F&d business europe may june 2018 by Colin Murphy

May/June 2018

2018

Food & Drink Business Website:

www.fdbusiness.com

C o n t e n t s

- 30 B AKERY

- 3 M ERGERS & A CQUISITIONS

iba 2018 - stronghold of the international baking industry.

Coverage of British and international deals.

- 33 D AIRY PAGE 3

Giampaolo Schiratti, CEO, Biscuit International.

- 7 C OVER S TORY

Valio returns to growth.

P AGE 17

Ronald Kers, new CEO, 2 Sisters Food Group.

- 48 N AUTRACEUTICALS Success of Vitafoods Europe reflects strength of nutraceutical industry.

The Top 100 food and drink manufacturers in the UK and Ireland.

PAGE 23

R EGULARS Bottling & Packaging. . . . . . . 20, 21, 25 & 26

- 17 P OULTRY Major changes in UK and Irish Poultry.

PAGE 7

Control & Automation . . . . . . . . . . . . . . . 36

Nitin Paranjpe, President, Unilever Foods and Refreshment.

IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Processing & Manufacturing . . . . . . 39 & 40 Materials & Ingredients . . . . . . . . . . . . 41-47

Indra Nooyi, CEO, PepsiCo.

PAGE 27

Jean-Francois van Boxmeer, CEO, Heineken.

Managing Director: Colin Murphy Editor: Mike Rohan Group Operations Manager: Sylvia McCarthy

- 23 B EVERAGES & S NACKS Performance with purpose at PepsiCo.

PAGE 9

George Weston, CEO, Associated British Foods.

Advertising: Ian Stewart, Rachel Howard and Tony Lambert Production Manager: Sylvia McCarthy

Food & Drink Business Europe is published by Premier Publishing Limited, 51 Parkwest Enterprise Centre, Nangor Road, Dublin 12. Tel: + 353 1 612 0880 Fax: + 353 1 612 0881 E-Mail: info@prempub.com Website: www.fdbusiness.com Premier Publishing Limited can accept no responsibility for the accuracy of contributors’ articles or statements appearing in this magazine. Any views or opinions expressed are not necessarily those of Premier Publishing and its Directors. No responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of the material in this publication can be accepted by the authors, contributors, editor and publisher. A reader should access separate advice when acting on specific editorial in this publication!

- 27 B REWING Continued revenue growth and improved operating performance at Heineken.

PAGE 15

Shelagh Hancock, CEO, First Milk.

Design, Origination and Separations by Fullpoint Design (057) 8680873. (086) 1573510 Printed by W&G Baird. Annual Subscription (UK and Ireland) £95 Overseas Subscription £115

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

M E E R R G G E E R R S S M Nomad Foods to Acquire Aunt Bessie’s For £210 Million Fresh from completing its acquisition of the Goodfella’s Pizza business from Boparan Holdings for £200 million, Nomad Foods, a leading UKbased international frozen foods group, has now agreed to purchase Aunt Bessie’s from William Jackson & Son for approximately £210 million. For its fiscal year ended April 2018, Aunt Bessie’s generated revenues and adjusted EBITDA of approximately Eur123 million and Eur23 million, respectively. The transaction is expected to be completed during the

third quarter of 2018, subject to certain closing conditions including obtaining any necessary regulatory approvals. The Aunt Bessie’s brand holds number one and number two market share positions, respectively, within frozen Yorkshire puddings and frozen potatoes, which combine to represent the majority of its revenues. The acquisition includes a production facility in Hull, England. The acquisition of Aunt Bessie’s is expected to further develop Nomad Foods’ portfolio in the UK, a strategically important market. The combination of the Aunt Bessie’s, Birds Eye and Goodfella’s brands is expected to result in a highly complementary portfolio with significantly enhanced scale, greater diversification and more resources to accelerate category growth. Noam Gottesman, co-chairman and founder of Nomad Foods, says: “The acquisition of Aunt Bessie’s illustrates the power of our value creation model which is fuelled by

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A C C Q Q U U II S S II T T II O O N N S S A

organic revenue growth, strong free cash flow and disciplined M&A. Similar to Goodfella’s Pizza, which we acquired earlier this year, Aunt Bessie’s is expected to be immediately accretive to earnings while providing complementary category exposure, synergy opportunities and new avenues for growth.”

Biscuit International Buys Northumbrian Fine Foods Biscuit International, one of Europe’s leading players in the private label sweet biscuit market owning Poult in France, Banketgroep in the Netherlands and A&W in Germany, has acquired Northumbrian Fine Foods (NFF), the UK’s leading gluten and milkfree biscuit manufacturer, from CriSeren Foods. Created in 1936, NFF has experienced strong growth in recent years with an annual turnover exceeding £27 million in 2017. As well as supplying supermarket own-label biscuits, NFF also owns the Prewett’s brand. This acquisition is in line with Biscuit International’s strategy to continue expanding its products offering and geographical footprint whilst addressing growing consumption trends in Europe such as organic and free-from products. According to Euromonitor, gluten and milk-free products are expected to generate £8.7 billion in sales in Europe by 2021, a 60% increase compared to £5.4 billion in 2016 that is increasingly driven by change in consumers’ lifestyles. The acquisition of NFF will allow Biscuit International to supply a wider offering to its European clients, whilst significantly reinforcing its presence in the United Kingdom. Senior management at NFF will remain unchanged, with Biscuit International benefiting from the team’s experience to help drive growth in the European market. Giampaolo Schiratti, chief executive of Biscuit International, says: “The European

free-from market is very dynamic and represents a real opportunity for growth. NFF’s expertise in gluten and milk-free biscuit production was a major attraction to us and the business provides an excellent fit into our portfolio of companies. We aim to further develop the business through innovation and creating exciting new products for the UK and European markets, and we anticipate this acquisition will lead our group to become Europe’s largest producer of gluten and milk-free sweet private label biscuits and strengthening the partnership with our customers, whether they are retailers or industrials.” Biscuit International produces 100,000 tons of biscuits and waffles from twelve factories in Europe. Biscuit International generated sales of Eur300 million in 2017, half of which were outside France, and employs 1,300 people. Biscuit International is owned by Qualium Investissement, a prominent player in the French private equity market and a limited number of French and international institutional investors together with the company’s management team.

manufacturer based in Wales. The acquisition comes in the context of increasing consumer demand for bottled water in the UK and will provide new opportunities to deliver growth in one of Nestlé’s core categories.

Princes Gate is the eighth largest manufacturer of bottled water in the UK, a market of £3.7 billion that has grown by 8% each year for the past five years. This acquisition will strengthen Nestlé Waters’ position in the UK and allow the business to meet the increasing demand for bottled water. One of the founders, David Jones, will keep a minority stake in the company. Nestlé Waters is best known in the UK for bottling Buxton Mineral Water and Nestlé Pure Life to consumers nationwide. In 2012, the business moved to Waterswallows, just outside of Buxton town centre, investing £35 million in a state-of-the-art bottling plant producing one of the lightest weight bottle ranges in the UK.

PepsiCo Expands BetterFor-You Portfolio into Baked Fruit and Vegetable Snacks

Giampaolo Schiratti, chief executive of Biscuit International.

Nestlé Acquires Majority Share in Welsh Spring Water Business Nestlé Waters has acquired a majority stake in Princes Gate Spring Water, a bottled water

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

PepsiCo has agreed to acquire Bare Foods Co (trading as Bare Snacks), a US-based maker of baked fruit and vegetable snacks. The transaction will expand PepsiCo’s snacking portfolio and further deliver on its Performance with Purpose vision to offer consumers more positive nutrition options. Bare Snacks was founded in 2001 by a family-owned organic apple farm in Washington, which began selling packaged baked apple chips in local farmers’ markets. Under its current leadership team, it has expanded steadily to become the leader in

M E E R R G G E E R R S S M apple, banana and coconut snacks. It has recently expanded into vegetable chips and offers the industry’s broadest assortment of baked crunchy fruit and vegetable chips. Bare products are made from simple ingredients that are baked, not fried.

They are Non GMO Project verified, feature clean labels and are sold online and in natural and conventional retail channels across the United States. Upon closing, Bare Snacks will continue to operate independently from its headquarters in San Francisco with its leadership reporting into Frito-Lay North America, a division of PepsiCo.

Heineken Expands in Central America Heineken has acquired a minority stake in Belize Brewing Company, Belize's market leader in beer and a subsidiary of Bowen & Bowen, which has been an importer and distributor of the global brewer’s brands including Heineken, Amstel and Red Stripe in Belize since 2016. The financial terms of the deal were not disclosed.

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and number two manufacturer of bagged snacks. It produces some of Britain’s most iconic snack brands including McCoy’s, Hula Hoops, Butterkist, KP Nuts, POMBEAR, Skips, Space Raiders, Discos, Nik Naks, Wheat Crunchies, Roysters, Brannigans and Frisps. Mark Thorpe, chief executiv of KP Snacks, says: “Tyrrells is an iconic brand with a big personality that has performed well both in the UK and international markets. Subject to completion of the deal, we look forward to welcoming our new Tyrrells colleagues into the business. This acquisition is a fantastic opportunity for us to add premium hand-cooked crisps to the KP business and a brand which further increases our capability in the sharing category. We can now offer our consumers and customers a total savoury snacking category portfolio. I am delighted that Tyrrells will be joining us to help maintain our momentum as the UK’s fastest growing scale snacks manufacturer and also enable us to continue to grow the brand across the international markets.” The transaction is subject to approval by the regulatory authorities.

The Intersnack Group to Acquire Tyrrells The Intersnack Group, one of the leading manufacturers of savoury snacks in Europe, has reached agreement for its KP Snacks business to acquire Tyrrells and its global portfolio of better-for-you, premium snack brands from US-based The Hershey Company for an undisclosed sum. The Tyrrells business includes a head office and two manufacturing sites in the UK, along with US manufacturing capabilities, the Aroma Snacks business in Germany and Yarra Valley Snack Foods in Australia. KP Snacks is the UK’s number one manufacturer of nuts

Mark Thorpe, chief executive of KP Snacks.

Nestlé and Starbucks Bring Together Coffee Brands in $7.15 Billion Deal Nestlé has announced an agreement granting the company perpetual rights to market Starbucks consumer and food-

service products globally, outside of the US company’s coffee shops. This transaction provides Nestlé with a strong platform for continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses. It also allows Nestlé to capture exciting new growth opportunities in the rest of the world with Starbucks premium products. As a complete provider of coffee solutions, Nestlé will accelerate growth in out-of-home

channels. The two companies will work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world. “This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” explains Mark Schneider, chief executive of Nestlé. “With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner.” As part of this transaction, Starbucks will receive an upfront cash payment of US$7.15 billion for a business which generated annual sales of US$2 billion. The transaction does not include the transfer of any fixed assets, which facilitates a smooth and efficient integration. Nestlé expects this business to contribute positively to its earnings per share and organic growth targets as from 2019. Approximately 500 Starbucks employees will join the Nestlé family. The agreement is subject to customary regulatory approval and is expected to close by the end of 2018. The agreement excludes ready-to-drink products and all sales of any products within Starbucks coffee shops.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Mondelez International to Acquire US Biscuit Brand For $500 Million Mondelez International has agreed with The Riverside Company, a global private equity firm, and other shareholders, including founder Kathleen King, to acquire Tate’s Bake Shop for approximately $500 million. Tate’s has been one of the fastest growing biscuit brands in the United States over the last twelve months. The brand’s sales have quadrupled over the past five years. “Tate’s is a great strategic fit that will complement our portfolio of beloved snacks brands,” says Dirk Van de Put, chairman and chief executive of Mondelez International. “With a unique and authentic brand and truly delicious products, this acquisition gives us an attractive entry point into the fast growing premium cookie segment.” The acquisition is subject to customary closing conditions and is expected to close during the summer of 2018.

Dirk Van de Put, chairman and chief executive of Mondelez International.

JAB to Acquire Majority Stake in Pret A Manger JAB, a global investment firm with a proven track record of investing in premium brands, is acquiring Pret A Manger, a leading company in the ready?to?eat food market, from Bridgepoint, an international private equity firm and its majority owner, and other minority shareholders. The transaction is expected to be completed during Summer 2018. Terms of the transaction were not disclosed.

M E R G E R S

A C Q U I S I T I O N S

Pret maintains a strong presence in the UK and boasts a rapidly growing international footprint with a presence in the United States, Hong Kong/China and France. Pret’s sandwiches, salads and wraps are freshly made each day in shop kitchens using quality ingredients. Pret’s offering includes an array of vegetarian or vegan sandwiches and salads, as customer demand for meat-free options continues to increase. The company operates 530 stores worldwide, generating group revenues of £879 million.

Together, JAB Holding Company and JAB Consumer Fund have controlling stakes in Keurig Green Mountain, a leader in the North-American beverage market; Jacobs Douwe Egberts (JDE), the largest pure-play FMCG coffee company in the world; Panera Bread, a leading bakery/cafe company; Peet's Coffee & Tea, a premier specialty coffee and tea company; Caribou Coffee Company, a specialty retailer of high-quality premium coffee products; Einstein Noah Restaurant Group, the leader in the North-American Bagel Category; Krispy Kreme Doughnuts, a global leader in doughnuts and other premium-quality sweet treats; and in Espresso House, the largest branded coffee shop chain in Scandinavia.

Proposed Combination of J Sainsbury and Asda Group

enlarged business within the UK grocery market. Bringing Sainsbury's and Asda together will result in a more competitive and more resilient business that will be better able to invest in price, quality, range and the technology to create more flexible ways for customers to shop. The combination will result in Walmart holding 42% of the issued share capital of the merged business and receiving £2.975 billion in cash (subject to customary completion adjustments), valuing Asda at approximately £7.3 billion on a debt-free, cash-free and pension-free basis. At the time of completion of the combination, Walmart will not hold more than 29.9% of the total voting rights in the combined business. The combination will create one of the UK’s leading grocery, general merchandise and clothing retail groups, with combined revenues of about £51 billion for 2017. It will incorporate a complementary network of more than 2,800 Sainsbury’s, Asda and Argos stores and several of the UK’s most visited retail websites, to create greater choice for customers through more store formats and channels, with a combined 47 million customer transactions per week. The deal is expected to generate net EBITDA synergies, post investments in price, across the enlarged group of at least £500 million. These synergies are comprised largely of buying benefits, opening Argos in Asda stores and operational efficiencies. There are no planned Sainsbury’s or Asda store closures as a result of the combination.

