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Ferrero aims to ease North America struggles by acquiring Delacre: Analyst

Douglas Yu

By Douglas Yu+

04-Aug-2016
Last updated on 04-Aug-2016 at 10:50 GMT2016-08-04T10:50:35Z

Delacre is part of Yildiz Holding's United Biscuits and sells mainly in France and Belgium. Photo: Delacre
Delacre is part of Yildiz Holding's United Biscuits and sells mainly in France and Belgium. Photo: Delacre

Ferrero has reportedly made a bid to acquire Belgian biscuits and pastries manufacturer Delacre in a move one analyst says could support a push for North America and reduce its reliance on chocolate.

Delacre is owned by Yildiz Holding, which recently combined its core confectionery and bakery businesses, including Godiva Chocolatier, to form a new global company called Pladis.

 

Source: Euromonitor

Italian daily newspaper La Stampa claims Nutella maker Ferrero sees Delacre as a chance to explore a new market for the firm that has significant growth potential.

Euromonitor International believes Ferrero’s bid to acquire Delacre is “an attempt to decrease its overreliance on chocolate which is now facing a number of challenges both from supply and demand sides”.

No financial details regarding the bid were disclosed.

Delacre: A safer bet for Ferrero?

Euromonitor’s senior food analyst, Pinar Hosafci, said the price gap between premium mass players such as Ferrero and store-based premium players, including Godiva and Hotel Chocolatier, is narrowing in Western Europe.

“Delacre is a relatively safer bet for Ferrero as the company specialises in premium biscuits which has obvious synergies with chocolate and complements Ferrero’s image as a premium player,” she said.

“Delacre also has a store in Belgium aiding Ferrero’s goal of store-based expansion as seen both by the take-over of store-based Thorntons and the growing number of Nutella cafés which are popping up very quickly in the Middle Eastern markets,” Hosafci added.

Ease struggle in North America market

Ferrero’s sales have suffered in Germany, Italy and France, according to Euromonitor. These three countries make up 41% of the company’s packaged food revenue.

 

Source: Euromonitor

As a result, Ferrero has been investing in markets with higher potential, such as China, the UK and the US, Hosafci said.

However, the company has been struggling to increase its footprint in North America in the face of the strong competition from Lindt, which has doubled its revenue within less than five years to reach 9% of the chocolate market in 2015, and Godiva, which – unlike in Western Europe –is sold in mass retailers in the US including Walmart,” she said.

“While the majority of Delacre’s sales stem from Belgium and France, the brand is also present in the US and Canada. This holds a strategic opportunity for Ferrero,” Hosafci said. “By bringing its chocolate-based innovation to the biscuits category, Ferrero could use Delacre as a tool to crack open the North American market which to date still remains the world’s uncontested leader in snacks.”

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