Convenience food manufacturer Greencore has acquired Freshtime UK in a deal worth £56m.
Announcing the move, Greencore CEO Patrick Coveney said that the acquisition is an ‘excellent strategic fit’ for Greencore that is expected to ‘help drive growth and value for shareholders’.
In particular, Coveney highlighted the crossover between the Greencore and Freshtime customer base. “It is a business and a customer set that we know very well and it provides us with an exciting opportunity to enhance our product offering [and] add further capacity to our manufacturing network,” he noted.
Greencore said the business and ‘strong customer base’ are ‘highly complementary’ to the group’s existing portfolio.
Freshtime supplies food-to-go salads, chilled snacks and prepared produce in the UK. Its products are distributed primarily through grocery and convenience channels and, in 2018, the group generated sales of £66m.
Freshtime operates a single facility in Boston, Lincolnshire, and gross assets at the end of last year were valued at £22m. “Freshtime's production facility is well invested, with an established local supply chain and capacity for future growth,” Greencore noted.
Enhancing position in food-to-go
ShoreCapital analyst Darren Shirley said that the acquisition would further boost Greencore’s already ‘leading’ position in the UK food-to-go market.
“We see the Freshtime acquisition as very much aligned with Greencore’s newly focussed UK strategy, enhancing the group’s presence in food-to-go salads and chilled snacking, with a customer base that is highly complementary to Greencore’s existing portfolio.
“Greencore’s acquisition of Freshtime strongly reflects management’s new strategic priorities in our view, with a well-established portfolio of food-to-go salads, chilled snacks and prepared produce further enhancing the group’s already leading position in UK food-to-go.”
Greencore has previously stated that it intends to ‘deepen’ its ‘leadership’ in UK food to go through a focus on growing with existing customers and expanding its offering to meet the needs of new customers, channels and adjacent categories.
Growth food-to-go market ‘a really exciting place to be’
The UK food to go market is growing ahead of wider out-of-home channels. According to a recent report from MCA & HIM, the analysis arm of FoodNavigator publisher William Reed Business Media, food to go sales have increased by 4.3% over the past decade.
To go sales, which include fast casual concepts such as Pret A Manger and Leon as well as forecourt and other channels, now account for almost one-quarter of the total eating out sales.
Launching the MCA & HIM Food To Go Market Report earlier this year, managing director Jill Livesey suggested that the food-to-go segment had consistently increased its importance in the eating out market. She described food-to-go as “a really exciting place to be” and a star in the eating out market right now.
Food-to-go is estimated to reach a value of £21.2bn in 2019, with its 3% growth outpacing the 1.8% forecast for the wider market.
But while Greencore is extending its presence in a growth category, it nevertheless remains a highly competitive place in which to operate. Grocery food-to-go offerings and convenience store grab-and-go remains the ‘largest part of the food-to-go market’. However, Livesey stressed that this sector is increasingly vying with – and losing share to – fast food, coffee shops and sandwich retailers.