Orkla acquires Czeck frozen veg group Agrimex

By Katy Askew contact

- Last updated on GMT

Orkla expands in Czech Republic, enters frozen vegetable sector
Orkla expands in Czech Republic, enters frozen vegetable sector
Nordic branded food manufacturer Orkla has acquired Czech frozen vegetable producer Agrimex for an undisclosed sum.

The deal, inked through Orkla’s local subsidiary Hamé, will provide the regional food and ingredients giant with a “foothold​” in the frozen vegetable sector and expand its foodservice business.

“Agrimex and Hamé are a good fit. We are market leader in several categories in the Czech Republic and Slovakia, and by purchasing Agrimex we will also acquire a solid foothold in frozen vegetables. Furthermore, we are strengthening our position in the out-of-home sector since more than one-fourth of Agrimex’s sales are made through this channel,”​ said Atle Vidar Nagel Johansen, Orkla EVP and CEO of Orkla Foods.

Agrimex’s products are sold under the Dione, Dione Premium and Agrimex Foodservice brands. The privately-owned company holds the largest market share in the country's frozen vegetable category and generated an annual turnover of approximately €10.2m (CZK260m) in 2016. The company generates 95% of its sales in the Czech Republic, with a presence in Slovakia and Poland. 

Orkla and Agrimex agreed not to reveal the purchase price. However, Orkla said that the deal includes Agrimex’s “modern, automated”​ production plant in Panenské Břežany, north of Prague. The company sources its vegetables from local Czech farmers in the factory’s vicinity.

Orkla acquired Hamé, a branded food company in the Czech Republic and Slovakia, last year. The group holds “strong positions​” in the liver paté, ready meals, ketchup, jam, baby food and tinned vegetable categories, Orkla said.

Hans-Marius Lee Ludvigsen, an equity research analyst at Kepler Cheuvrex, told FoodNavigator that the move is “positive”​ but “limited in size”.

“The strong position in frozen foods will compliment Hamé’s already strong category positions. Also, this strengthens Orkla’s position in the out-of-home-channel which will be a key channel to drive organic growth going forward,”​ he said.

Likewise, Kjetil Lye, an analyst with Handels Banken, said that this relatively small-scale deal was a good fit and in line with Orkla's strategic priorities.

"This is ​minor acquisition for Orkla, but it fits well with the group’s strategy to grow its branded consumer business. We expect them to do more acquisitions over the next years,"​ he told FoodNavigator. 

M&A to reshape portfolio

Orkla has been using M&A to reshape the portfolio of its food and ingredients business.

The company, which sold its stake in energy firm Sapa earlier this year, has been expanding in key categories and countries through acquisitions – as well as sharpening its focus via divestitures.

Orkla-selger-K-Salat-til-Stryhns-A-S_medium
Orkla did not reveal the financial details of its deal to sell the K-Salat business in Denmark

Just last week (15 November), the Norway-based company revealed it is selling its K-Salat business in Denmark to Stryhns in a bid to “concentrate on fewer categories”​.

K-Salat produces salad spreads, mayonnaise, remoulade, dressings and potato salads in Denmark and the sale included a factory located in the country.

“From now on, Orkla Foods Danmark will concentrate its core assortment on the well-known brands Beauvais, Den Gamle Fabrik, Glyngøre, Bähncke, FUN, Grønnegården and Risifrutti,”​ Tino Bendix, CEO of Orkla Foods Danmark, said.

Ludvigsen noted that M&A is likely to form a key plank of Orkla’s strategy moving forward. “I definitely expect Orkla to continue to be active with bolt-on acquisitions within the branded consumer divisions,”​ he predicted. 

A spokesperson for Orkla confirmed that the group is "quite active"​ on the M&A scene.

"In general we are looking for strong, local brands with number one or number two positions in their home markets. Our strategy is to be a leading player in smaller markets where we already have a strong position, such as the Nordic countries, the Baltics and Central Eastern Europe.

"With regards to categories, we continue to focus on our core categories where we can build on our competence, and meet consumer trends through innovations and product improvements. We have also added higher growth categories adjacent to our core through M&A, such as vegetarian and organic food brands. In our M&A strategy, we also aim to grow our presence in sales channels with faster growth than traditional grocery."

Related topics: Business, Healthy foods, Prepared foods

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