J Sainsbury and Walmart have agreed terms in relation to a proposed combination of Sainsbury’s and Asda Group, a wholly owned subsidiary of Walmart, to create an

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

COVER STORY

The Top 100 Food and Drink Manufacturers in the UK and Ireland Food & Drink Business Europe presents its 23rd annual ranking of the top one hundred food and drink manufacturers in the UK and Ireland, while assessing some of the key corporate developments within the industry during the past twelve months.

ood & Drink Business Europe presents its 23rd annual ranking of the top one hundred food and drink manufacturers in the UK and Ireland, while assessing some of the key corporate developments within the industry during the past twelve months. Ranked according to their most recently available annual turnover figures, the 2018 Top 100 incorporates companies ranging in scale from Unilever’s Foods & Refreshment business, which achieved global sales of Eur22.44 billion (£19.75 billion) in 2017, down to Nichols, the UK-based soft drinks producer and owner of the Vimto brand, with a turnover of £132.8 million. Third ranked Diageo is the largest beverages group. Companies with annual turnovers in excess of £1 billion occupy the top 33 places within the 2018 league table. £1 Billion-plus Deals Top 100 companies were involved in three acquisition deals worth over £1 billion during the past year. Moy Park (ranked

Nitin Paranjpe, President of Unilever’s Foods and Refreshment business, which heads the Top 100.

middle-market brands in North America, including Canadian whisky Seagrams VO, cinnamon schnapps Goldschlager, Myers’s rum, Popov vodka and Romana sambuca. Such a sale could net Diageo up to $1 billion. Cott Beverages (ranked 75th) – the UK operation of Canadian drinks group Cott Corporation – recently changed ownership in a deal worth US$1.25 billion (Eur1.1 billion) whereby Refresco, the Netherlands-based independent bottler of beverages for retailers and A-brands in Europe and the US, acquired Cott’s bottling activities. Cott’s bottling activities generated revenues of US$1.7 billion in 2016. The UK operations, which represent around 30% of Cott’s business, are being integrated into Refresco Europe.

Ivan Menezes, chief executive of Diageo. Ranked 3rd, Diageo is the leading drinks company in the

€6.8 Billion Disposal However, by far the biggest deal was Unilever’s disposal of its spreads business for Eur6.8 billion to KKR, a leading US-

Top 100.

23rd), Northern Ireland’s largest food company and one of largest poultry producers in the UK and Europe, was sold by Brazil-based JBS, the world’s largest meat processing company, to Pilgrim’s Pride Corporation of the US for approximately $1.3 billion (£1.0 billion, Eur1.1 billion). See ‘Major Changes in UK and Irish Poultry’ in this issue. In beverages, Diageo acquired Casamigos, the fastest growing super-premium tequila brand in the US, for $1 billion. The deal provides an opportunity for Diageo to strengthen its participation in the fast growing tequila category, as well as expand the brand internationally. In line with its strategy of focusing on the premium segment, Diageo is also reported to be considering disposing of a number of its FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Marnie Millard, chief executive of Nichols, the 100th ranked company in the Top 100.

ture by moving from two legal entities Unilever NV and Unilever PlC, into a single entity incorporated in the Netherlands. Unilever will continue to be listed in London, Amsterdam and New York. Unilever is also evolving its structure to be based on three divisions Beauty & Personal Care, Home Care, and Foods & Refreshment. Headquartered in Rotterdam, Unilever’s newly combined Foods & Refreshment business is headed

by Nitin Paranjpe. Goodfella’s and Aunt Bessie’s Another Top 100 company, Nomad Foods (ranked 17th), the leading frozen foods company in Western Europe with brands including Birds Eye, Findus and Iglo, announced two deals with a combined value of £410 million in the past twelve months. Fresh from completing its £200 million acquisition of the

George Weston, chief executive of Associated British Foods, which is ranked 2nd In the Top 100.

based international investment firm. Unilever’s spreads business includes brands such as Becel, Flora, Country Crock, Blue Band, I Can’t Believe It’s Not Butter, Rama and ProActiv. Operating across 66 countries around the world, the business had a turnover of Eur3.03 billion and assets of Eur1.108 billion in 2016. During the past twelve months, Unilever also completed a number of bolt-on acquisitions, including Mae Terra organic food in Brazil, Pukka Herbs organic herbal tea in the UK, the TAZO specialty tea brand in the US for $384 million, and Betty Ice, the Romanian icecream producer. Having exited the spreads business, Unilever is now focusing on completing the integration of its Foods & Refreshment businesses. Unilever is currently in the process of transforming into a simpler, more agile and more focused organisation. This involves simplifying the corporate struc-

Company 1 (1) Unilever (Foods & Refreshment) 2 (2) Associated British Foods 3 (3) Diageo 4 (4) Kerry Group 5 (-) Total Produce 6 (5) Boparan Holdings

Turnover £19.75b £15.36b £12.05b £5.63b £3.78b £3.29b

Profit £3.2b £1.6b £3.5b £539.7m £63.8m -£37.7m

7 (6) Tate & Lyle 8 (9) ABP Food Group 9 (7) Arla Foods UK

£2.71b £2.46 £2.35b

£286. End £23.9m

10 (18) Greencore 11 (10) Greene King 12 (8) Glanbia 13 (21) Muller UK & Ireland Group

£2.32b £2.22b £2.10b £1.90b

£12.4m £184.9m £202.1m -£114.4m

£1.85b £1.82b

£25.6m £39.0m

Irish dairy co-ops Independent

£1.75b

£217.2m

17 (14) Nomad Foods 18 (13) Mondelez UK

£1.72b £1.65b

£120.6m £21.9m

19 (20) Britvic plc 20 (15) Nestle UK

£1.54b £1.53b

£111.6m £253.6m

Coca-Cola European Partners Nomad Foods Mondelez International, US plc Nestle, Switzerland

14 (16) Ornua (formerly Irish Dairy Board) 15 (12) Bakkavor Group 16 (11) Coca-Cola European Partners GB

Edmond Scanlon, chief executive of Kerry Group. Ranked 4th, Kerry is the largest Irish company in the Top 100.

Ownership/Status plc plc plc Irish co-op/plc Irish plc Incorporating 2 Sisters Food Products – Independent 0mplc Irish independent Arla Foods, Denmark/Sweden plc plc Irish co-op/plc Alois Muller, Germany

Source: Company accounts, DueDil, Irish Times. Eur = £0.88. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

ket. Total Produce, Europe’s leading fresh produce company and ranked 5th in the Top 100, also completed two major deals worth over $300 million during the year (see Panel). M&A Activity Merger and acquisition activity within the overall UK and Irish food and drinks industry remains high. According to

research by business and financial advisory firm Grant Thornton UK LLP, overall disclosed deal value for 2017 in the UK and Irish food and beverage sector reached £21.4 billion, significantly higher than £8.4 billion in 2016 and £10.8 billion in 2015 (excluding the £71 billion SABMiller deal). Grant Thornton UK LLP also reports an ongoing, high level of cross border activity with a number of European and

Nick Hampton is the new chief executive of Tate & Lyle (ranked 7th).

Goodfella’s Pizza business from Boparan Holdings, Nomad Foods has just agreed to acquire Aunt Bessie’s from William Jackson & Son for approximately £210 million. The Goodfella’s brand holds number one and number two market share positions within the frozen pizza category in Ireland and the UK respectively. The acquisition also includes the San Marco brand and two frozen pizza manufacturing facilities which provide a foundation for future expansion in the category. The Aunt Bessie’s brand holds number one and number two market share positions, respectively, within the UK frozen Yorkshire puddings and frozen potatoes sectors. As a brand closely identified with roast dinners, Aunt Bessie’s will expand Nomad Foods’ portfolio into this major eating occasion. The acquisition includes a production facility in Hull, England. The acquisition of Aunt Bessie’s will also further develop Nomad Foods’ portfolio in the UK, a strategically important mar-

Company 21 (17) Princes

Turnover £1.51b

Profit £28.7m

22 (24) Cranswick 23 (19) Moy Park 24 (27) Hilton Food Group 25 (22) MolsonCoors Brewing (UK)

£1.46b £1.40b £1.36b £1.35b

£92.4m £59.7m £37.4m £79.4m

26 (23) Wm Morrison Produce

£1.31b

£70.4m

27 (25) AB InBev UK

£1.30b

-£2.6m

28 (26) Heineken UK

£1.14b

-£24.0m

29 (32) Chivas Bros

£1.07b

£319.3m

30 (35) William Grant & Sons 31 (28) Tulip

£1.06b £1.05b

£260.2m -£21.6m

£1.01b £1.00bE £991.1m £960.0m

£100.3m nd £38.0m £71.9m

Confectionery UK 37 (33) United Biscuits (UK)

£884.9m £868.2m

£139.1m £100.4m

38 (42) Dairygold Co-op 39 (38) Premier Foods 40 (39) Dunbia

£849.6m £819.2m £768.3m

£28.5m £20.9m £10.8m

32 (29) Marston’s 33 (30) Dawn Meats Group 34 (31) Samworth Bros 35 (34) Greggs 36 (-) Mars Wrigley

Siobhan Talbot, group managing director of Glanbia (ranked 12th).

Ownership/Status Mitsubishi, Japan plc Pilgrim’s Pride, US plc Molson Coors Brewing, US Wm Morrison Supermarkets plc Anheuser-Busch InBev, Belgium Heineken, Netherlands Pernod Ricard, France Independent Danish Crown, Denmark plc Irish independent Independent plc Mars, US Yildiz Holding, Turkey Irish co-op plc Independent

Source: Company accounts, DueDil, Irish Times. Eur = £0.88. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

um snack brands from US-based The Hershey Company for an undisclosed sum. KP Snacks had earlier purchased Butterkist, the popcorn business of Tangerine Confectionery. KP Snacks is the UK’s number one manufacturer of nuts and number two manufacturer of bagged snacks. Private equity investment featured in 22% of deals in 2017, the highest level in the sector since Grant Thornton UK LLP started tracking the data in 2007. According to Grant Thornton UK LLP, the uncertainty over Brexit is increasing

the appetite of overseas buyers in establishing or protecting a UK presence. The weakness of Sterling since the Brexit vote also means that UK assets are now 20% cheaper. Changes in Leadership A number of Top 20 companies changed their leadership during the past twelve months. Stefano Agostini, previously head of Nestlé Waters Italy, is now the chief executive of Nestlé UK & Ireland, having succeeded Dame Fiona Kendrick, who remains as chairman providing strategic

John Jordan , chief executive designate of Ornua (ranked 14th).

US-based firms showing an interest in acquiring UK and Irish brands, while private equity involvement is also strong. Of the 163 deals in 2017 involving UK/Irish targets, 33.7% had overseas acquirers. This is an increase on the 32% in 2016 and 28% in 2015. Notable deals of this nature include the acquisitions of UK ready meals producer KK Fine Foods by Ter Beke of Belgium, and Lily O’Brien’s, the Irish manufacturer of premium chocolate and desserts, by Colian Holding of Poland. More recently, Biscuit International, one of Europe’s leading players in the private label sweet biscuit market owning Poult in France, Banketgroep in the Netherlands and A&W in Germany, acquired Northumbrian Fine Foods, the UK’s leading gluten and milk-free biscuit manufacturer, from CriSeren Foods. Intersnack Group, one of the leading manufacturers of savoury snacks in Europe, has reached agreement for its KP Snacks business to acquire Tyrrells and its global portfolio of better-for-you, premi-

Stefan Descheemaeker, chief executive of Nomad Foods (ranked 17th).

Company 41 (41) Kepak 42 (40) Froneri International

Turnover £757mE £730.7m

Profit nd £31.5m

Ownership/Status Irish independent PAI Partners, France & Nestle

44 (-) Valeo Food Group, 45 (44) Edrington Group 46 (48) Lakeland Dairies 47 (45) Warburtons 1876 48 (56) Karro Food Group 49 (46) Faccenda Foods

£707.0m £704m £701.3m £677.4m £550.9m £524.7m £520.0m

-£5.5m nd £189.0m £14.0m £29.6m £12.0m £11.7m

50 (49) C&C Group 51 (47) Carlsberg UK

£482.4m £473.4m

£69.7m -£7.0m

52 (52) Heineken Ireland

£468.6m

53 (50) McCain Foods GB

£466.2m

£38.1m

54 (51) Sun Valley Foods 55 (54) Dairy Crest 56 (53) Lucozade Ribena Suntory 57 (57) Irish Distillers Group

£464.0m £456.8m £418.4m £414mE

£1.6m £62.3m £51.4m nd

58 (58) Fuller Smith & Turner 59 (-) Carbery Group 60 (65) Dale Farm

£392.0m £367.2m £341.4m

£39.9m £27.3m £4.8m

Lion Capital, UK CapVest, US Independent Irish co-op Independent Independent Hillesden Investments Irish plc Carlsberg, Denmark. Heineken, Holland McCain Foods, Canada Cargill, US plc Suntory, Japan Pernod Ricard, France plc Irish co-operative United Dairy Farmers Group

43 (43) Young’s Seafood International

Source: Company accounts, DueDil, Irish Times. Eur = £0.88. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

as chief executive is Philip Heffer, who joined Hilton Food Group in 1994 when the business was founded and, in his current role of chief operating officer, is responsible for all of Hilton’s businesses with its major customers. Chivas Brothers, the Scotch whisky and premium gin business of Pernod Ricard, will also have a new chief executive in July, when Jean-Christophe Coutures, currently chief executive of Irish Distillers, which is also part of Pernod Ricard, moves to take up his new post. He will be replaced by Conor McQuaid, who is also

at Pernod Ricard. Ornua, Ireland’s largest exporter of Irish dairy products, has appointed John Jordan as chief executive designate to replace Kevin Lane on 30 June 2018. Perhaps the most transformational leadership change is at 2 Sisters Food Group, Britain’s biggest food manufacturer, where Ronald Kers became the new chief executive on 1 June 2018. Ronald Kers is the former global chief executive of Muller, the Eur6 billion international food company. He takes over from Ranjit Singh Boparan, the co-founder and owner of 2

