US food companies advance and retreat in Europe
Curious, three of the US's biggest food companies have been involved in deals in the European market over recent weeks.
Kraft buys back
Kraft Foods, a division of Altria, announced that it will acquire part of the UK's United Biscuits. Kraft currently owns 25% of United Biscuits' stock. The deal is with around $1.2 billion.
Kraft will get access to a number of brands, including its own Ritz crackers and Oreos, which have been sold by United Biscuits in Europe, Africa, and the Middle East. Kraft, which recently replaced its CEO, has trouble innovating for years, and has very few new successful brands to build for the future. The company has been astute at repackaging existing brands, such as Oreos and Ritz, for example.
This deal also transfers United Biscuits Spanish and Portuguese operations to Kraft. The company will have seven of the top ten biscuit (cookies and crackers) brands in Spain, and almost 40% market share in Portugal. Brands include Fontaneda, Filipinos, Artiach, Chiquilin and Triunfo.
United Brands was taken private in 2000 by a consortium of equity companies and Kraft. Kraft's exit apparently will be followed by the sell off of much of the rest of the company, possibly to the UK's Premier Foods and an equity partner.
The game of pickup and discards goes on.
Campbell to sell off British brands
US soup maker is in talks with the same Premier Foods to sell off a number of British grocery brands, including Homepride sauces, Oxo gravy, Fray Bentos meat pies. Premier Foods is reportedly building a specialty in uniquely British foods.
Heinz sells of some European properties
In an attempt to consolidate its European operations, Heinz has started selling units. It sold its Linda McCartney's frozen vegetarian dinner company to Hain Celestial. It sold UK frozen fish company to an equity group. Other frozen food and seafood assets across Europe are on the block. Heinz intends to focus on key products like its canned beans and soup, as well as ketchup and other condiments.
Heinz is in big trouble, according to Brand Republic ("FMCG: The trouble with Heinz", 6//14/08) it is in the throes of an invested-led shakeup. The problem, as with Kraft and Campbell is innovation:
Risk-aversion runs deep within the company, says {one analyst]. 'There is no culture of new product development. The problem is that while there are only one or two people who can sign off on such activity, the power of veto is widespread. It took me two years to go from idea to launch - by that time the market had moved on, the need for it had passed.'… Heinz's culture means that the company has been more likely to cost-cut, rather than innovate its way out of a crisis. Inevitably, this strategy fails when rivals become more proactive.
These words could be used to describe all three companies, all of whom are struggling with innovation as they seek to grow and keep stockholders happy.
9:04:00 PM 
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