Kerry Group: We’re stepping away from ‘non-core’ B2C bakery

24-Feb-2015 - Last updated on 24-Feb-2015 at 17:02 GMT

Kerry Group corporate affairs director: 'We have already disposed of a couple of such bakery type businesses which we acquired as part of other transactions'

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Kerry Group’s decision to sell its business-to-consumer Australian bakery is part of a strategy to re-focus on core B2B work, its corporate affairs director says.

The ingredients major announced it was in discussions to sell its €160m ($181.28m) Australian bakery business earlier today in its preliminary full-year earnings. It said negotiations for the sale were “now at an advanced stage”.

Frank Hayes, corporate affairs director at Kerry Group, said the sale would consolidate focus back towards business-to-business.

“Kerry is a B2B specialist in ingredients and flavors; we are not a B2C player and therefore our strategy is to concentrate on our strengths,” he told BakeryandSnacks.com.

Hayes said bakery remained a “significant end-use market” from a B2B perspective for its ingredients and flavor offerings, but said Pinnacle did not fit that model as it sold end products and mixes to manufacturers, retailers and franchise shops.

“As you know, over Kerry’s history – over the past decade or so – we have already disposed of a couple of such bakery type businesses which we acquired as part of other transactions.

“This is a quality business but our strategy is to concentrate and invest in our own technologies that are central to the group… In terms of Kerry’s Taste & Nutrition business, (Pinnacle) sat outside of that – we would have classified it as a regional bakery lifestyle business which really is non-core to Kerry,” he said.

Better placed with bakery ‘specialists’

Hayes would not say who Kerry was negotiating with but suggested the company would be best taken on by a bakery specialist.

Kerry Group acquired Pinnacle via its Burns Philp acquisition in the late-90s, he explained. “We’ve had a number of such regional technologies that the group has acquired as part of various transactions and unless they’re core in Kerry’s ingredients and technology portfolio, in terms of future investment they would be better placed with other specialists within the bakery industry.”

Once the Pinnacle sale clears, Kerry will be left with one small bakery business in the UK.

Asked if this business would also be sold, Hayes said: “We’re always looking at options in terms of growing or indeed divesting non-core activities. But in terms of the businesses for sale, we’re very much at the end of that portfolio and it’s from here on we will be concentrating on organic and acquisition growth.”