The Irish own-label food manufacturer was described as a “potent force” in the UK chilled prepared food market with "deepening and strengthening foundations in the US too”, by Shore Capital analysts Clive Black and Darren Shirley. In the US, they said “a firm basis for long-term growth seems to have been created”.
Black and Shirley attributed Greencore’s achievements mainly to its ceo Patrick Coveney and finance director Alan Williams. They expected them to continue to deliver plenty of progress in the future.
Coveney was voted Personality of the Year in the Food Manufacture Excellence Awards in 2014 for his leadership of Greencore.
“Greencore’s strategy in the UK has quite simply been to develop its product proposition and deepen its relationships with its core customers,” said Black and Shirley.
“In this respect the group has been blessed with a product portfolio that is in the right place at the right time but one that it has also shaped and evolved.”
They pointed in particular to the company’s activities in chilled convenience and ‘food-to-go’ markets, the latter now representing nearly half of its sales.
Central to the progress in the UK sandwich category, had been Greencore’s relationship with Marks & Spencer (M&S), where the group would shortly commission its second Northampton facility, they added. “M&S is expected by us to sustain space growth in the UK for the medium-term through owned and franchised stores, so supporting sales for Greencore,” they said.
Black & Shirley also noted that Greencore had benefitted from the rationalisation of stock-keeping units by the major multiples, together with the “rejuvenation” at the Co-op.
“We sense that further concentration of production by the retailers plays into its hands of Greencore, alongside a number of leading players supplying the UK supermarket space,” they claimed.
Evolution in the US
Greencore has been in the US since 2008, when it acquired Home Made Brand Foods.
Black and Shirley applauded Greencore’s “materially evolved” US strategy, focusing on foodservice and a frozen capability through the acquisitions of HC Schau, Lettieri’s and Marketfare Foods. And remarked that its business across the pond was “now firmly progressing”.
“The sales potential and production base in the USA are now material, year-end (September) annualised sales are expected to be c$400M, including a first contribution from the new build Seattle, Washington state plant coming on-stream mid-year; year-end capacity is likely to be c$700M,” they predicted.
They noted that two core customers – 7Eleven and Starbucks – had been the catalyst for the revitalised US strategy by Greencore, which “promises a growing profit contribution through the rest of this decade”.
Black and Shirley anticipate further progress in the US as maturing plants delivered profitable contributions, citing in particular Greencore’s plants at Fredericksburg in Virginia, Salt Lake City in Utah, and its centre at Danvers in Massachusetts. (See the infographic below showing all Greencore’s US plants – click map to enlarge).
Further US expansion
“We would not be surprised to see Greencore seek to build out its network further still in what remains a remarkably sub-regional country, reflecting its sheer size and diversity,” they said.
“In terms of geography, we will watch and wait with interest but with the new Seattle plant set to be commissioned quite soon, it is our expectation that it will not be the only plant on the West Coast in due course to be operated by the company.”
They predicted that California could be a focus for Greencore’s attention next, with Texas another possibility