Stefano Agostini, new chief executive of Nestlé UK & Ireland (ranked 20th).

support, last July. Elsewhere, Edmond Scanlon has succeeded Stan McCarthy at chief executive of Kerry Group, the largest player within the fragmented global ingredients and flavours market as well as a major supplier of consumer foods to the Irish, UK and selected international markets. Nick Hampton is the new chief executive of Tate & Lyle, the global provider of ingredients and solutions to the food, beverage and other industries, having earlier this year succeeded Javed Ahmed, who held the post since October 2009. Hilton Food Group, the UK-based specialist international meat packing business, has announced that Robert Watson OBE, the current chief executive, will become executive chairman with effect from 1 July 2018, and non-executive chairman during 2020. His replacement

Philip Heffer, who will become the new chief

Company 61 (63) JW Galloway (Scotbeef) 62 (61) William Jackson & Son 63 (60) Finsbury Food Group 64 (62) KP Snacks

Turnover £319.9m £318.0m £314.3m £313.5m

Profit £4.9m £13.2m £16.6m £13.8m

65 (59) Weetabix Ltd

£313.1m

£81.9m

66 (55) Noble Foods 67 (66) Foyle Food Group 68 (76) Baxters Foods Group 69 (64) Ferrero UK 70 (69) Yeo Valley Group 71 (74) AG Barr 72 (77) Addo Food Group 73 (80) Innocent 74 (72) Seachill

£309.8m £306.1m £296.7m £292.3m £284.9m £277.7m £270.9m £268.0m £266.3m

£7.5m £3.5m -£1.5m £5.2m £7.9m £44.9m £1.2m £12.7m £10.4m

75 (73) Cott Beverages

£266.0m

£37.6m

76 (68) Burton’s Biscuit Company £259.6m

£-m

77 (70) Walkers Snack Foods 78 (78) McCormick UK 79 (79) Meadow Foods 80 (82) Volac International

£16.4m £4.4m £11.7m £9.4m

£251.7m £239.9m £228.3m £212.2m

Source: Company accounts, DueDil, Irish Times. Eur = £0.88. Figures in brackets indicate previous year’s rankings.

executive of Hilton Food Group (ranked 24th).

Ownership/Status Independent Independent plc Intersnack, Germany Post Holdings, US Independent Independent Independent Ferrero, Italy Independent plc LDC, UK Coca-Cola, US Icelandic Group, Iceland Refresco, Netherlands Ontario Teachers' Pension Plan, Canada PepsiCo, US McCormick, US Independent Independent

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Sisters Food Group, who spent 25 years successfully building the business. The group produces around a third of all the poultry products consumed in the UK and also supplies to continental Europe. In addition to poultry, 2 Sisters’ Protein division incorporates red meat operations. 2 Sisters is also a major player within the UK chilled and frozen food categories, and has developed a strong

brands portfolio including Fox’s Biscuits. Ranjit Singh Boparan has now stepped up to the position of president of Boparan Holdings (ranked 6th), the parent company of 2 Sisters Food Group. Having recently acquired Moy Park, Pilgrim’s Pride Corporation has just appointed Chris Kirke as president of the Northern Ireland-based poultry and prepared foods supplier, succeeding Janet

Chivas Brothers (ranked 29th), the Scotch whisky and premium gin business of Pernod Ricard, will have a new chief executive in July, when JeanChristophe Coutures, currently chief executive of Irish Distillers (ranked 57th), which is also part of

Company 81 (67) First Milk 82 (85) Charles Wells 83 (83) Thorntons

Turnover £202.6m £193.7m £191.3m

Profit £6.5m £3.3m -£18.9m

84 (84) Linden Foods

£182.7m

£0.9m

£180.3m

£0.1m

£176.6m

£3.9m

87 (92) Marlow Foods

£176.1m

£23.6m

88 (91) Manderley Food Group (Tayto) 89 (86) Lactalis McLelland 90 (99) Whyte & Mackay Group

£174.0m £172.8m £169.8m

£0.8m £3.9m £25.5m

91 (93) Natures Way Foods 92 (89) Halewood International 93 (-) Alpro UK 94 (96) Shepherd Neame 95 (94) St Austell Brewery 96 (95) Tangerine Confectionery 97 (97) Walkers Shortbread 98 (-) Lantmannen Unibake UK

£162.8m £158.0m £157.0m £156.2m £153.2m £139.3m £138.7m £136.0m

£0.4m £1.2m £4.8m £11.8m £14.0m £2.8m £10.0m £9.3m

99 (100) SA Brain & Co 100 (-) Nichols

£135.4m £132.8m

£3.2m £30.4m

85 (87) Zetar 86 (90) Coca-Cola HBC Northern Ireland

Ownership/Status Co-operative Charles Wells Ferrero International, Switzerland Fane Valley Co-operative & ABP Food Group Zertus, Germany Coca-Cola HBC, Greece Monde Nissin Corporation, Philippines Independent Lactalis, France Emperador, Phillipines Independent Independent Danone, France plc Independent Independent Independent Lantmannen, Sweden Independent Plc

Source: Company accounts, DueDil, Irish Times. Eur = £0.88. Figures in brackets indicate previous year’s rankings.

Pernod Ricard, moves to take up his new post.

McCollum, who headed the business since 2014. Chris Kirke most recently led the US division of Greencore (ranked 10th in the Top 100). Under his leadership, Greencore US grew revenues from $300 million to $1.6 billion through a mix of organic growth and acquisitions, transforming the business into a highly profitable, industry leader. Brexit Uncertainty Although UK food and drink manufacturers are uncertain about the impact of Brexit on their businesses, they are proceeding with investment plans to boost productivity, automation and new product development, according to new research published by accountancy and business advisory firm BDO LLP. BDO’s Food and Drink Report 2018 found that 60% of manufacturers surveyed are generally positive about the future of the indus-

Ian Curle, chief executive of Edrington (ranked 45th).

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Shelagh Hancock, chief executive of First Milk (ranked 81st).

try, with three quarters (76%) expecting revenue growth and 67% believing order levels will increase in the next year. However, over the last three years, confidence among UK food and drink manufacturers has fallen 20% and Brexit uncertainty is posing the biggest threat to businesses for the year ahead. Indeed, less than a quarter (24%) of respondents believe the Government can negotiate a favourable post-Brexit environment for the industry and only 2% think Brexit will have a positive impact on their business in the next year. According to the BDO report, concerns over skills gaps and labour are still a major worry to the industry, especially those companies reliant upon workers from overseas. Boosting Productivity Despite these challenges, food and beverage manufacturers still see a future worth

investing in, with productivity top of the agenda. Two thirds (63%) of manufacturers are looking to make better use of staffing resources and half (54%) are aiming to improve materials utilisation and reduce waste. This in turn is driving investment in automation. According to BDO’s report, the objective for almost 50% of all automation projects currently underway by manufacturers is to boost productivity. Manufacturers are also relying on new product development to open up future growth opportunities and to add sales. The BDO report discovered that the two second biggest drivers of growth were refreshing existing product ranges and expansion into new domestic markets. Only 19% see expansion into new export markets outside the EU as a priority. The Changing Face of UK Grocery The UK grocery market is also undergoing a fundamental change with the proposed combination of Sainsbury’s and Asda Group, a wholly owned subsidiary of Walmart, likely to further intensify competition between retailers, exerting further pressure on food and beverage manufacturers’ margins. The Sainsbury’s/Asda combination will result in Walmart holding 42% of the merged business and receiving £2.975 billion in cash (subject to customary completion adjustments), valuing Asda at approximately £7.3 billion on a debt-free, cash-free and pension-free basis. At the time of completion of the combination, Walmart will not hold more than 29.9% of the total voting rights in the combined business. Grocery market share figures, for the 12 weeks to 22 April 2018, reveal a market share of 15.9% and 15.5% for Sainsbury’s

and Asda respectively, giving the proposed combined entity a potential share of 31.4%, according to Kantar Worldpanel. “This is a pivotal moment for the British grocery market. A merger between Sainsbury’s and Asda would transform the traditional landscape placing nearly a third of market share in the hands of the joint supermarket giant, though the march of the discounters – and any enforced store closures – could impact this figure,” points out Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel. “The two supermarkets appeal to different customer bases. Asda achieves nearly two-thirds of its sales outside London and the south east of England in contrast to Sainsbury’s, which registers 59% of its sales in those two areas. Sainsbury’s also appeals to more affluent shoppers (ABC1): this demographic accounted for 62% of all sales at Sainsbury’s in comparison to 46% of sales at Asda. Meanwhile, Sainsbury’s premium own-label line ‘Taste the Difference’ clocked up sales of £832 million annually – nearly two and a half times the size of Asda’s ‘Extra Special’ range.” J

Jonathan Neame, chief executive of Shepherd Neame (ranked 94th).

Total Produce Moves to Forefront of Global Fresh Produce industry Dublin-based Total Produce, Europe’s leading fresh produce company, is acquiring a 45% equity stake in Dole Food Company for a cash consideration of $300 million. Dole is one of the world’s largest fresh produce companies. The transaction consideration for the 45% interest implies a Dole enterprise value of approximately $2 billion and 9x Dole adjusted EBITDA. Total Produce and Dole are two of the largest fruits and vegetables companies in the world with revenue of Eur4.29 billion and $4.455 billion, respectively. The deal brings together two industry leaders creating a combined group with increased scale and geographic and product diversification. Dole’s strong presence in North America will complement Total Produce’s position in the European market. Dole has leadership positions in a number of its core product categories including bananas, pineapples, fresh vegetables and grapes that will align with Total Produce’s product mix. Dole and Total Produce expect to deliver annualised synergies and cost savings at Dole of $15-20 million in the short-term and $35 million over the medium-term. Carl McCann, chairman of Total Produce, comments: “I believe that this investment by Total Produce in Dole is the single most positive step in our company’s history. It places Total Produce at the forefront of our industry,

and we anticipate it will create significant additional value for shareholders in the years ahead.” Total Produce recently acquired a 50% stake in California-based fresh produce company, The Fresh Connection, one of North America’s premier produce export companies. The deal served to further broaden Total Produce’s US presence and to provide it with strategic access to other key markets.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I POULTRY

Major Changes in UK and Irish Poultry The British and Irish poultry processing industry has undergone significant change in the past twelve months following major merger and acquisition activity, and two of the leading players are now under new leadership. oy Park, one of largest poultry producers in the UK and Europe, has been sold by Brazil-based JBS, the world’s largest meat processing company, to Pilgrim’s Pride Corporation of the US for approximately $1.3 billion (£1.0 billion, Eur1.1 billion). Northern Ireland-based Moy Park was acquired by JBS for $1.5 billion in September 2015 and became the central element of the Brazilian group’s European business. Moy Park had been previously owned by Marfrig Global Foods, another Brazilian food group, since 2008. With 13 processing and manufacturing units in Ireland, the UK, France and the Netherlands, Moy Park processes 5.7 million birds per week, in addition to producing around 200,000 tons of prepared

over the next two years from the acquisition. Moy Park will remain headquartered in Craigavon, Northern Ireland, and will operate as a business unit within Pilgrim’s. In the neighbouring Republic of Ireland, Manor Farm, the country’s largest chicken processor and market leader, has been acquired by Scandi Standard, the leading chicken pro- Andy Dawkins, chief executive of Avara Foods. ducer in the Nordic region, for Eur94 million. Sweden-based Scandi Standard was created in June 2013, by merging the largest poultry operations in the Nordic region into one group. Manor Farm sources and processes approximately 50% of all fresh chicken sold in the Irish retail market and approximately 25% of all chicken consumed in Ireland.

New Force A new force within the British poultry industry has been created following the joint venture between Cargill’s fresh chicken operations in the UK and Faccenda Foods’ fresh chicken, turkey and duck business, to create Avara Foods. The new joint venture, which is equally Moy Park, one of largest poultry producers in the UK and Europe, has been owned by Cargill and Faccenda Foods, employs approximately sold to Pilgrim’s Pride Corporation of the US for $1.3 billion. 6,000 people in the UK across multiple agriculture and operational centres, with broad capabilities that span the foods per year. Its product portfolio comprises supply chain focused on operational excellence fresh and added value poultry, ready-to-eat and customer focused partnerships. meals, breaded and multi-protein frozen Andy Dawkins, formerly chief executive of foods, vegetarian foods and desserts. Faccenda Foods and who is the head of Avara Pilgrim’s employs approximately 51,000 Foods, comments: “Launching Avara Foods people and operates chicken processing plants brings together two successful businesses with and prepared-foods facilities in 14 US states, high standards, shared values and strong repuPuerto Rico, Mexico, the UK, and continental tations for building sustainable partnerships Europe. The acquisition of Moy Park posiwith customers, growers and suppliers. Now tions Pilgrim’s Pride to become a global playthe opportunity is to take the best from both er. and provide our customers with great service The acquisition gives Pilgrim’s Pride access and innovation from a trusted leader in fresh to the attractive UK and European markets, foods.” while also diversifying its portfolio. Moy Park “We believe that it is our strong values and brings to Pilgrim’s a fully integrated, markettalented people that make the difference and leading platform with more than 800 farmers will be key to the success of our business now across the UK. Pilgrim’s anticipates incremenand in the future,” Andy Dawkins elaborates. tal annual revenue of approximately $2.0 bil“Our first step is to make sure that there is a lion as a result of the transaction. The USsmooth transition as we bring together the two based poultry group expects to achieve approx- Ronald Kers is the new chief executive of 2 Sisters businesses as Avara Foods, and establish a solid imately $50 million in annualised synergies Food Group. platform for growth.” FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Cranswick, the £1 billion turnover UK fresh pork and convenience foods business, is expanding its presence in the UK poultry market.

