Ter Beke and Pluma to create processed meats powerhouse

By Ahmed ElAmin

- Last updated on GMT

Related tags Ter beke Meat Netherlands

Two food companies in Belgium have announced plans to merge their
operations, creating the largest processed meats group in the
country and a powerhouse in the Benelux region.

Food companies are consolidating operations or selling off unprofitable businesses across Europe in a bid to counteract the effects of growing retailer power, declining margins and high input costs.

Belgium's food market is currently stable and consolidating. Meanwhile the Netherlands market is in the processing of consolidating, according to a statement from Ter Beke, which announced plans to absorb processed meats group Pluma into its operations.

The two said they had signed an agreement which should lead to the merger of the companies by the end of May 2006.

The merger of the processed meats division of Ter Beke with Pluma's will give the company a 17 per cent market share in Belgium. The company will become the number three processed meats supplier in the Benelux level. In the UK, the merged group is number one in the pâtés segment.

Ter Beke's processed meats division has an annual turnover of about €130 million. Pluma, which solely concentrates on processed meats, has a turnover of about €100 million.

The two operations would form the third largest processed meats group in the Benelux region and will be the market leader in Belgium. The Benelux region is composed of Belgium, the Netherlands, and Luxembourg.

The merger is being paid for in part by the issue of 342,254 new shares and in part by the payment of €5.5 million.

"In the short term the merger will make a positive contribution to the profit of the group and offers the best prospects for continuing to grow successfully in a consolidating market,"​ Ter Beke stated in making the announcement.

Ter Beke said its growth strategy is to grow its core businesses, made up of fresh ready meals and processed meats.

The company plans to develop its fresh ready meals business by focusing on international growth both by investing in its consumer brand "Come a casa" and by additions to its portfolio of products.

Ter Beke and Pluma's main market for processed meat products is the Benelux. In addition, both have a strong presence in pâtés products in the UK market.

For the past 10 years, processed meats consumption in the Benelux has remained virtually unchanged, Ter Beke stated in justifying the merger.

"However, the stability of this market conceals a major shift from over-the-counter products to pre-packaged processed meats which is occurring at a rate of more than ten per cent per year,"​ the company stated.

The Belgian processed meat market is only partially consolidated, with the three largest producers together holding a market share of about 30 per cent. In the Netherlands, the top three companies together account for 70 per cent of the market.

"In these stable processed meats markets, critical mass and scale are of fundamental importance,"​ Ter Beke stated.

Both countries are mainly private label markets. About 90 per cent of processed meats sold in Belgium are private label. In the Netherlands private labels account for almost 100 per cent of the market.

Major retail clients expect their suppliers to provide a full range of products with innovative concepts in terms of product and packaging, Ter Beke stated.

The wholesaler in the traditional channel and the specialised customer in the food service channel also expect a similar service, including high-tech IT and logistical capabilities.

After the merger, the new processed meats group will have an annual turnover of about €230 million and employ around 900 people.

As a whole, the listed Ter Beke Group will have a total turnover of around €330 million and employ about 1,600 staff.

Ter Beke processed meats division is strong in the salami, processed poultry meats and pâtés markets. Pluma is a leader in the cooked ham, pâtés and cooked meats markets. It also has a salted processed meats segment.

In 2005, Pluma installed a new production line for cooked hams and cooked meats intended for cutting and pre-packaging.

"Together Ter Beke and Pluma can generate major synergies, above all in the area of purchasing, logistics, product development and commercial power,"​ the company stated.

The Coopman family is the current principal shareholder of Ter Beke. They and the main shareholders of Pluma will together form a company that will hold a 55 per cent interest in Ter Beke. The Coopman family will hold a 64 per cent share in the holding company.

Ter Beke said the merger will allow it to continue building towards a gradual division of its two core businesses, processed meats and fresh ready meals.

Ter Beke currently operates in ten European countries. The group has two units, processed meats and fresh ready meals. It has nine plants in Belgium, the Netherlands and France.

Related topics Processing & packaging

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