Breakfast takeaway as Chinese firm buys Weetabix
China’s second biggest food and drink firm has acquired control of Weetabix, in a deal valuing the cereal group at more than a billion pounds.
The Chinese state-owned firm Bright Food has bought control of Weetabix from its Texas based owners, Lion Capital, which will retain a 40 per cent share. The deal is China’s biggest takeover of an overseas food and drink company, following several weeks of talks.
Bright Food has tried, and failed, to buy other global brands: an attempt to get control of United Biscuits fell through in 2010, and it also lost out in a bid to get a 50 per cent stake in the French dairy produce firm Yoplait. Now it has managed to acquire a global food brand, which it wants to roll out across Asia.
Weetabix, which employs around 2,000 people, already exports to 80 countries across the world, with annual sales of more than £420m. It accounts for some 7 per cent of Britain’s total cereal sales, producing tens of millions of Weetabix bars every week at its Kettering plant in Northamptonshire. It was family-owned for 72 years, until the Texan venture capital firm bought it out in 2004.
Several weeks ago, it unveiled new plans to win back more market share from Kellogg’s, and expand its international business, directing different brand messages at different overseas markets. It is not clear how the Chinese purchase will affect these plans, although it could easily fit in with Bright Food’s own expansion plans.
According to the Wall Street Journal, “China’s growing middle classes are demanding higher quality products and favouring the convenience of processed and packaged food”, and there is already a move to convert consumers to the idea of eating cold cereal with milk for breakfast instead of the usual rice porridge called congee.
Speaking before today’s news, the chief executive of Weetabix, Giles Turell, told Marketing Week that he believed a more functional message would work best in countries unused to such conventional British breakfast fare. “We will have to talk more about the benefits of what the brand does”, he said. “Whole grain, energy, low fat, low sugar, high fibre.”
Evidence suggests that Britons are falling out of love with cereal in the mornings, as lifestyles grow more hectic and food is eaten on the run. In China, however, it is booming. In 2011, sales of breakfast cereals aimed at children soared by more than 12 per cent, thanks to heavy promotion by firms like Nestle, the leading brand in the market.
Experts say the fast-growing sales are a sign that Chinese consumers are interested in healthier eating, especially where children are concerned. Bright Foods will be hoping it will now be well-placed to exploit that trend, and turn Weetabix into a household name across Asia.