Separate to the Avara Foods joint venture, in the UK Cargill will continue to process and sell cooked poultry products in Balliol, Wolverhampton, as well as operate its poultry import, trading and distribution business. Cargill will also continue to operate its European poultry businesses in France, Russia and the Netherlands. Faccenda Foods will retain its shareholding in Dartmouth Foods. Changes in Leadership Two of the UK and Europe’s leading poultry processors – 2 Sisters Food Group and Moy Park – have just appointed new chief executives. 2 Sisters Food Group is undergoing a transformational change following the decision by Ranjit Singh Boparan, co-founder, owner and chief executive of Britain’s biggest food manufacturer and one of Europe’s largest poultry processors, to step up into the position of president of Boparan Holdings, the parent company of 2 Sisters Food Group. Ranjit Singh Boparan comments: “These changes are the right ones to make at a very important stage in our business’s history and they help secure strong foundations for future development and growth. These are further major transformative steps in a journey to build a better business with a world-class leadership team.” Ronald Kers, the former global chief executive of Muller, has been appointed as the new chief executive of 2 Sisters Food Group. New Head at Moy Park Pilgrim’s Pride Corporation has also installed a new chief at Moy Park. Chris Kirke has been appointed as president of the Northern Ireland-based poultry and prepared foods supplier, succeeding Janet McCollum, who headed the business since 2014.

Chris Kirke brings more than 26 years of food industry experience, operational expertise, and a strong track record of customer engagement and business transformation in the UK and the US to Moy Park. Chris Kirke most recently led the US division of Greencore Group. Under his leadership, Greencore US grew revenues from $300 million to $1.6 billion through a mix of organic growth and acquisitions, transforming the business into a highly profitable, industry leader. “The Pilgrim’s team is excited to have Chris join us on our journey to realise our vision of becoming the best and most respected company in our industry,” says Bill Lovette, president and chief executive of Pilgrim’s Pride. “His proven track record of delivering results for customers, and driving profitability in the UK and the US, will uniquely position the Pilgrim’s European business platform for its next chapter of accelerated growth and innovation.” Bill Lovette adds: “Janet McCollum was instrumental in establishing Moy Park as an unquestioned leader in the food industry in the UK. She has accomplished a lot and we are grateful for her more than 25 years of dedicated service and commitment to Moy Park.” Expansion Cranswick, the £1 billion turnover UK fresh pork and convenience foods business, is expanding its presence in the UK poultry market. Cranswick has been a significant player in the sector since its £40 million acquisition of Crown Chicken, a leading integrated poultry producer based in East Anglia, in 2016. Cranswick has just been granted planning approval for the construction of new world-class poultry primary processing facility in Eye, Suffolk, with further associated investment to upscale existing milling and hatchery operations. Moy Park and 2 Sisters Food Group are also investing heavily in their poultry operations. Moy Park is spending £170 million across its sites in Northern Ireland and £20 million in a hatchery at Newark-onTrent in England. 2 Sisters Food Group has also embarked upon a £150 million investment programme across its UK Chris Kirke has been appointed as president of Moy Park. poultry business. J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I MEAT & POULTRY

Future-proof For Success he meat market remains fast-moving and competitive. As part T of this processors and retailers are always looking for a point of differentiation. As well as new product development, this can mean new pack formats. Convenience remains a major driver here but this has to be matched by the ability to maintain product quality and freshness and extend shelf life. This has led to the introduction of many new pack types. As well as the different shapes and designs of trays, there are now a wide variety of sealing requirements in addition to traditional atmospheric sealing, including Gas Flush, Hermetic Shrink, Vacuum, Skin Pack, Skin Plus and Skin Deep.

Challenges These bring with them a number of challenges. Companies need the flexibility to be able to respond to changing market requirements and consumer demands in their style of pack. At the same time, they must be able to explore any new pack options while maintaining current production. Equally significant, the proliferation of new products and pack types means that many manufacturers now have to handle a variety of different packs on a single line. Meanwhile the need for speed and efficiency on the production and packing line remains essential. Tray sealing specialist Proseal has addressed these challenges by ensuring its GTe range of tray sealers can handle all types of pack on the same machine. This gives manufacturers the ability easily to switch between packs during normal production with minimal downtime. Future-proofing The other focus of the company’s development work has been on future-proofing its models. There is little point having a machine that is fast and efficient if it is not able to cope with new pack formats. Proseal’s GTe platform is 20

therefore designed to be completely adaptable in order to incorporate the latest developments. For every feature introduced into new models, the company also ensures that it can be retrofitted to existing machines so that all customers keep up-to-date with latest trends. In this way, meat processors are well equipped to cope with ever-changing market requirements without the need to invest in new machines each time. In terms of increasing line speeds, Proseal’s pioneering ProMotion intelligent buffering system enables trays to feed continuously into the tray sealer without having to pre-sort and adjust pack spacing. It also improves product handling since there are fewer line stoppages due to misplaced trays. In addition, and particularly important for retail markets, the unique Eseal® technology provides high quality seal reliability while at the same time delivering a 92% reduction in energy usage, which offers valuable cost savings and sustainability benefits. It can also decrease gas flushing cycle times by ensuring accurate gas flush positioning. Fully Integrated Line speeds and efficiencies are further increased and enhanced when all machines are fully integrated. The Proseal tray sealer screen is able to monitor and control the entire line. This has two particular advantages. In the event of a problem, the tray sealer is able to pass a stop signal to the equipment further up the line. This allows the line to come to a controlled stop, which avoids overfeeding of the tray sealer and prevents unnecessary product or packaging waste. Equally important, continual online monitoring enables the tray sealer to collect data on small but unscheduled line stoppages. This can help production managers and engineers to identify recurring problems and implement corrective action to maximise line uptime. In a constantly changing and developing market, this ability to respond quickly to the latest trends while maintaining high efficiencies can make all the difference to a business’s success and growth. J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I LABELLING

ILS’s Labelling Equipment is a Tonic For Botanist Gin eliability of capital equipment, backed up by dependable customer support from suppliers, is crucial for any drinks manuR facturer, especially when based in a remote location, which is why a successful distillery in the Hebrides is toasting Industrial Labelling Systems (ILS) for helping the Botanist Gin business to meet a staggering 47% growth in sales over the past year. Bruichladdich Distillery, on the Isle of Islay on the scenic west coast of Scotland, has reaped the benefits from automating its labelling process after investing in a T43 Blow Vac Non-Contact Print Apply Labeller from ILS for decorating the uniquely foraged Botanist Dry Gin. Switching from hand labelling to ILS’s blow vac print apply system labeller has transformed the progressive distillery’s production line, from incurring considerable down time and waste of preprinting labels and applying to flat-pack cases of Botanist Dry Gin before each run. The net result is increased overall line efficiency and cost savings on both labels and packaging.

The distillery’s bottling plant production manager, Jonathan Carmichael, explains: “There has been a resurgence in recent years on premium gin. The biggest advantage of the ILS equipment for us is that we have been able to keep up with the ever-increasing demand for our Botanist Gin. We are currently labelling on average 54,000 bottles per week.” He adds: “Because of our remote location it is very important that we invest in reliable machines. The build quality of the ILS blow vac labeller is vastly superior and it can also be remotely accessed by ILS to troubleshoot any issues or to update the system in any way. ILS has also attended on site for training and servicing when required with the minimum of fuss.” ILS is the exclusive UK distributor for Evolabel Print & Apply Labelling Systems, highly accurate printers and applicators renowned for operating in the most challenging conditions, offering peace of mind and the future proofing that is so essential for customers like the Bruichladdich Distillery. J FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I BEVERAGES & SNACKS

Performance With Purpose at PepsiCo Having delivered solid organic growth of 2.3% to reach revenue of over $63 billion in 2017 and expanded its core operating margin by 45 basis points, PepsiCo plans to accelerate capital investments to $3.6 billion in 2018 to add manufacturing capacity and to make its operations even more efficient. he global beverages and snacks group is continuing to drive top line growth by increasing productivity and investing in innovation to position the company for sustainable longterm expansion. PepsiCo’s food and beverage portfolio includes 22 brands that generate more than $1 billion each in annual retail sales, such as Frito-Lay, Gatorade, Pepsi, Quaker and Tropicana. The US-based group has been successfully transforming its business to meet increasing consumer demands for healthier products and changing shopping habits. Just 12% of group revenue is now generated from the once dominant Pepsi brand, while ‘Everyday Nutrition’ and ‘Guilt-Free’ products generate 25% and 45% respectively. PepsiCo has also been developing new capabilities in areas such as e-commerce, digital and brand marketing to improve competitiveness in the fast changing retail environment.

Results “Our results for 2017 and over the longer Indra Nooyi, chairman and chief executive of past are a result of our steadfast commitment PepsiCo. to manage our business responsibly and sustainably. Our portfolio of businesses has delivered consistently strong financial results year after year, while making the investments and taking the necessary actions to sustain shareholder value creation over the long-term,” points out Indra Nooyi, chairman and chief executive of PepsiCo. She elaborates: “Specifically, the expansion of our geographic reach and product portfolio has made our business more resilient. The power of our customer relationships in retail and foodservice has created advantage in the marketplace. The strength of new capabilities in e-commerce, research and development, social and digital marketing and design has helped us connect with consumers in new ways. Our environmental footprint has continued to shrink, streamlining our operations and reducing costs. And our commitment to productivity has enabled us to sustainably reinvest in the business, positioning us to capture tomorrow’s growth.” “In a nutshell, we have built a business that balances top line growth, productivity and reinvestment to generate strong financial

results, in a way that is self-reinforcing and self-sustaining,” she adds. Performance With Purpose 2025 At the heart of this approach is Performance with Purpose 2025, a strategy designed to achieve annual productivity savings of $1 billion. “Our annual productivity savings of approximately $1 billion have been driven by a relentless continuous improvement mindset, focused on every aspect of our value chain and guided by our environmental sustainability agenda,” Indra Nooyi explains. “We have refined our business model to reduce management layers and accelerate decision making, and have deployed leading-edge technologies to increase manufacturing throughput, reduce logistics costs and increase go-to-market efficiency and effectiveness.” To support is strategic priorities and growth agenda, PepsiCo recently refined its senior leadership structure, including appointing Ramon Laguarta as president of PepsiCo with responsibility for shaping the group’s corporate strategy, working closely with business units to deliver top line growth, driving productivity to enable

‘Everyday Nutrition’ products generate 25% of PepsiCo’s group revenue.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

PepsiCo Nutrition Greenhouse, which launched in 2017, saw eight companies achieve estimated combined growth of over Eur10 million - a fourfold increase in sales over its duration. The second year of the programme will include a broader focus on nutrition beyond health and wellness, towards brands that tap into key lifestyle trends, enable personal performance or are purpose-driven. PepsiCo is currently seeking to identify up to ten emerging brands in the nutrition space with products aimed at European consumers. The selected companies will receive Eur20,000 in funding as well as the opportunity to work alongside experts from some of PepsiCo’s leading brands including Quaker, Alvalle, Sunbites and Tropicana. Outlook Looking ahead, Indra Nooyi is encouraged by a number of factors maker of baked fruit and vegetable snacks, will expand Frito-Lay’s better-forsuch as a growing global economy with stability in developed maryou snack offerings. kets and a number of developing and emerging economies showing signs of rapid growth. However, the market environment remains this growth, and investing in new areas of disruptive innovation, all challenging including ongoing changes in consumer shopping patin support of the company's Performance with Purpose 2025 agen- terns and preferences, particularly regarding health and wellness, da. within a highly competitive retail environment, complicate by rising commodity costs for manufacturers. Expanding the Better-For-You Portfolio “As a company, we will double down on new capabilities in areas PepsiCo has also been expanding its bettersuch as e-commerce, digital and brand marfor-you portfolio through acquisition. A keting to make us even more competitive,” recent move of this kind is the purchase of she remarks. “We’re going to accelerate capiBare Foods Co (trading as Bare Snacks), a tal investments to add manufacturing capaciUS-based maker of baked fruit and vegetable ty and make our operations more efficient.” snacks, which will expand Frito-Lay's better“We expect net capital spending of approxfor-you snack offerings. “For nearly a dozen imately $3.6 billion,” confirms Hugh years, PepsiCo has been committed to Johnston, vice chairman and chief financial Performance with Purpose, our vision of officer of PepsiCo. “This is a bit above our making more nutritious products, while also trend over the last few years as we accelerate reducing added sugars, salt, and saturated fat. some projects into 2018.” Most of the Bare Snacks fits perfectly within that vision,” planned increase in capacity is in snacks with says Indra Nooyi. the results of this investment coming on stream in 2019. Investment in E-commerce PepsiCo also expects to return approxi“Despite the many challenges we faced over mately $7 billion to shareholders in 2018, the years, from changing consumer preferwith cash dividends of approximately $5 bilences, to disruption in the retail environment, lion, reflecting a 15% dividend increase, and to geopolitical turmoil, we have consistently share repurchases of approximately $2 biland substantially reinvested savings back into Hugh Johnston, vice chairman and chief financial lion. the business to further build capabilities and officer of PepsiCo. Regarding PepsiCo’s financial performance adopt technologies that we believe will enable in 2018, Hugh Johnston comments: “We us to sustain our top line growth,” she says. For example, invest- expect organic revenue growth at least in line with our 2017 ment in e-commerce across multiple channels, including e-grocery growth rate or 2.3%, as we expect to continue to benefit from sucand direct to consumer helped fuel strong growth in 2017. cessful product innovation and strong market-place execution, but She continues: “We are leveraging big data and predictive analyt- tempered by a cautious outlook as it relates to the retail environics to sharpen real-time marketing messages, dynamic merchandis- ment and changing consumer behaviour.” ing and tailored offers. And we’re increasingly collaborating with PepsiCo is on track to achieve its top line growth target, having retail customers to make e-commerce a point of differentiation for just reported organic revenue growth of 2.3% in the first quarter of PepsiCo. As a result, our e-commerce business is now approximate- 2018, helped by particularly strong performances in the group’s ly $1 billion in annualised retail sales, and we are well-positioned to international divisions fuelled by accelerated net revenue growth in capitalize on what is sure to be a dynamic future in this space.” developing and emerging markets. However, core operating margin PepsiCo continually invests in innovation and new product contracted by 110 basis points. J development, such as the recent North American launch of LIFEWTR, a new premium bottled water brand designed to exploit the growing consumer shift towards lower calorie products. PepsiCo’s purchase of Bare Foods Co (trading as Bare Snacks), a US-based

Nutrition Greenhouse The beverage and snacks giant has also introduced the PepsiCo Nutrition Greenhouse incubator programme as part of its commitment to open innovation and to collaborating with the entrepreneurs that are helping to shape the food and beverage industry. It plays an important role in helping PepsiCo to realise its Performance with Purpose goal of transforming its portfolio and bringing more convenient, nutritious options to consumers. 24

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

ACMI Opens New Possibilities For Repacking! epacking is certainly not a new concept, but the technical innoR vations introduced by ACMI between 2015 and 2017 have opened new possibilities for repackaging, especially for soft drink makers. The line that ACMI will introduce, and which is actually in operation at one of the most important European plants of the Coca-Cola European Partners group, features high automation and greater flexibility both in the depalletising and repackaging phases, thus offering interesting solutions to the large international bottling groups. Concept This innovative repacking line allows many repackaging options ranging from three types of product: can packs, bottle packs, bulky PET bottles on shaped trays, bulky PET bottles on cardboard trays and bulky cans on cardboard trays. The main constraints to be met include the inability to simultaneously handle the three types of product listed above and the inability to change the original packaging with which the product enters the line (it is therefore not possible to extract the cans from the cans pack or repackage it passing, for example, from a 6x4 configuration to a 2x2 configuration). Since it is a so called ‘off-line system’, the production speed is lower than that of a traditional bottling line as speed is not the main element to assess this type of plant, but rather the flexibility in repacking combinations. Being equipped with three inbound loading stations, the line can mix up to three different flavours, palletising directly on pallets or on a tray. The Line Moving on to the description of the line from a technical point of view, it has an infeed system consisting of three independent loading stations. These stations consist of conveyor belts that transport the product pallets to the two depalletising robots equipped with special gripping heads. The gripping heads represent the focus of the entire depalletisation system which is able, on the one hand, to depallitise can packs and bottles by taking them ‘by row’ and, on the other, by means of an automatic exchange system from the head itself, to pick-up the bottles from the shaped plastic trays. The pick-up head is equipped with a camera system to correct any tray

Depalletising area.

