Mexican acquisition will strengthen Grupo Bimbo’s position in US confectionery market, analyst

By Helen Glaberson

- Last updated on GMT

Related tags Sugar confectionery market Confectionery Mexico Us

Grupo Bimbo has completed its acquisition of Mexican confectionery firm Dulces Vero, a deal that should strengthen its position in the US hispanic confectionery market, according to market analyst Jonathan Thomas.

Financial terms of the transaction, which was first announced in mid-June, have not been disclosed. Dulces Vero, which produces a range of confections including lollipops, gummies, caramels and marshmallows, had 2009 sales of approximately Mex$1.1bn.

Grupo Bimbo said that Vero’s products complement its subsidiary company Barcel in the US Hispanic market, and also furthers the company’s strategy of reaching across all socio-demographic segments. “Along with sales and cost synergies, Vero’s strength in the wholesale channel, combined with Barcel’s extensive retail distribution network, will provide a strong platform for continued growth,” ​said the company.

Strengthened position

Jonathan Thomas, principal market analyst at Leatherhead food research told last week that the​acquisition would strengthen the position of the merged entity in the “fairly fragmented”​ US sugar confectionery market.

The analyst said this was due to the wide range of products on offer there.

One of the benefits Dulces Vero brings to Grupo Bimbo is that it already exports its sweets outside Mexico, both to the US and further afield to Europe and Asia, according to Thomas.

In addition, he said that the merged company was likely to benefit from Bimbo’s “considerable resources​” in terms of distribution and marketing.

“As a result of which its share of the US sugar confectionery market can be expected to increase in the near future,”​ he said.

Hispanic foods in the US

Thomas said that Hispanic-inspired flavours, such as chilli and cinnamon have been well to the fore within the US sugar confectionery market over the last few years.

“So much so that manufacturers such as Hershey and Mars have been experimenting with them, or establishing partnerships with companies based in Latin America,”​ Thomas said.

“Some of these flavours have also been apparent within the chocolate sector, as consumers have moved towards more premium products incorporating different and/or novel ingredients,”​ he added.

The analyst said he did not expect the implications to be so widely felt further afield, “at least not in the near future,”​ since tastes in the US differed to those in the European markets.

However, Thomas said it is worth noting that the European market for lollipops is pretty much dominated by the Chupa Chups brand. “It is possible that this latest development may go some way towards increasing competition within this sector should Bimbo decide to expand beyond the Americas region,”​ he said.

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