
Hain Celestial completed its purchase of Premier’s jams and spreads division for £200M last month (October). Also this month, Mizkan confirmed an agreement to buy Premier’s pickles business for £92.5M, with the sale to be completed early next year.
Strength in the States
Premier ceo, Mike Clarke, said: “Internationally, we are having a dialogue with both parties [Hain and Mizkan] about building a strong business in America and how we could help each other in other geographies,” he said.
“We are also talking to a big retailer there. We currently sell some brands abroad but this would be the first time we would be working with partners to add momentum to our international business.
When Clarke took the helm of the troubled food company in 2011, his strategy for recovery was to concentrate on promoting Premier’s eight Power Brands: Hovis, Mr Kipling, Bisto, Oxo, Ambrosia, Batchelors, Sharwood’s and Loyd Grossman.
Premier already sells two of these in the States: Sharwood’s and Ambrosia.
Growing existing business
The lucrative American market would help Premier to grow its remaining business now that it has made sufficient disposals to reduce its debt to the bank’s required levels.
Julian Wild, food group director at legal firm Rollits, recently told FoodManufacture.co.uk that it was now essential for Premier to expand its remaining business to maximise profit and keep shareholders happy.
Wild said: “You can’t just continue disposing of businesses because it’s driving the business backwards.
“Now they [Premier] have satisfied the banks they’ve got to find a way of growing their core business to boost their stock market rating.”
Clarke said: “We can now focus our attention on driving further momentum in our grocery business and unlocking value in bread.”
Premier Foods’ Disposals
- November 2011 – Four Irish brands comprising Chivers, Gateaux, McDonnells and the Erin licence sold to The Boyne Valley Group for £34.7M.
- December 2011 – Brookes Avana sold to 2 Sisters for £30M.
- June 2012 – Sarson’s vinegars and pickles business sold to Mizkan for £41M.
- July 2012– Elephant Atta ethnic flour business sold to Westmill Foods for £34M.
- August 2012 – Jams and spreads business sold to Hain Celestial for £200M.
- October 2012 – Pickles business sold to Mizkan for £92.5M.