Type of pallets.

imperfections and always ensure perfect centring during the product pickup phase. Once depalletised, the two types of product, packs (of bottles or cans) and bulky bottles, follow two different paths, to meet again at the palletisation area. Twisterbox and Traymax The bottle or can packs coming from the three depalletisation lines, once depalletised, they proceed to the Twisterbox® layer formation system that, in addition to forming the layer, also mixes the flavours so as to deliver to the palletiser one layer of product with mixed flavours. However the Twisterbox can also handle only one flavour type when the purpose of the repacking line is to change the final pallet size moving for example, from a Europallet to one quarter tray. Not only, as the system is not only able to reduce the pallet size, but it can also insert the product layer into cardboard half and quarter trays, and then palletise them on pallets. In the case of tray package insertion, the Traymax tray former comes into play, another key element of this central part of the line which, logistically positioned alongside the Twisterbox, performs two functions: on the one hand it has the task of repacking bulky bottles (and also to mix their flavours, three at most) when the line is

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

pallet stretch wrappers, capable of handling numerous combinations. The first two pallet stretch wrappers, positioned close to the palletisation area, are two Vortex 1000 fixed-pallet systems, whilst the third wrapper is a rotating table pallet stretch wrapper Rocket model. All three pallet stretch wrappers mount a one meter reel and are equipped with the ACMI patented electronic prestretching system (film pre-stretching value is above 400%) and the automatic change over system of the entire pre-stretching unit. The most complex configuration is that where the first Vortex pallet stretch wrapper wraps the pallet quarters, the second Vortex pallet stretch wrapper wraps the pallet quarters two by two thus generating a half pallet and the third and last pallet stretch wrapper wraps the two half pallets together once these have been placed on a â&#x20AC;&#x153;motherâ&#x20AC;? pallet, generating a whole pallet. This is not a compulsory wrapping combination, but it is the one in which each machine wraps a different pallet size: quarter, half, full - if this is not flexibility! J

Pallet stretchwrappers.

set up with this type of program and from the top it has the task of producing empty trays for palletising layers composed of packs (cans or PET bottles) produced by the Twisterbox. Palletisation The palletisation phase is entrusted to three Condor robots with specific gripping heads: the first, located at Twisterbox and Traymax outfeed, is equipped with a pick-up head with perimetric pads and inserts the product layer inside the trays produced by the Traymax (in this case the line can generate trays of the same flavour or with mixed flavours); the second, equipped with an openable platform head, palletises shrinkwrapped pack layers prepared by the Twisterbox, and the trays with bulk bottles prepared by Traymax tray former; the third robot, equipped with a special gripping head, manages and supplies pallets and interlayers that feed the palletising process. Pallet stretch Wrapping The line ends with a wrapping system consisting of three

Twisterbox & Traymax.

I SUSTAINABILITY

Measom Freer Prove Their Environmental Credentials

he well-established plastic packaging T manufacturer Measom Freer is proud to announce it has achieved the BSI ISO

14001:2015 Certificate in Environmental Management. The company believes it has a moral duty to protect the natural environment and they are committed to minimising their global impact as a business by improving resource efficiency, reducing waste and reducing costs. They ensure their stock products are sustainable by sourcing materials such as polythene that can be readily recycled, PPR 26

(post production regrind) is also used in all their stock products. It believes that its cusFOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

tomers should also be offered the choice of using eco materials, like Bio-based Copolyester and rHDPE (a PCR PostConsumer Recycled HDPE) and they offer these on a made to order basis for their products. So if you are looking for a company who is committed to controlling its effect on the environment and produces quality products too contact their Sales Team now: sales@measomfreer.co.uk Tel +44 (0)116 2881588 or buy online at www.measomfreer.co.uk. J

I BREWING

Continued Revenue Growth and Improved Operating Performance at Heineken With all its geographic regions contributing to strong organic growth in volume, revenue and operating profit in 2017, Heineken is increasing its capital expenditure to over €2 billion in 2018 as the global brewer continues to strive for superior top line growth whilst working on improving operating performance. ollowing acquisitions last year, Heineken has become the third largest pubs business in the UK and the second largest beer company in Brazil. The Heineken brand has been strengthened with the introduction of a new zero-alcohol version, which has been rolled out in 16 countries, and work has commenced on the group’s first brewery in Mozambique, involving investment of Eur85 million. The Netherlands-based global brewer divides its business into four regions – Europe; Africa, Middle East & Eastern Europe; Americas; and Asia Pacific. Europe remains the largest region, accounting for 36% of total beer volumes and 35% of operating profit (beia) in 2017. “We have a broad, balanced geographic footprint which provides stability from mature markets paired with faster growth from emerging economies,” says Jean-Francois van Boxmeer, chairman and chief executive of Heineken. “During 2017, we significantly expanded our operations in Ethiopia, Mexico, Cambodia, Vietnam and Haiti, and we opened our first brewery in Ivory Coast.” This balanced geographical footprint is complemented by a strong brands portfolio of more than 300 international, regional, local and specialty beers and ciders, headed by the Heineken brand. With a presence in more than 190 markets, Heineken is the world’s most international beer brand. The international brands portfolio includes Amstel, Desperados, Sol, Affligem, Tiger, Tecate, Krusovice and Red Stripe. Furthermore, Heineken is the world’s largest cider producer.

Jean-Francois van Boxmeer, chairman and chief executive of Heineken.

The group’s balanced geographical footprint is complemented by a strong brands portfolio of more than 300 international, regional, local and specialty beers and ciders, headed by the Heineken brand.

Acquisitions Heineken recently completed the £402.7 million acquisition of Punch Taverns, comprising approximately 1,900 pubs across the UK. The Punch business is being fully integrated into Heineken’s existing leased pub estate, Star Pubs & Bars, to create the third largest player within the UK’s still a highly fragmented pubs market. “Investing to grow our UK pub portfolio through this acquisition will enable us to unlock further value in the UK pub market,” explains Stefan Orlowski, regional president Europe for Heineken. “The performance of our Star Pubs & Bars business clearly shows that well invested pubs, in the hands of skilled and ambitious independent operators can outperform and we will seek to replicate that success with these new pubs in partnership with their licensees.” David Forde, UK managing director of Heineken, adds: “This is good news for pub-goers across the UK who will see the benefit of well-invested pubs in their communities.” Americas Heineken has expanded its influence in South America following its Eur664 million acquisition of Brasil Kirin to become the second largest beer company in Brazil. Brazil is the third largest beer market by volume in the world with attractive long-term market fundamentals. Furthermore, the premium segment of the Brazilian beer market, which has outperformed the broader beer market in recent years, has a relatively low share compared to many other markets, providing opportunities for future growth. In 2017, Heineken also consolidated its standing within the craft

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changes in consumer behaviour worldwide.” He elaborates: “Heineken 0.0, as well as our other low- and noalcohol offerings, represent an opportunity to access our existing base of loyal consumers who would prefer an alcohol-free drink at times, as well as new consumers who wouldn’t otherwise drink an alcoholic beer. In 2017 we sold almost 13 million hectolitres of our low- and no-alcohol products and we see growth opportunities in this category.” See Panel.

The Heineken brand has been strengthened with the introduction of a new zeroalcohol version. Heineken 0.0 is a non-alcoholic lager brewed with a unique recipe for a distinct balanced taste and only 69 calories per 33cl bottle.

& variety segment of the beer market by acquiring the remaining stake in Lagunitas Brewing Company, the US-based craft brewer, for an undisclosed sum, having purchased 50% of the business in 2015. Lagunitas has successfully outperformed the US beer market, where craft beer now represents about 11% of total volume. Heineken has helped to expand Lagunitas’ international presence, including entry into new markets such as France, Mexico, Italy and Spain, and extended the brand’s availability in markets including the UK, Canada, Netherlands, Sweden and Japan. Taking full ownership will allow Heineken to accelerate the rollout of the Lagunitas brand to many more markets around the world. Lagunitas will continue to operate as an independent entity within Heineken and will report within the Heineken Americas Region. Development Strategy The group’s strategy is to lead the premium segment in beer and cider across the world and leverage the brand power of the Heineken brand, supported by a strong portfolio of international premium and local brands. The goal is to be the number one, or a strong number two, in the markets where Heineken competes with a full brands portfolio. Heineken is also continuing to focus on growing and leading the craft & variety, low- and no-alcohol and cider categories, which are becoming increasingly important as it seeks to achieve additional customer penetration and target more households. Jean-Francois van Boxmeer explains: “As the premium segment continues to outpace the overall beer market, the brand power of Heineken is more important than ever. The launch of our latest innovation, Heineken 0.0, has been very promising, in tune with an increasing emphasis on health and wellbeing that is driving

Financial Performance Heineken posted a 5% increase in organic revenue (beia) to Eur21.91 billion for 2017 with revenue (beia) per hectolitre up by2.1% as consolidated beer volume rose by 3.0%, with growth across all regions. Operating profit (beia) grew 9.3% organically during the year, primarily reflecting higher revenue and cost efficiencies. The group’s operating margin improved by 40 bps excluding the Brasil Kirin, Punch and Lagunitas acquisitions, and net profit at Eur2.247 billion was up 9.3% organically over 2016. Capital expenditure related to property, plant and equipment should be slightly above Eur2 billion this year, up from Eur1.7 billion in 2017. Outlook Heineken is projecting further organic revenue and profit growth in the current financial year. Excluding major unforeseen macro economic and political developments, Jean-Francois van Boxmeer expects an operating profit margin expansion of around 25 bps for 2018. “We are committed to long-term value creation and will continue to strive for superior top line growth whilst working on improving our operating profit margin,” says the Heineken chief. J

Stefan Orlowski, regional president Europe for Heineken.

Heineken 0.0 is Latest innovation Heineken has launched its latest innovation - Heineken 0.0 - a non-alcoholic lager brewed with a unique recipe for a distinct balanced taste - and only 69 calories per 33cl bottle. The brand’s iconic green label has been turned blue - the colour associated with the alcohol free category. Heineken’s Master Brewers created the new zero-alcohol beer using only natural ingredients. Willem van Waesberghe, Global Craft and Brew Master at Heineken, says: “Removing alcohol from regular 5% Heineken would have been easy, but it wouldn’t deliver the best tasting non-alcoholic beer. Heineken 0.0 is brewed from scratch and has a perfectly balanced taste with refreshing fruity notes and soft malty body.” Gianluca Di Tondo, senior director global Heineken Brand, comments: “As pioneering brewers, we are committed to introducing new and innovative products to meet consumer needs. The zero alcohol segment in Europe and Russia grew with a 5% CAGR between 2010 to 2015. We expect this strong growth to continue, driven by good innovation on taste, as it already has in Spain, Germany and Austria. Our ambiGianluca Di Tondo, senior director global Heineken tion is to lead the category development in the markets where non-alcoholic beer is still small, but has growth potential, with a premium proposition.” Brand.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I BAKERY

iba 2018 – Stronghold of the International Baking Industry Iba, the world’s leading trade fair for bakery, confectionery and snacks, will take place at Fairground Munich from 15-20 September 2018. s a premier platform, it offers an unparalleled market overview in twelve halls with all the latest innovations and products of the industry. Virtual bakery tours, a central topic for the to-go market and a speakers’ corner are exciting innovations that visitors can look forward to.

efficiency, automation, hygiene, digitisation at the point of sale, and in production, shop fitting, packaging and logistics.” New Speaker's Corner in Hall B5 The baking industry is facing big challenges. In addition to the iba.FORUM in Hall B3, the new speakers’ corner in Hall B5 offers comprehensive coverage. There, visitors can exchange ideas with leading experts on interesting topics from science to applying it in practice and get a perspective on upcoming trends. “The interest shown by national and international companies is huge. Apart from a few remaining spaces, iba is already fully booked,” says Dieter Dohr, CEO and President of GHM Gesellschaft für Handwerksmessen. More than 1100 exhibitors from over 45 countries will cover the entire spectrum of baking goods with their range. “As the leading trade fair, iba has an eye on all the trends in the industry worldwide, as well as the relevant requirements for bakers and confectioners, restaurateurs and industry decision-makers of the food retailing sector,” explains Dohr. “At iba 2018, innovations and concepts will play a central role for all sized companies in the areas of manufacturing processes, the out-of-house market, energy

