Weekly Roundup: Iberchem completes acquisitions of Flavor Inn and Duomei, FAO Food Price Index rises for fourth month

07 Feb 2020 --- This week in acquisition news, the Iberchem Group completed the acquisition of Flavor Inn Corporation and Duomei, two flavor companies located in Malaysia and China respectively, while Constellation Brands acquired a minority stake in Press Premium Alcohol Seltzer. Meanwhile, FoodDrinkIreland (FDI) welcomed a €200 million (US$219 million) capital investment scheme, in the same week the Ibec group that represents the sector also said that any future trading relationship with the UK must be underpinned by a comprehensive trade deal with no tariffs. World food prices rose for the fourth consecutive month in January, according to the Food and Agriculture Organization (FAO) Food Price Index, and Bowman Ingredients revealed an £8 million (US$10.3 million) investment in a new European manufacturing facility.

In brief: Business and acquisitions 
The Iberchem Group has completed the acquisition of Flavor Inn Corporation and Duomei. The transactions come as the latest effort in the group’s merger and acquisition strategy initiated last year with the purchase of South Africa’s Versachem. The company also announced financial results for the full year ended December 31, 2019. Despite being amid the aftermath of the raw material crisis that shook the food industry in 2018, the Spanish group closed the year outperforming the initial objectives set out in its annual budget. The company reported net revenues of €174 million (US$190 million), representing a net increase of 19 percent. 

Barentz International and Matco Foods have started a new joint venture in Pakistan, following an agreement between both parties. The aim of the new activity is to better serve the rapidly growing Pakistani food processing market with a target group of 200 million citizens. Matco Foods has built up an extended network within the Pakistan local food industry and Barentz offers a high-quality ingredients portfolio within the global life science markets. Barentz Pakistan will primarily focus on the markets for human nutrition and pharmaceutical products. 

Ardent Mills has revealed its intention to further invest in specialty grain capabilities and The Annex by Ardent Mills (The Annex) by purchasing Andean Naturals, Inc.’s quinoa sourcing, cleaning and packaging operation in Yuba City, California (US). The purchase is expected to be finalized in mid-February. Yuba City will be Ardent Mills’ first gluten-free sourcing and cleaning facility with the ability to expand to additional grains. This important milestone for The Annex comes shortly after the acquisition of an organic grain elevator in Oregon, as well as the Denver RiNo investment to clean and pack specialty grains. 

Through Constellation Brands Ventures’ “Focus on Female Founders” program, Constellation has acquired a minority stake in Press Premium Alcohol Seltzer. Focus on Female Founders supports the advancement of women within Constellation and within the industry through meaningful investments in female-founded and female-led businesses doing disruptive and innovative work across beverage alcohol and adjacent categories. As an independent, woman-led and co-owned brand made of natural ingredients, this quality premium seltzer fits Constellation’s Focus on Female Founders program and the company’s overall high-end strategy. Terms of the transaction were not disclosed. 

FDI, the Ibec group representing the food and drink sector, has welcomed the announcement by the European Commission of State aid approval for a €200 million (US$219 million) capital investment scheme in agri-food processing and marketing. Paul Kelly, FDI Director, says: “FDI has repeatedly called for exceptional state aid support as we face the likelihood of a hard and disruptive Brexit, and a fracture of the Single Market. The Irish agri-food and drink sector is uniquely exposed, presenting a compelling case to minimize the economic fallout and job losses. The focus must be on maintaining markets in the UK, developing other markets and ensuring that in the domestic market, companies remain competitive against imports.”

In the same week, FDI also said that any future trading relationship with the UK must be underpinned by a comprehensive trade deal with no tariffs, no trade and customs fees/charges and no quotas on our food and drink trade. “With €4.5 billion of Irish exports to the UK and substantial imports of raw material and intermediates, our integrated supply chains would be damaged not just by tariffs but also by regulatory divergence. Regulatory divergence is likely to have the largest economic impact in any comprehensive and balanced Free Trade Agreement reached under the Revised Political Declaration,” Kelly says. “The transition period also needs to be of sufficient length for businesses to plan and prepare for any new FTA arrangements and avoid cliff edges. We cannot allow the final months of 2020 to descend in uncertainty and substantial business costs.”

World food prices rose for the fourth consecutive month in January. The FAO Food Price Index averaged 182.5 points during the month, up 0.7 percent from December and 11.3 percent higher than the same month a year earlier. Vegetable oils, sugar, and wheat were the chief drivers of the index, which tracks monthly changes in the international prices of commonly-traded food commodities. 

Food coatings specialist Bowman Ingredients has announced an £8 million (US$10.3 million) investment in a new European manufacturing facility. The UK business is expanding global production to meet increased demand and serve its growing customer base of food manufacturers across Europe. The purpose-built manufacturing facility will be located in Wroclaw, Poland. It will feature a state-of-the-art blending plant, R&D facility, customer presentation suite, and warehousing, mirroring the standards and capabilities of Bowman Ingredients’ UK site. The new manufacturing facility is due to be operational from the end of March 2020, ready to service both new and existing customers.

By Elizabeth Green