Consolidation in UK poultry as Cargill, Faccenda form JV

25-Sep-2017 - Last updated on 26-Sep-2017 at 14:42 GMT

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Further evidence of consolidation in the UK fresh poultry sector came yesterday (25 September) as Cargill and Faccenda Foods revealed plans to establish a joint venture operation in the country.

Cargill and Faccenda are currently the third and fourth-largest poultry processors in the UK.

The newly formed company will focus on the production of chicken, turkey and duck products. It will operate as a stand-alone business with each company taking equal shares.

Andy Dawkins, managing director for Faccenda Foods, will be appointed chief executive while Chris Hall, fresh chicken director for Cargill Meats Europe, will be appointed chief commercial officer of the new joint venture.

The new business will employ approximately 6,000 people in the UK. It will operate across multiple agriculture and operational centres, with capabilities that span the supply chain.

Ian Faccenda, CEO of Faccenda Investments, commented: “The new joint venture confirms our long-term commitment to being a responsible partner across the entire supply chain, providing stability and security to our customers, suppliers and growers for years to come.”

Separate to this 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 will retain its shareholding in Dartmouth Foods.

The name of the new joint venture is going to be announced at the closing of the deal.

Supporting innovation

Announcing the deal, Cargill said the enlarged company will have the “capability to respond to changing customer needs” in the retail and food service sectors with “a strategy for growth”.

“We believe the two organisations are complementary. Combining into one entity allows us to build on our strengths, grow in the market and better serve our customers. The venture will facilitate greater opportunities to innovate and deliver new and exciting poultry products for consumers,” explained Chris Langholz, president of Cargill Poultry.

Sector consolidation

The news follows a period of sector consolidation in UK poultry, with 2 Sisters Food Group acquiring Grove Turkeys and Bernard Matthews, as well as the acquisition of Moy Park by US-based Pilgrim’s Pride.

Boparan Holdings-owned 2 Sisters is the largest poultry producer in the country, followed by Moy Park. The combined Cargill-Faccenda venture will be the third-largest company in the sector.

ShoreCapital Markets analyst Clive Black suggested that these developments will mean the UK poultry sector is likely to become “materially more rational”.

“Combined, a new top-3 [player] may also make for further rationality in the overall chicken market from a supplier perspective if the new combination decides to be more careful with overall supply levels.”