New Visitor Service – The Digital iba Marketplace Iba also offers its visitors a new digital service. Through the online marketplace, visitors can prepare themselves better for their specific needs before the fair and so gain a better overview and orientation

on site. Thanks to the new search option for ‘solution approaches’, you can quickly find, for example, innovative snack solutions, digitisation, energy efficiency or raw materials that will be exhibited at iba. Additionally, visitors have the opportunity to contact the exhibitors directly and arrange appointments with them. Further information is available at www.marktplatz.iba.de/en. ‘iba.TO GO!’ - Snack and Beverage Concepts in a Central Area Also new is the topic area ‘iba.TO GO!’ in Hall B3. For the first 30

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

time, iba is combining innovations and solutions for snack and beverage concepts for baking traders at a central contact point. There, the entire process chain of snacks is presented - from ingredients and preparation, through to sustainable packaging solutions to logistics and shop design, rounded off with many workshops and displays. The trend topic coffee is also discussed in detail by experts, starting with the coffee bean, roasting and grinding, to machines and serving coffee in china or to-go cups with a deposit system. ‘iba.OPERATE!’ - The Entire Packaging Market in One Hall With ‘iba.OPERATE!’, packaging solutions and processes are shown in Hall B1. “Medium-sized companies, large bakeries, manufacturers of dough and the food retail industry, iba offers a market overview in this area, which has never been seen before at this fair,” says Claudia Weidner, project manager of iba. Intelligent and environmentally-friendly packaging, food safety and process optimisation solutions will be presented, of course, live in action. Top Bakers in One Place At iba, a multimedia experience show in Hall B3 will premiere. From Munich, visitors can have a look at the top bakeries on a national and international level. With the help of virtual reality glasses and 360-degree videos, you will be able to see right into renowned master bakeries from Germany, Greece, Iceland, Austria, Japan or the USA directly at the fair. Here, trade visitors experience first-hand what makes their colleagues across the border successful. The experiential programme in Hall B3 will be complemented by the appearance of renowned industry stars in live competitions at the ‘iba.FORUM’. Highlights include the world-renowned iba-

UIBC-CUP, an international championship in which bakers from twelve countries compete against each other. In 2018, for the first time, the best young confectioners in the world will compete in the UIBC Junior World Championships in Munich. Best For Last For visitors and exhibitors to be able to exchange views in a relaxed atmosphere after the fair, the iba Oktoberfest tent will also be on the exhibition grounds. This year, Wiesn-Wirt Able will take care of the guests and thus ensures a relaxing end with the original Bavarian Oktoberfest atmosphere - of course with a brass band and traditional specialties. Further information about iba visit www.iba.de/en. J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I DAIRY

Valio Returns to Growth With a new €170 million snack plant now in production at its yoghurt manufacturing site at Riihimaki in Finland, Valio is well placed to continue its international expansion while consolidating its leading domestic market position. espite the difficult global market conditions, Finland’s largest dairy processor increased net sales by 4.3% to Eur1.708 billion in 2017, while increasing profitability (milk return) by 5% and maintaining a steady milk price for its 5,500 farmer owners. In addition to opening the world’s most modern dairy snack plant, Valio further enhanced its international reputation for innovation and sustainability by introducing more than 100 new products during the year, to maintain its growth in added value products in both Finland and export markets, and was also voted the most responsible company in Finland for the fourth consecutive year. The performance represents a return to growth for Valio, which, following record results in 2013, has experienced a difficult few years as a result of the the EU ban on exports to Russia and weak demand in Asia.

constantly add value to its milk pool, about 85% of all the raw milk produced in Finland, in order to be able to pay the best prices in the EU to its owners - Finnish dairy farmers. In addition to consolidating its position in Finland and the neighbouring markets of Sweden, Denmark, the Baltic countries and Russia, Valio is also seeking profitable growth in the international markets for consumer products and specialty food industry products. The average price Valio paid for raw milk last year was 39.0 cents per litre, up from 38.1, plus 0.5 cents per litre in after payments. Consequently, the total raw milk price paid to owners in 2017 was Eur9 million more than in the previous year. Indeed, the milk price paid by Valio has remained higher than the average EU price throughout the 21st century. Innovation Valio has a strong track record of dairy product innovation and its strategy is to continue to effectively commercialise these skills either on its own or in co-operation with partners. Finland’s largest dairy co-operative is the world’s leading expert in lactose free dairy. Indeed, Valio invented lactose free milk and was the first in the world to launch it in 2001, using its unique patented technology. Valio’s lactose free milk tastes like regular milk, with no compromise on flavour or texture. Valio has since developed a complete range of lactose free products with superior taste. With more than 100 products available in the Nordic and European markets, Valio has the largest lactose free portfolio in the world.

Annikka Hurme, chief executive of Valio.

However, Valio is having to contend with falling prices for milk powder and butter as a consequence of rising milk production in the EU and globally. “The biggest challenges come from the dairy industry’s operating environment. The imbalance of the global markets continues, and the growth in milk production is expected to outpace the demand for dairy products,” says Annikka Hurme, chief executive of Valio. The co-operative is also facing weakening consumption of dairy products in its domestic market which is increasing the urgency to develop exports from Finland. In 2017, Valio’s domestic net sales remained flat whereas international sales rose by 12.4%, fuelled by growth particularly in Sweden, the Baltics, Russia and China. “Accessing new export markets and achieving profitable growth requires us to invest in personnel and in marketing in the upcoming years. Consequently, we are constantly looking for new ways to do things more agilely and efficiently,” points out Annikka Hurme. “There are no shortcuts to accessing new export markets; it’s a matter of going through the regulatory permit processes as well as long-term building of recognition.” Development Strategy As a dairy co-operative, Valio’s primary objective is to achieve profitable growth by using world-class processing technology to

New Products Valio is continuing to develop new products to meet changing consumer needs. Recent innovations, such as ValSa milk salt and snacks with reduced sugar, have been launched in response to rising concerns about healthy eating. Valio updated its salt and sugar reduction targets in 2017 as part of a nutritional

The new Riihimaki R2 snack plant is the most modern of its type in the world and is also the largest single investment in Valio’s history.

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commitment, which is contributing to the UN’s sustainable development goals. “Our commitment is linked in particular to two UN goals: ensuring an adequate standard of food and nutrition, and improving health and wellbeing. Meeting these goals is essential, since the world’s population is projected to grow to as much as 9 billion by 2030. In Valio’s sustainability programme, we have committed to concrete actions that respond to global nutrition challenges. Innovations to improve health and wellbeing have been part of Valio already for decades,” says Anu KaukovirtaNorja, senior vice president of Research and Technology at Valio. New Snack Plant Central to its innovation strategy is the new Eur170 million dairy snack plant, which was commissioned in September 2017. The new Riihimaki R2 snack plant is the most modern of its type in the world and is also the largest single investment in Valio’s history. The plant’s annual production capacity is 120 million kilograms and it employs some 70 people. The new plant’s energy, logistics and water consumption systems have been designed to minimise losses and conserve natural resources, and over three-quarters of the thermal energy used at the facility is produced from renewable fuels. The world’s most modern heat recovery system is generating energy savings of 30% compared to the old Riihimaki plant.

As a dairy co-operative, Valio’s primary objective is to achieve profitable growth by using world-class processing technology to constantly add value to its milk pool, about 85% of all the raw milk produced in Finland.

Sugar Reduction A central aspect of Valio’s current R&D work focuses on reducing sugar. In 2015 Valio made 84 different snack products that met Valio’s commitment of reducing sugar content, and by 2017 Valio had increased that number to 136. The target for 2020 is to have 168 low-sugar products. “For example, we are studying the potential for using new kinds of fermentation cultures and enzymes for enhancing flavour,” explains Kaukovirta-Norja. “We will also examine how we can even more effectively use the sugar contained in berries and fruit and how modern technologies can be used to create great taste at our new snack plant in Riihimaki, Southern Finland.” Return to Ice Cream Production To strengthen its domestic market position, Valio has re-entered the Finnish ice cream market after more than a decade with the launch of a new line of Valio Ice Cream products. The six flavour combinations in the gourmet ice cream family will be the only 34

Jussi Mattsson, senior vice president of Valio.

Finnish, lactose free product line alternative on the market. The products are produced at Valio’s Oulu dairy. “Valio has long history as an ice cream producer, and we know what the Finns like when it comes to ice cream. We want to offer ice cream lovers something new and delicious and that many people can enjoy. That’s why Valio Ice Cream is always lactose free and features unique flavour combinations,” explains Jussi Mattsson, senior vice president of Valio. In addition to Finland, the ice cream will be sold in Moscow and St Petersburg. Ice cream is one of the products not included in the Russian Government’s import ban. Since 2014, Valio has been exporting juices, berry soups and Valio baby infant formulas from Finland to Russia. Additionally, in Russia Valio sells Valio branded, locally produced cheeses and fresh products like milks and yoghurts. Expansion in China Valio has also been stepping up its activities in China with the opening of a new head office in Shanghai. In addition to the existing Ingredient business units, Valio China has also established the new business units of Retail and Food Service. According to Euromonitor International, China’s dairy market size was valued at RMB376 billion (Eur50 billion) in 2017 and is expected to reach RMB484 billion by 2022. Valio has been operating in China since 1986 when it collaborated with the Ministry of Agriculture to help develop China’s dairy industry by providing milk production knowledge training in Finland and Beijing. Valio DEMI demineralized whey powders entered the China market in 1990. Thanks to Valio’s world-leading demineralization process and the pure quality of Finnish milk, the product was widely used to produce

Valio has been stepping up its activities in China.

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

infant formulas as well as chocolates and ice creams. Since then, Valio has been driving its growth in China by establishing a sales, marketing and service system to provide professional and innovative solutions for the premium dairy ingredients market in addition to demineralized whey powders and skimmed milk powders. Furthermore, Valio opened flagship stores on e-commerce platforms, such as JD.com and Tmall.com in 2017 to provide consumers with high-quality products from Finland. Valio’s ability to win the trust of the Chinese market in a relatively short period of time is mainly because of its sustainable business model that manages and controls every process – from cow-raising to the collection, transportation, quality inspection, processing and warehousing of raw milk – to ensure the quality and safety of the entire supply chain, from farm to plant. Indeed, Valio is a leader in sustainable food production in Scandinavia (see Panel). “We’re really excited to inaugurate our China head office in Jing’an, Shanghai,” says Annikka Hurme. “Right now, there is good momentum in the Chinese economy; we do hope that our new head office can write the next chapter for Valio in China.” J

Valio is International Leader in Sustainability In 2017 Valio was voted the most responsible company in Finland for the fourth consecutive year in Scandinavia’s biggest Sustainable Brand Index. “The world’s highest quality milk, healthy animals, and safe and premium quality products are a matter of honour to us. This award is a wonderful recognition to the 5,500 dairy farm entrepreneurs around Finland and to all Valio employees for the long-term sustainability work we Kristiina Kiviharju, senior vice do every day,” says Kristiina Kiviharju, president of Quality & Sustainsenior vice president of Quality & ability at Valio. Sustainability at Valio. According to the survey, eco-friendly packaging, the reduction of food waste, and healthy products are important factors for Finnish consumers when talking about sustainable food production. Kristiina Kiviharju continues: “For Valio, sustainability means concrete actions from the dairy farm to the store shelf. In 2017 we implemented the historically most extensive quality and production reform to improve animal wellbeing. We started paying a responsibility bonus to the farms that commit to preventive healthcare for cows, among other things. Another good example of a sustainability action is the world’s first entirely plantbased packaging. The renewable material doesn’t use any oil whatsoever as a plastic raw material, so the carbon footprint is 58 percent smaller compared to a container made from fossil raw materials.”

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Rocla’s Automation Solution Increases Safety and Saves Money at Valio’s Cheese Production Plant alio is the leading dairy product manufacturer in Finland, and the Haapavesi V plant processes and packs one of Scandinavia’s favourite cheese brands Oltermanni. Inside this factory there are

two automated guided vehicles by Rocla working 24/7. Rocla has been developing and manufacturing AGVs for 35 years. These AGVs have been customised with the Oltermanni branding and have quickly become part of the team.

Before same pallet transfers were handled by man-operated trucks. The premises are confined and distances are not that long. The work itself caused stress to employees and a challenge in work safety. At Valio they wondered, why should a good employee be doing this kind of boring work phase. Valio wanted to find a new solution to this. Pallets are being loaded with products in only a few minutes intervals. In order to keep the production line running smoothly the full pallets need to be transported right away to the shipment. In the old days the drivers needed to be ready all the time to move the full pallets to the shipment preparation. By replacing manual operators the amount of damage to vehicles, stock and site has reduced by 90 %. The number of forklift operators Valio employs on this site has fallen from 8 to 4 and manual shifts have fallen from 3 to 2. These AGVs can run unattended through the night with a traceability of 100 %. Crucially these machines don’t require track installation or wholesale changes to the existing design of a warehouse. The AGVs know their jobs and get on with them and when they are running low on power, they automatically roll themselves onto floormounted charging contacts. The AGV receives its instructions by wifi and carries them out using a rotating laser which bounces off a series of discreetly placed reflective strips. The unit can calibrate its exact position to

within a centimeter. And it’s safe too. Sensors at both ends, in the side rails, above the AGV and in the forks themselves means that if anything comes too close it stops. The AGVs are moving around in areas where there are also manual forklifts and people, and they get along with everybody. “People are often afraid of new things but nowadays everybody says they wouldn’t give them away,” concludes Marko Palosaari, Valio Haapavesi Plant Manager. For further information visit www.roclaagv.com. Watch the video https://www.youtube.com/watch?v=vVXQ U68W9NM J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Rocla’s Automation Solution • Automation intelligence since 1983 • Over 7,000 automated guided vehicles in more than 1,000 projects worldwide • short delivery, easy implementation, low total cost of ownership • reliable and safe 24/7 operation • long lifespan up to 20 years • local lifetime services close to customer thanks to global partner network • in production, warehouses and logistic centers with an emphasis on manufacturing, food & beverage, packaging and paper & printing.

