Yildiz still lacks 'power brands' after United Biscuits buy: Analyst
The announcement of Turkish Yildiz's acquisition through its biscuit business Ulker Biskuvi Sanayi this week came after much speculation around its sale – with Kellogg, PepsiCo and Burton tipped as contenders in the last few months of bidding.
Jodie Minotto, global food trends analyst for the market research firm Mintel, told ConfectioneryNews the buy was a good move for both companies – providing Ülker with access to relatively stable markets, strong brands and a wide network of production facilities.
However, she said that the acquisition meant Ülker had found itself with a large portfolio of “regional brands” - like McVitie’s, Penguin, go ahead!, McVitie’s Jaffa Cakes, Jacob’s, Jacob’s Cream Crackers, Twiglets, Mini Cheddars and Carr’s in the UK, and BN, Delacre, Verkade and Sultana elsewhere in Europe – but it still lacked power brands like Oreo and Ritz were for its main competitor Mondelēz.
“Ülker must now balance its ambitions to continue expanding globally with a need to invest in building and establishing power brands which are essential in the arsenal of every global consumer goods company.”
Overall though she said the buy significantly elevated Ülker in the global biscuits category, overtaking Nestlé and PepsiCo and securing the position of third largest player after Mondelēz and Kellogg, and second largest in Europe.
United Biscuit owns and operates 16 manufacturing facilities, seven of which are in the UK.
“UB has a solid revenue and production base in the UK and Europe, which will provide stability as the newly expanded Ülker biscuits business expands into the Middle East, Africa and Russia, which remain volatile.”
She said the buy now meant Ülker had a strong presence in Europe, where it was previously lacking. The Turkish firm could build on United Biscuit investment in the Middle East and Africa through the acquisition of Saudi based Rana Confectionery and Nigerian biscuit maker A&P Foods, as well as its pre-sale efforts to establish the McVities brand in India.
“United Biscuits also exports to the massive Indian biscuit market, where its British heritage provides it with an advantage given its colonial ties to the country.”
Yildiz Holding demonstrated its ambitions to move beyond its strong domestic footing in 2007 when it acquired premium Belgian chocolate company Godiva for $850,000.
Latin American or Russian buy next?
However she said the move would not help Yildiz to realize its Latin American or Russian ambitions, with further buys probably on the cards as a result.
“UB acquisition is unlikely to be very helpful in advancing these plans. However, Ülker have also indicated they are planning further acquisitions and these are likely to be focused on delivering them an advantage in these two important biscuit markets.”
And the losers were...
She said most of the contenders for United Buscuits were highly compatible. A deal with Kellogg would have concentrated more market power between themselves and category leader Mondelēz.
“If the deal were struck by Burton’s it could have completely transformed their business, yet it would not have greatly enhanced the United Biscuits business overall.”
Meanwhile in the case of PepsiCo, United Biscuits would have bolstered its presence in the biscuit category and given them a greater geographic presence beyond Latin America where most of its biscuits strength currently lies, she said.