INTERVIEW: Kerry Eyes Continental European Growth and Major Acquisitions
02 May 2017 --- Kerry is eyeing dynamic organic growth opportunities in continental Europe, as well as a major global acquisition in the next 18 months. Despite the challenges that Brexit presents for a company with a massive UK footprint, Kerry has orchestrated scenario planning and is prepared for the headwinds that the UK exit from the EU will bring. This is according to the Kerry Group’s new Taste and Nutrition Division President and CEO of Europe, Malcolm Sheil, who has just been permanently appointed to the role, following several months of serving as Interim President.
In a detailed interview with FoodIngredientsFirst, Sheil confirmed aggressive organic expansion plans in continental Europe that go: “from Portugal to Russia.” “From an organic standpoint a lot of our European business has historically been UK and Ireland based,” he notes. “But now we are increasingly looking to the continent; all the way from getting our local application labs on-stream and sales forces on the ground. We are looking at it from the standpoint of footprint to supply those customers as well,” Sheil adds.
He notes that Kerry already has several factories in mainland Europe at the moment and is quite well positioned between Spain, Italy, France, Germany, Italy and Poland. They are also currently building a site in Russia. “But we definitely see that we will be putting more sites on the ground for both applications and production, in the following months and years,” he adds.
Kerry Group today is a world leader in Taste & Nutrition serving the food, beverage and pharmaceutical industries and a leading consumer foods processing and marketing organization in selected EU markets. With sales to over 140 countries worldwide, Kerry has grown to become a highly successful public company, having achieved sustained profitable growth with current annualized sales in excess of €6 billion. Launched as a public company in 1986, the market capitalization of the Group has grown to the current level of approximately €14 billion. Kerry Group now employs over 23,000 people throughout its worldwide activities and operations. Photo Shows (L-R):
Olivier Picard, GM Russia; Michele Van Der Walt, VP Commercial Sales, UK & Ireland; Patrick Cooney, CFO, Kerry Europe; Mike Doyle, COO, Kerry Europe; Malcolm Sheil, President & CEO, Kerry Europe; Catherine Keogh, VP Strategic Marketing & Business Planning; Oliver Kelly, VP Global Accounts; Juan Aguiriano, VP Commercial Sales, Europe; Kate Brosnan, VP Human Resources; Philip O’Connor, Business President, Meat; Martin Stiegler, VP Food & Beverage Systems.
Kerry has historically grown through acquisitions and growth from this regard will continue too. “We will always look at acquisitions to take us into growth areas where we are not yet present, or to accelerate our growth in them. We are definitely active in this regard, but it takes two to tango and somebody must be willing to sell,” Sheil notes. “It is definitely a major part of our plan going forward and we would definitely like to see some activity going forward into later-2017 and into 2018,” he explains.
An acquisition would likely be of a company with a global footprint that can easily to be integrated into the organization. “We have a very healthy balance sheet. We have gone through the ‘Kerry Connect’ process of making the organization from an internal standpoint, a global organization. So we feel very comfortable now that we could take in a major acquisition, both system-wise and people/structure/organization-wise and really get the value out of a major acquisition at this point. Most of these companies would have footprints across the globe,” he adds.
The UK accounts for a significant part of Kerry’s business, with the company operating as the largest food & flavoring systems business in the UK. But Sheil stresses that increased moves in continental Europe would not result in the company moving any of their facilities away from the UK as a result of Brexit.
“We do see good opportunities in the UK as well and we are not moving things elsewhere. From a production standpoint, we need to get things closer on the ground and deliver on opportunities in mainland Europe,” he notes, as the company evolves from being quite UK and Ireland-centric. “We have been a bit more inward looking than we could have been. We really have a solid base now to grow our business organically, so now we can leverage with our customers to help them grow. It’s a dynamic food & beverage marketplace. This is where we strive so that we can move with the marketplace, whether from a regional, trends or delivery standpoint,” he says.
Brexit is obviously a major concern for the company, with scenario work at play. “When it comes to Brexit, we obviously have quite a large footprint in the UK. We have a global supply chain as well and are very used to sourcing different raw materials from around the world,” Sheil says.
“We have done a huge amount of scenario work on our customers’ current business and how to help them through this period of uncertainty and post-Brexit. We are confident that we are very well positioned to be able to maneuver as required, depending on what the outcome of Brexit is. That is both for supplying back into the UK and for manufacturing in the UK and exporting back into mainland Europe,” he adds.
Scenario planning is customer specific, but there are general areas to consider. “We would be looking at it from raw material supply standpoint and as to whether WTO [regulations would] be applicable? Will there be a continuation of the current tariff quotes between mainland Europe and the UK? Will there be different tariffs between the North and Republic of Ireland?” he notes.
Kerry has also been looking at inward processing requirements between different countries. “We have been looking at if the UK adopts a NAFTA style agreement with other countries, how would that work? We are leveraging our global knowledge on how regulatory works from an import/export standpoint and also from a labeling perspective, in terms of regulation. We know European legislation quite well, but we also know North American and APAC regulation quite well. So if something were to change, we could work out what it may look out,” he notes.
From a company standpoint, Sheil admits that the ideal [and unlikely] scenario would be that post-Brexit, free trade continues, regulation doesn’t change and labeling stays the same. “That is what we are supporting with the Food and Drink Federation in the UK etc., but we are saying that we need to ready in terms of what comes next and that we are quite comfortable in whatever the scenarios are. It will obviously cause work, but we are used to working hard and not afraid of it,” he quips.
Malcolm Sheil joined Kerry as a Graduate Accountant from Dublin City University in 1988. He spent three years in the U.S. as Plant Controller and Corporate Commercial Controller, before his promotion to Finance Director for Kerry Mexico and then to Finance Director for Kerry South America in 1998. In 2003, Malcolm was appointed President of Kerry’s LATAM business and served in that role for 13 years. He returned to Ireland recently, after being appointed President & CEO of Kerry Europe.
Commenting on his appointment, Sheil said: “It is a very exciting time for our industry as we continue to respond to and provide solutions to the evolving demands and requirements of consumers across Europe. Our food and beverage heritage has helped position us strongly as our technologies and systems allow us to create customized solutions for our customers. The taste and nutrition of products are intricately linked and we will continue to invest heavily in research and development to ensure that we can bring tasty and nutritious solutions to our growing client base.”
Innovation is promised at the company. For example, Kerry has leveraged its half a century of dairy protein expertise, and combined it with cutting edge nutritional science to create ProDiem, a complementary combination of plant proteins including pea, rice and oat to improve the protein digestibility-corrected amino acid score (PDCAAS), delivering a solution with a complete essential amino acid profile. The PDCAAS score has been independently verified by a leading laboratory, confirming that with a score of as high as 1.0 it matches that of the best animal protein sources.
In creating ProDiem, Kerry has successfully pushed past the limitations of traditional plant based proteins, providing a plant based protein that is optimized for nutrition, texture and taste. ProDiem is a great option for soy-free, non-dairy and vegan protein and is available to boost the nutritional content of beverages, bar and snack applications.
ProDiem proteins are also available as part of Kerry’s specialist Total Novel Texture (TNT) range, which is specifically designed for nutritional bar and snack applications. A common problem for protein fortified bars is hardening over time, however TNT offers the significant value of greatly reducing bar hardening over shelf life as well as enhancing the textural attributes of bars and improving the overall taste.
The product will be shown at Vitafoods Europe in Geneva next week.
By Robin Wyers