Putting People Before the System – The Finnish Way Food and Beverage business, the Iandnkeyfuture to success is Continuous Improvement people – helping professionals do their work better. Changing consumer habits mean a broader array of product variations, bigger volumes, shorter product cycles and unpredictable changes. That is why companies should digitize and standardize their processes and ensure end-to-end transparency across supply chain. The competition in the F&B industry is among the toughest in the world. In addition to responding to consumer behavior, success requires brand reliability, calling for ever stricter product safety and traceability.

Companies need increasingly dynamic optimization of product mixes, recipes and production volumes, minimizing human errors. Implementing systematic daily management to support employee innovativeness and driving Continuous Improvement pays off. Investments will pay for themselves faster and efficiency and productivity will increase. Roima’s Comprehensive Offering at Your Service Roima helps companies develop their product management, enterprise resource planning, operations management, machine vision and intralogistics. Roima’s best recipes for success have been developed together with valued customers who never compromise quality. When boosting customers’ profitability, Roima puts people first. With 170 professionals and 30 years of experience enhancing the F&B industry processes, Roima is a partner you can rely on. Different production approaches constitute Roima’s core compe-

tence, and by identifying and analyzing the key challenges of your production process, Roima can create a comprehensive solution for your business to harness the change for your success! Solid Industry Expertise “Roima’s expertise helped Valio prioritize its development needs and turn them into concrete actions to be taken – into a future roadmap for short and long term. Through this roadmap, Valio will secure the lifecycle of its production critical systems and ensure the continuity of its business also in the future,” says Mika Puustinen, Business IT, Valio. J

New Report – How Digital Tech Is Changing the Food & Beverage Industry hile other industries have embraced digital technology, food W and beverage companies have been falling behind. Tetra Pak has undergone its own digital transformation over the past few years and is now working with other companies to help them navigate the complex systems and technology. Tetra Pak has launched a whitepaper looking at: • The impact of digital tech and Industry 4.0 on food and beverage manufacturers; • The challenges and opportunities that Industry 4.0 brings; • Steps that manufacturers can take to overcome challenges, increase productivity and reduce costs. Industry 4.0 represents the fourth great leap in technology since the dawn of the industrial age. Embracing Industry 4.0 can lead to increased productivity, reduced costs and deliver increased profitability for businesses. Internally it also provides the opportunity for continued progression and upskilling, creating new jobs for employees. By implementing a five-step process, food and beverage manufacturers can more quickly respond to the changing needs of their consumers and make the most of Industry 4.0. 1. Partner. Join forces with others in the food and beverage industry who have a deep understanding of the technology and processes Industry 4.0 requires and of the imagination required to

execute them. 2. Connect. Ensure their equipment is capable of being connected with each other, and with the workforce necessary to manage it efficiently. 3. Engage. Team up with subject matter experts in each part of their processes, to ensure they are fit and ready to respond to the potential changes Industry 4.0 will bring. 4. Analyse. Make sure they have the capability to analyse the data that is generated to make swift, smart decisions. 5. Decide. Make informed decisions based on what they’ve learned about their business needs, and how their strategy needs to adapt. J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I MIXING & BLENDING

Admix Sweetens the Pot With its High Shear Mixing Technology or food and beverage processors incorF porating sweeteners to their products, opportunity exists to reduce costs when efficiently utilizing granulated sweeteners (pure sucrose, fructose, or dextrose) as opposed to procuring them in liquid form. A high-level overview of the savings is: granulated sucrose in bulk is less costly than liquid sucrose delivered in tankers; the

solve 67.5 Brix sucrose, a minimum water temperature of 21°C (70°F) is required, and to dissolve 65 Brix, a minimum water temperature of 8°C (47°F) is required. These temps are needed to maintain the sweetener in solution. Next, we consider time. Once a desired Brix level has been identified, the processing equipment must allow time for the sweetener to completely dissolve after it has all been added to the liquid. This chart in this article demonstrates the time it takes for 67.5 Brix granulated sucrose to completely dissolve. This required time cannot be reduced with higher shear levels. To achieve these levels, the crystals must be completely deagglomerated (lump-free) and must maintain a rapid particle velocity through the liquid until it completely dissolves. Crystals that remain un-agitated on the bottom of the vessel can remain for hours and may never dissolve. Mixing System

Admix Rotosolver.

need to store and heat the liquid sucrose is eliminated and by going granular only a surge/storage tank that would typically hold a half-day’s production is needed. Another advantage to granular is that a fresh on demand batching operation can improve flavor profiles and the small batching capability may allow for more accurate temperature tolerance control that could help processing parameters downstream.

Once these basics are understood, a mixing system can be designed that introduces the granular sweetener into the solution in an efficient and effective manner. The sophistication of the system is solely dependent on the volumes to be produced and the capital available for the system and its ROI. Detailed and customized designs can be prepared by Admix, leaders in advanced mixing technologies, but here’s a quick review of two options.

Major Factors to Consider

When batching or liquifying granulated sweeteners, temperature and time are the two major factors to consider. First, we consider temperature. As the percent solids of sweetener in water increases, the minimum temperature must also increase to completely dissolve the sweetener. For example, to completely disFOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Admix FastFeed.

Admix Rotosolver® in-tank, high flow, high shear disperser for batch creation & hold. A properly sized Rotosolver can enable processors to add sugar at double the rate of many conventional mixers. For sugar processing, Admix recommends adding a mechanical powder feed from bulk bag or from bulk silo directly into the tank, and adding a simple tank jacket or inline heat exchanger to achieve and maintain desired temperature. Admix FastFeed™ inline powder induction and dispersion systems provide robust powder induction with moderate to very high shear rates. This technology allows dependable introduction of granular sweeteners directly into a liquid flow stream. In a single pass, these systems are capable of creating 44 Brix. On a recirculation loop, slurries up to 80 Brix are achievable. Admix has been assisting processors in the beverage, dairy, confection, cereal and snack food industries to design and operate efficient granulated sweetener batching/hydrating systems for over 20-years with powder addition rates up to 181 kg / 400 pounds per minute. Admix is well versed in the process pain points associated with sweeteners and is ready to assist with your mixing needs. For further information contact Admix on Tel +45 3213 8743, Email europesales@admix.com or visit www.admix.com. J 39

I MIXING & BLENDING

New Hygienic Magnetic Mixer Designed for Exceptional Performance and Reliability PX FLOW has announced the release of a new magnetic mixer, the MagMixer S MBE, from their Lightnin brand. The MBE Series MagMixer has been specifically designed for reliable operation and regulatory compliance. The unit has no shaft penetrating the tank and so requires no mechanical seals; significantly reduces the risk of leakage or microbial contamination. It provides high torque capacity with optimum cleanability and, with bottommounted magnetic agitators, is ideal for low-viscosity blending, dissolving solids and solid suspension in sterile applications. Precisely engineered using computational fluid dynamics (CFD), the MagMixer MBE utilizes Lightnin A281 3-blade hybrid axial/radial impellers in an open construction that maximizes flow while facilitating easy cleaning and sterilization (CIP and SIP). Alongside optimizing product flow, the impellers contain strong magnets which produce high levels of torque capacity in a compact form.

The magnetic impeller removes the need for shaft and seals. Strong, oversized ceramic bearings reduce the risk of breakage, are product lubricated and produce exceptional mixer stability, reliability and performance. The mixer further assures low maintenance overheads as the bearings can be easily replaced on-site and there is no need for a spare Impeller. Magnetic lifting of the impeller reduces the load on the surface of the bearings and enables the mixer to continue to run until the mixing vessel is com-

pletely empty; improving formulation mixing right until the very last drop has left the mixer. The MBE Series MagMixer is controlled by a variable frequency drive (VFD). The Series covers a wide power range from 0.09 kW to 7.5 kW (0.12Hp to 10Hp) with operating speeds of between 200 and 1000 rpm. A range of options across the range including different bearings, O-Rings, drive and body materials; protection classes (up to IP67), and hazardous area operation (ATEX Category 2) make this a flexible mixer choice for fluid viscosities up to 500 cP. Overall the MBE Series MagMixer is an exciting new addition to the Lightnin mixer portfolio, offering exceptional performance and high torque capacity at a surprisingly low initial cost. Designed for superior sanitary performance and to assist with FDA compliance, the mixer is ideal for food, beverage, pharmaceutical and biotechnology as well as fine chemicals, and personal care applications. J

Putting the Maximum Mechanical Work in Your Mixing Process With a Minimum of Energy Consumption acko Pumps of Belgium and P Daniatech of Denmark have bundled their expertise in pump manufacturing and mixing and have set a new standard in high-shear pumps. The patented rotorstator design was optimized with CFD and gives the pump an unrivalled energetic efficiency. The energy consumption is 40% to 50% lower compared to other high-shear pumps.

This high efficiency does not only result in a lower energy bill for every hour the pump is in operation, but also reduces the initial investment. The high-shear pump can be fitted with a smaller motor and the possible frequency convertor is also smaller and cheaper. The optimized flow through the rotor-stator also results in a very quiet operation. The high-shear pumps are based on the well-established Packo FP pumps and they share consequently all their valued unique advantages. All the options of the FP pumps are also available on the highshear pumps and they have almost all spares in common (motors and seals are normalized). The high-shear pumps (SFP) are plugand-play mixing units that combine the mixing and pumping function in one machine, hence saving maintenance and floor space. They have pumping capacities up to 200 m?/h and up to 80 m differential pressure. FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

These features, together with the hygienic design, make the Packo highshear pumps the favourite in dairy, ice cream, prepared food, beverage, bakery, marmalade and similar industries. Where static mixers, dynamic mixers and agitators can give satisfactory results for simple duties such as blending liquids of similar viscosity and density, the high-shear pumps can reduce mixing times up to 95% in processes where stable emulsions are needed, particle size has to be reduced or texture agents (eg xanthan, alginate, pectin, carboxymethyl cellulose, carob, gelatin) have to be activated. Thanks to the recently elevated shear rates of up to 95.000 s-1, the shearpumps are even suitable for processes where traditionally a homogenizer was needed. Thanks to this ultra-high shear value, the Packo high-shear pump gives enough mechanical work to the pumped liquid to transform yoghurt into drinking yoghurt. J

I PREPARED MEALS

Kerry Launches Great Culinary Taste to Help Meet Changing Consumer Needs onsumers want to enjoy authentic, delicious restaurant quality C prepared meals made from ingredients they know and trust. Taste, convenience, nutrition and traceability need to coexist; and while all four are intrinsically linked to consumer demand, delivering it all at scale and for a profit, is not easy. Kerry, the Taste & Nutrition company, understands these challenges, as it strives to manage the complexity inherent in preparedmeal innovation, development and manufacture. To help address these needs Kerry has just launched Great Culinary Taste; a simple approach to help bridge the gap between the great authentic taste that consumers are looking for and what Kerry’s customers can produce at scale, helping create dishes that are inspired by the market, fast-track innovation and reduce complexity. Great Culinary Taste is a simple approach to working with customers to create simple dishes that are inspired by the market, as well as delivering on the taste and innovation agenda. It aims to take the ingredients prepared meal manufacturers already have available, add a little bit of culinary magic and know-how, to enable them to enhance the taste of existing consumer favourites or add to their range by creating other product variants including more authentic and ethnic dishes. Great Culinary Taste brings together key elements of the Kerry Taste & Nutrition portfolio of natural, authentic solutions to deliver innovative, clean label foods that are filled with real ingredients. The Great Culinary Taste range includes; plant proteins, natural stocks, infused oils, natural flavours, DairySource-Cream Replacer, natural extracts and marinades, pastes and glazes.

from around Europe, have develop a toolkit that can stretch the ingredients already available in a development kitchen, to produce other prepared meal variants and drive costs even lower, by maximising what is already in the larder. This approach can help manufacturers introduce a new prepared meal to the market, reinvigorate an existing consumer favourite, or create a richer, more premium taste experience.” [1] Kerry Discovery Research (2016) [2] GlobalData 2016 J

Being able to introduce this variety, authenticity and ethnicity to your range, using clean-label ingredients is critical to the success of prepared meal reformulation. The latest research Kerry has undertaken, reveals that over 70% of European consumers now check the back of pack labelling when shopping for groceries, with 73% of consumers looking for more natural ingredients in their prepared meals[1]. 42% say they are highly influenced by products that claim to be authentic, homemade or made with real ingredients[2]. Commenting on the changes in consumer demands and subsequent challenges, Grace Keenan, Kerry Marketing Manager, Savoury, says: “Informed consumers are demanding more from the foods they eat, but taste remains a key driver of consumer choice. They want simple, transparent ingredients and reassurances that what they are buying is good for them and their families. This creates complexity for the developers of prepared meals, who need to create taste experiences, at scale and without compromising on labelling or nutritionals.” Thomas Duffin, Development Chef, Kerry Taste & Nutrition, says: “To really bring great Great Culinary Taste to life, our chefs FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I FLAVOURS

Global Flavours Market to be Worth $18 Billion by 2023 he $13 billion food and beverage flavours market is expected to be worth $18.13 billion by 2023, having grown at a CAGR of T 5.5% since 2016, according to Allied Market Research. The natural flavours segment is projected to exceed this rate of growth, expanding at a CAGR of 8.9% from 2017 to 2023 The food flavour industry plays a vital role in food processing to enhance the taste of products. Flavours are used in various products, such as bakery, confectionery, meat, snacks, seafood and poultry. Increase in demand for ready-to-eat meals and fast foods are the key driver of the industry globally. Moreover, innovative technologies, the introduction of new flavours, a rise in disposable incomes, changing food consumption habits, and heavy investment in R&D activities are also fuelling overall market growth. The beverage segment accounts for more than 25% of the total market, in terms of revenue. Flavourists at beverage manufacturers have focused on creating a perfect blend of flavours, which is expected to cater for the change in consumer preferences. Technological advancements in production procedures and a rise in demand for fruit-flavoured drinks are expected to provide lucrative growth opportunities to the beverage flavours industry. The Flavors (Food & Beverages) Market Report, published by Allied Market Research, highlights the growing use of natural flavours due to health awareness and factors, such as improvement in standards of living, change in lifestyle, and the growth of the beverages industry. Furthermore, high demand for flavours across European countries to produce commercialised clean label or green food products without additives and other harmful chemicals has driven the growth of the natural flavours segment. Asia-Pacific is expected to dominate the global flavours (food & beverages) market by 2023, owing to the growth in demand for various packaged, flavoured food products, rising disposable incomes, a change in dietary habits, transitioning lifestyles, and a

rapid rate of urbanisation. North America and Western Europe are expected to witness high demand for natural food flavours in the near future. The key players operating in the market are Firmenich, Frutarom, Givaudan, Huabao International Holdings, International Flavors & Fragrances (IFF), Kerry Group, V Mane Fils, Robertet, Sensient Technologies Corporation, Symrise and Takasago International. “Stringent government regulations and adverse effects of synthetic flavours on human health are factors expected to hamper the market growth in the future. However, innovation in flavours and their growth in demand across emerging countries are expected to open new avenues for the market players in the future,” says Eswara Prasad, Team Lead, Chemicals & Materials at Allied Market Research. J

