In an announcement today (24 May), Tate & Lyle said it has entered into an agreement to take a 15% equity holding in the company, which it described as the largest privately held stevia supplier globally. The deal also provides Tate with the option to buy Sweet Green Fields outright. Further financial details were not disclosed.
‘Highly complementary’ deal to drive innovation
Tate said that the move builds on its existing distribution agreement, which saw Tate & Lyle become the exclusive global distributor for Sweet Green Fiends portfolio of stevia based ingredients in April last year.
Chief executive Nick Hampton said that the partnership was “highly complementary” to Tate’s sugar reduction ingredients.
“Their industry-leading portfolio of stevia-based ingredients is highly complementary to our portfolio of proprietary sugar reduction solutions, and the results from the first year of our global distribution partnership have been very encouraging. We look forward to working together with the Sweet Green Fields team to deliver truly break-through, great tasting stevia products for our customers,” he said.
Hampton added that the firm is “increasingly well-positioned” to address “growing consumer demand for healthier diets with less sugar, calories and fat and more fibre”.
Joan Braca, president of food and beverage solutions at Tate & Lyle, also stressed the potential for increased innovation thanks to the tie-up. “Our customers around the world are looking for great tasting, nutritionally balanced, and sustainable food products. Our growing partnership with Sweet Green Fields will, through collaborative innovation and the diversification of our supply chain, help us meet those needs and make stevia sweeteners an integral part of our sweetener portfolio,” Braca suggested.
Focus on M&A to support growth
Vertical Group analyst Brett Hundley believes that the deal points to an increased focus on mergers and acquisitions to support growth at Tate & Lyle.
“The company will focus more on M&A going forward,” he said. “Aside from further developing its existing business, it also wants to use M&A to broaden its geographic scope, with Asia as an example. [Management] noted that its geographic expansion could push it into new production technologies, like tapioca.”
The news comes as Tate & Lyle unveiled a drop in full year sales for the 12 months to 31 March. Revenue dipped 2% to £2.71bn (€3.1bn). Forex trimmed 1% off the top line.
Profitability was up, however. Profit before tax increased by 23% - or 13% on a constant currency basis – climbing to £286m (€327m).
Hampton revealed that the ingredients manufacturer plans to “accelerate” its performance by focusing on three areas.
“To accelerate business performance and inject more pace into the organisation, we are implementing three programmes to sharpen our focus on our customers, accelerate portfolio development and to simplify the business and deliver greater productivity,” he explained.
The company aims to develop a customer-centric strategy concentrating on what it has identified as the “key categories” of beverages, dairy, and soups, sauces and dressings. Tate will accelerate “portfolio development” through innovation, partnerships and acquisitions, Hampton added.
Meanwhile, the group intends to deliver $100m (€85m) in productivity improvements over a four-year period, supported by the implementation of zero-based budgeting. Tate would not disclose what proportion of these savings will be re-invested in the business.