Kellogg has bid for a 51% stake in Egyptian biscuit and breakfast cereal firm BiscoMisr, according to a filing in Egypt’s stock exchange – a move which would makes sense, according to an analyst.
The filing by BiscoMisr said that Kellogg was interested in acquiring at least 51% of the Egyptian firm.
“By policy, we do not comment on rumours or speculation about potential acquisitions or divestitures” Kellogg said in a statement to BakeryandSnacks.com.
Pinar Hosafci, food analyst at Euromonitor, said the move by Kellogg’s “makes sense” but noted others were in the running.
“BiscoMisr has a very diverse portfolio when it comes to biscuits – more than any other domestic biscuit manufacturer in Egypt. They are present in savory biscuits, filled biscuits (wafers), chocolate coated biscuits and are the biggest player in plain biscuits. In addition, they have cakes, mints and breakfast cereals; the latter being Kellogg’s biggest business.”
Kellogg faces competition from Saudi conglomerate Savola Group and United Aranb Emirates based Abraj Capital, both of which recently put in offers for a 51% stake.
Last year, BiscoMisr also rejected bids from both Egypt’s premier dairy firm Juhayna Food Industries and Saudi Arabia’s biggest chilled meat producer Halawani Industrial Company.
Political unrest has no impact on biscuit sales
Egypt is recovering from a period of political turmoil following the Egyptian Revolution of 2011, but Hosafci said: “Biscuit sales in the country were rampant since the revolution.”
”The market saw 13% annual increase in current fixed USD terms since 2011, which is well above the global average growth of biscuits.”
The BiscoMisr buy would give Kellogg its first real presence in the Egyptian biscuit market. In 2013, BiscoMisr held a 6.6% share of the Egyptian biscuits market. The company mainly caters for the premium end of the market.
RTE cereal share
The BiscoMisr buy would also help Kellogg marginally improve its market share of ready-to-eat cereals. Kellogg held a 24.4% share of the market in 2013 and would add an additional 0.8% if it were to acquire BiscoMisr, according to Euromonitor figures.
However, Kellogg would still remain second place behind Temmy’s brand owner Mass Food Co, a domestic producer that holds a 39.2% share.
The breakfast cereal category is still relatively small in the country as Egyptians tend to prefer a traditional breakfast of cheese, tomatoes and bread, or tea and biscuits, according to Euromonitor.
BiscoMisr was established in 1957 and operates three factories. Its headquarter facility in Cairo produces energy bar Datto, wafer biscuits, corn flakes, baked goods, cakes, and seasonal confections Kahk and ghorayeba.
The firm’s Arabisco factory in the Al Nozha district was acquired in 1963 and produces plain, filled, coated and salty biscuits and some seasonal confections such as BiscoMisr’s famous Eid biscuits.
Its third factory was built in 1987 and is located in Al Seyouf. This facility produces Luxe Biscuits, fundo cakes, Fresh biscuits and Mint.