IFF Acquires Frutarom in $7.1 Billion Deal nternational Flavors & Fragrances (IFF) is acquiring Frutarom in Iincluding a cash and stock transaction valued at approximately $7.1 billion, the assumption of Frutarom’s net debt. Frutarom is a flavours, savoury solutions and natural ingredients company, with production and development centres on six continents. It markets and sells over 70,000 products to more than 30,000 customers in over 150 countries. Frutarom is primarily focused on natural products, which drive more than 75% of its sales. Frutarom’s product portfolio consists of innovative and integrated solutions combining taste and health, natural and clean label products. In addition, Frutarom mainly serves local and mid-size customers, and has a compelling presence in fast-growing adjacent and complementary categories. Frutarom has a strong track record of growth, with expected sales of above $1.6 billion in 2018. The transaction creates a global leader in natural taste, scent and FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

nutrition. In addition to IFF’s and Frutarom’s highly complementary flavour capabilities, Frutarom’s portfolio creates opportunities to expand into attractive and fast-growing categories, such as natural colours, enzymes, antioxidants and health ingredients. The combined company’s customers will have access to comprehensive and differentiated integrated solutions with increased focus on naturals and health and wellness. Furthermore, Frutarom significantly enhances IFF’s exposure to the fast-growing small- and mid-sized customers, including private label. Approximately 70% of Frutarom’s sales are to these two customer groups. On a pro forma basis, the combined company would be expected to have approximately $5.3 billion of revenue in 2018. Following the completion of the transaction, IFF is expected to benefit from enhanced top line growth rates and a strong EBITDA margin. IFF and Frutarom expect to realise approximately $145 million of runrate cost synergies by the third full year after closing, with approximately 25% achieved in the first full year. J

I FLAVOURS

Synergy Flavours Acquires Italian Natural Flavourings Supplier ynergy Flavours has completed the S acquisition of Janousek, based in Trieste, Italy. One of the world’s first suppliers of herbal extracts and natural flavourings and an expert in Italian profiles, Janousek has been serving customers in its home market of Italy for 135 years and also operates across Eastern Europe. The acquisition of Janousek will enable Synergy to expand into these European geographies with its specialist product ranges, which include flavours for nutrition and dairy taste solutions. Synergy’s flavour creation and application capabilities span the globe – with commercial, manufacturing and technical support facilities in Ireland, the UK, the US, Brazil and Thailand. The company is part of the Carbery Group – a leading international manufacturer of speciality food ingredients, flavouring systems and an award-winning cheese producer, owned by four Irish dairy co-operatives. Steve Morgan, CEO of Synergy Flavours, comments: “We’re thrilled to be welcoming the Janousek business into our group as it brings new expertise and products into our natural flavour, essences and extracts portfolio and complements our long heritage in dairy processing in Ireland and vanilla extraction in the USA. The Italian site has an excellent record for high quality manufacturing, offers room for growth with easy 44

road access to much of mainland Europe.” He adds: “Janousek is a growing, well run business and we have no plans for major or immediate changes. Our intent is to invest in and grow the team, adding new skills and new capacity to the site as required over the coming years.” Jason Hawkins, CEO of the Carbery Group, adds: “With ongoing investment and expansion underway in the US, Asia and Brazil and recent investment in

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

Mexico, our intention is for Synergy Flavours to be positioned to support customers across the world, regardless of borders or geography. The acquisition of Janou‰sek gives Synergy in Europe a new home on the doorstep of Eastern Europe, potentially easier access to the Middle East and an established base to support flavour and natural ingredient manufacturing for new and existing customers in Italy and the wider region.” J

I FLAVOURS

Flavorchem Announces Extracts For Cleaner Labels lavorchem Corporation, a global supplier F of flavour and colour solutions, recently unveiled their line clean label extracts. The “Go Clean” movement is here to

stay, with consumer demand for more label friendly ingredients, clean processing facilities, and corporate transparency and authenticity. Flavorchem now offers a variety of clean label extracts derived from wholesome sources, using only the cleanest

methods of processing for a true-to-nature flavour. As there are no federal regulations defining ‘clean label’ ingredients, Flavorchem follows standards set by industry leaders in food service and retail. These standards include, but are not limited to: • No Artificial Ingredients • No Synthetic Chemicals • Propylene Glycol (PG) Free • Caramel Color Free • Prop 65 Free • Natural/Natural WONF • Non-GMO Project Verified • Organic Compliant/Certified. For a list of extracts to help provide clean labels visit flavorchem.com. Established in 1971, Flavorchem is a privately held business whose customers include first class brands well recognized throughout the world. US-based Flavorchem is a fullservice operation with

three strategically located manufacturing facilities throughout the world, providing for logistical advantages and contingency. The company’s global headquarters are in Downers Grove, Illinois, with a research and development centre and complete flavour manufacturing operations. Additional manufacturing facilities are in San Clemente, California, and Kerepes, Hungary, along with global offices in China and the Americas. J

Symrise Develops Safe Grill Taste That Meets New EU Requirements ymrise has developed a taste solution that imparts a natural grill S taste to snacks, sauces, meat products and the like. Grillicious is an excellent alternative to conventional grill flavorings which, from April 22, 2018, onwards, may no longer be used due to an EU regulation. As a result of the implementation directive of the European

Union (EU) from 2012, the food industry is now required to offer taste solutions that comply with the regulation, yet at the same time still ensure the same taste experience. With Grillicious, Symrise provides food manufacturers with a suitable solution for their products. “We developed Grillicious on the basis of the new EU requirements and were thus able to expand our high-quality and reliable range of flavorings and ingredients,” explains Simone Ehbrecht, Marketing Director of the Culinary EAME Flavor Division at Symrise. “With Grillicious, our customers get a grill flavor with the authentic grilled taste that they prefer. It also fulfills the requirements of the laws pertinent to them and can even be labeled as natural.” Grillicious is derived from plant-based oils and can be labelled as a natural flavour. Symrise’s own, company-internal production guarantees sustainable and responsible processing, and ensures that customers receive a reliable and approved product for their own applications. Furthermore, Grillicious ensures a stable price-performance ratio and a consistent taste profile in the food to be enjoyed. J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I FLAVOURS

Red Arrow is Committed to the Continued Safe Use of Grill Flavors ed Arrow Products, a Kerry Group business, is committed to providing safe, quality, and compliant ingredients. Grill Flavors R have been safely consumed for over 30 years. Regardless of the recent, unfortunate rejection by the EU Commission to extend the use of Grillin’™ 5078 and Grillin’™ CB-200SF, Red Arrow supports the continued safe use of these grill flavors. Red Arrow continues to demonstrate its due diligence with an extensive safety evaluation plan, initiated in 2017, to go above and beyond answering any questions that EFSA had cited in their opinions of 2017 which indicated that more data was required.According to Nancy Higley, Ph.D., Vice President Regulatory and Toxicology External Affairs, the Red Arrow program is designed to meet the global standards of food safety evaluation. The following studies are being conducted:

• Characterization of Unknown Fraction Although it can be inferred from the manufacturing process that the majority of the product is derived from the starting oil material, Red Arrow has an extensive analytical program using state of the art reference libraries to further identify the unknown fractions of Grillin’™ 5078 and Grillin’™ CB-200SF. Preliminary, Unaudited Results: As expected, the >400 constituents in these Grillin’™ flavors are fatty acids and phospholipids typically found in the starting oil material. • Exposure Refinement Although there is a history of safe use of Grillin’™ flavors, Red Arrow has revisited the use levels and engaged an expert third party to estimate the consumption of these grill flavors. There are several acceptable methods to determine exposure to flavoring substances. Red Arrow has chosen the Added Portions Exposure Technique (APET). APET was developed by EFSA and is an adaptation of the method acceptable by the Joint Expert Committee on Food Additives (JECFA) of the World Health Organization (WHO). Preliminary Unaudited Results: Based on the normal and maximum use levels for adults and children, the exposure estimates continue to indicate adequate margins of safety for the current consumption of Grillin’™ flavors. In addition, the results support the doses planned for the feeding study. • Toxicology Study: Reverse Bacterial Mutation Using Preincubation Although previously the external scientists had advised that this

study was not necessary, Red Arrow has since conducted this study for both Grillin’™ 5078 and Grillin’™ CB-200SF. Preliminary Unaudited Results: Confirmed results indicate no increase in revertant colonies, therefore, no demonstration of genotoxicity. The laboratory draft report is in review. • Toxicology Study: Micronucleus Study Although previously the external scientists had advised that this study was not necessary, Red Arrow is conducting this study for Grillin’™ CB-200SF. Preliminary, Unaudited Results: No preliminary data is currently available. • Toxicology Study: Subchronic Study Although EFSA has not indicated the necessity of this study, Red Arrow is demonstrating its commitment to the safety program by conducting this study for both Grillin’™ 5078 and Grillin’™ CB200SF. Preliminary Unaudited Results: Confirmed that a dietary route of exposure is acceptable by the animals and technically feasible. The 14-day, dose-range study on Grillin’™ CB-200SF indicated no in-life adverse effects and no adverse macroscopic observations upon necropsy. Red Arrow is proceeding to conduct the 90-day study in accordance with global standards and consideration of the completed exposure assessment (outlined above). All unaudited data and reports reviewed to date demonstrate no safety concerns. Red Arrow continues to complete this very extensive program and continues to support that Grillin’™ 5078 and Grillin’™ CB-200SF are safe under the conditions of intended use. Red Arrow Products will continue to keep the industry updated as more results from these studies become available. NEW: Grillin’ RA18016™ Red Arrow has created a new grill flavor that is approved for use in the EU and is identical in flavor characteristics to the legacy grill flavors. Grillin’™ RA18016 is a natural flavouring that brings the authentic grill impact customers have come to expect from the creators of the gold standard for grill flavors. The attached flavor map shows the comparison between Grillin’™ CB-200SF and the new Grillin’™ RA18016. J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018

I NUTRACEUTICALS

Success of Vitafoods Europe Reflects Strength of Nutraceutical Industry he success of Vitafoods Europe 2018, which attracted over 20,000 T visitors for the first time, reflects the strength of the industry, the organisers say. A total of 21,132 visitors passed through the doors at Palexpo, Geneva between 15th and 17th May. The numbers were the highest in the event’s 21-year history and represented a 6% increase on the 2017 event. Exhibitor numbers were also up, with 1,119 companies showcasing their products and services, 8% more than in 2017. Commenting on the figures, Chris Lee, Managing Director, Global Health & Nutrition Network Europe, Informa Exhibitions, says: “The success of Vitafoods lies in the role we play in a vibrant, fastmoving industry that is committed to innovation. There’s enormous thirst for knowledge and we offer a space where people can learn, as well as coming together to do business. By providing opportunities to discover new products and gain insights into the trends and science shaping nutrition, we hope to help drive innovation. The big focus now is on building our role as an industry partner, supporting its growth and helping it adapt to challenges.”

The organisers of Vitafoods Europe are now planning for its next edition (7-9 May, 2019 at Palexpo) as well as Vitafoods Asia (11-12 September, 2018 in Singapore). One trend that was apparent at Vitafoods Europe was the convergence of traditional categories. “Old categories have begun to blur,” says Chris Lee. “There’s now a really interesting space, for example, between nutrition and pharma. Companies are starting to understand the role functional foods can play in addressing global health problems such as cardiovascular disease and obesity. As a result, we’re seeing an increasing number of products that are hard to pigeon-hole as either food or pharma. Another interesting example is the convergence of food and cosmetics, with ingestible skincare and nutricosmetics becoming more mainstream.” Exhibitors and visitors also enjoyed the emergence of innovative new categories. “This year, we saw a lot of synergy between food and nutraceuticals, and a lot of innovations and new forms of delivery” says Antoine Dauby, Marketing Communications Director at Naturex, one of the event exhibitors. “So it's definitely a great place to learn.” Another big theme was personalised nutrition, which was the subject a new interactive workshop in the Vitafoods Europe Education Programme. A key question for delegates was how the category can become more accessible. “I found the workshop very valuable because I think personalised 48

nutrition is a space where there’s not a lot of knowledge in terms of commercial applications” says Katherine Martinez, AVP at United Laboratories. “From where I sit – because the Philippines is pretty much a third world country ? the challenge is how to make personalised nutrition accessible, and there was a particularly interesting question about whether science is outpacing the commercialisation opportunities.” The introduction of the workshop was part of a drive to make the Education Programme a more interactive experience. Other changes, such as the introduction of round table discussions, were also well received by delegates “I’ve been coming to Vitafoods since 2014 and I think the Education Programme gets better and better every year,” says Dr Mohammed Gulrez Zariwala, Senior Lecturer at the University of Westminster. “It’s always useful, and I think the organisation was particularly good this year.” A total of 4635 people attended presentations at the several theatres on the show floor, again indicating visitors’ desire to learn. One of the most popular features was the new Sports Nutrition Theatre, where 869 people attended presentations. “The quality of our educational offering is very important to us,” says Chris Lee. “We work hard to adapt to trends in order to deliver the most relevant information and sports nutrition is a good example of that. We’ve seen the category evolve from something that was the preserve of professional athletes into something much more mainstream – it’s now very common for everyday cyclists and runners to use specialised nutrition products.” J

FOOD & DRINK BUSINESS EUROPE, MAY/JUNE 2018