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As inflation eases from levels of the past two years, investors in large, publicly traded companies are looking at how companies can boost sales without the help of price increases. The latest quarterly figures from General Mills, released (June 26), highlight the demanding situations faced by food manufacturers.
Remaining in North America, private equity firm Swander Pace Capital announced its latest acquisition, the purchase of a U. S. -marketed frozen food manufacturer from Swander Pace Capital. and Canada.
In Asia, shortly after Mondelez and Lotus Bakeries joined forces to expand into India, one of its main domestic competitors announced that it would close one of its factories in the country.
And Mondelez itself has revealed that its operations across the border with Pakistan are aimed at sourcing more inputs that they use domestically, which, given the country’s chocolate market expansion forecasts, is not a surprise.
In the three months to May 26 (General Mills’ fourth quarter), the U. S. group’s sales fell 6 percent, due to declining volumes. In its core retail business in North America, volumes fell 6%.
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“As we approach fiscal 2025, our most sensible priority is to drive biological expansion in our net sales and, in particular, our volume expansion,” said Jeff Harmening, chief executive officer of General Mills.
During an investor-analyst call, he later added, “Improving the price is the number one project we want to have to be competitive. “
This is a challenge that is not unique to General Mills or even the United States. Every food brand will be wondering how to spice up unit sales, and this will be a recurring theme on investor calls as we begin to see corporations inform their schedule. year moment quarters (McCormick numbers
Could SKU’s efforts help?
Swander Pace Capital is one of the leading active capital firms in the North American food and beverage market, and this week the acquisition firm unveiled its latest investment.
North American frozen food maker Inovata Foods has secured an undisclosed investment from Swander Pace Capital.
As the terms of the deal were announced, Swander Pace Capital showed Just Food that it is now the majority shareholder of Inovata Foods.
The Canadian manufacturer, founded in 1989, sells its frozen foods in Canada and the United States to stores and restaurant customers.
Inovata Foods founder Steve Parsons said it will “accelerate our capacity expansion plans. “
The company has a 45,000-square-foot production facility in Edmonton, Alberta, and a 95,000-square-foot production facility one hundred miles from the U. S. border in Tillsonburg, Ontario.
The Ontario-based company produces a variety of frozen foods on-site, ranging from pasta and noodle dishes to Indian-style curries and paella.
And Swander Pace Capital supported a company that operates in a developing market on both sides of the border: the United States.
“As demand for gastronomic responses from premium brands continues to grow, we see Inovata as the ideal platform to capitalize on those trends,” said Tyler Matlock, managing director of Swander Pace Capital.
News broke this week that India’s Britannia Industries was preparing to close a factory in the suburbs of Kolkata after all of its permanent staff on site accepted voluntary pension plans.
The Taratala biscuit factory, founded in 1947, is closing its doors. Britannia reportedly hired about 150 workers at its facility, according to the Times of India.
The company has three biscuit production plants in the eastern states of Bihar, Odisha and Assam.
The Indian sweet biscuit market looks set to remain dynamic, which is why Mondelez and Lotus have announced their recent merger in production and distribution in the country.
In the fiscal year ending March 31, 2024, Britannia Industries generated cash worth of Rs 165,460 crore ($1. 98 million), an increase of 3. 5% from last year. The accumulation of operating profit increased by 10. 1% to Rs 28,690 crore.
Vice President and CEO Varun Berry said after the group’s May results: “In a scenario of tepid revenues, our functionality this year is synonymous with resilience and competitiveness. Over the past 24 months, we have achieved a strong earnings expansion of 19%, accompanied by a remarkable 43% accumulation in operating profit.
“Our market share recovered over the course of the year thanks to strategic price movements for competitiveness and intensified investments in brands, supported by distribution expansion. “
Mondelez seeks resilience in Pakistan
Meanwhile, across the border from Pakistan, Mondelez will invest about $5 million in its local operations to source more domestic inputs.
The U. S. confectionery and snack giant sends 50% of all the raw fabrics it uses for the finished products it manufactures in the country to Pakistan.
The organization has two production plants in Hub, Balochistan, which will get the new investment.
Mondelez said in its statement: “Due to severe macroeconomic pressures and lack of foreign exchange liquidity in the country, Mondelez Pakistan has taken proactive measures to mitigate the effect by putting in place measures to localize 50% of imported materials above, with the exception of imports such as cocoa beans, which are not harvested locally.
“Mondelez Pakistan has plans to future-proof its operations in the country through localization, prioritizing export expansion and consolidating its long-term presence in the market. By investing in local capabilities, the company can generate sustainable expansion. boost exports and consolidate its position as a key player in the Pakistani economy.
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