Machu Picchu Foods scoops Peruvian rival to enter the wafer cone market
Montecorvino produces premium wafer cones with German machinery installed at its Callao plant, according to Fernando Andrés Guzmán, MPF’s sales manager. Following the takeover, Montecorvino’s equipment will now allow MPF to supply its own local and international clients with products such as sweet vanilla cones and other wafer cone products.
MPF’s entry into this market segment could help the company earn an additional $1m in 2015 and $3m in 2017, following the acquisition.
“We are expanding our portfolio, securing the business relationship with our national and international clients. This way we are fulfilling our mission to provide tailor-made [solutions] to the food industry,” said Guzmán.
Expansion and modernization drives funded with Dutch loans
The purchase of Montecorvino was announced just a few months after Lima-based MPF secured a $10m senior loan from Dutch development bank FMO. The bank’s funds will be used for capex investment and working capital ($8m) and for financing of cocoa farmers ($2m). The funding comes at a critical time for MPF, as the company’s operations have moved into more value-added products such as cacao derivatives and chocolate processing.
The larger share of the FMO funding will be used to modernize the chocolate production line in MPF’s Callao plant, while the smaller funding component ($2m) will be used to provide technical support and financing to around 3,000 cocoa bean growers that are involved in sustainable cocoa bean production activities.
The company is now primarily dedicated to the cocoa segment, where it is a strong niche player with key strategic relationships locally and abroad. MPF has become the largest player in cocoa origination and an important player in chocolate production in Peru.
“By financing approximately 10% of MPF’s balance sheet and being the first international long-term debt provider, FMO plays an important role in the growth of the company. This investment also contributes to inclusive development in Peru by supporting the company's cocoa sourcing operations from smallholder farmers,” said the Dutch bank.
Last month, FMO announced it would grant an additional €0.17m ($0.18m) to MPF for the implementation of SAP Enterprise Resource Planning (ERP) software. “This will position the company to integrate production, logistics, commercial, financing and controlling, and position it for future growth. Top of the line resource planning software will better position MPF to deal with the increasing complexity of operations and the growth of activities,” said the Dutch institution at the time.
Forerunner in the Peruvian market
“Our plants produce two out of three chocolates that are consumed in Peru. We are the largest company in the cocoa and chocolate market in the country,” Guzmán said for Peru Exporta, a weekly publication of the Peruvian Association of Exporters (ADEX). He added that the company’s plan for 2015 is to increase its exports to the USA, Canada, Japan, Europe and Taiwan.
The company exported $60.6m worth of goods to 30 countries in 2014. The USA and the Netherlands jointly accounted for 48% of MPF’s total exports. The Latin American market currently absorbs only around 10% of the company’s foreign sales, although the continent is an emerging market for MPF. “Consumption is rising because the purchasing power has increased. Chocolate is a luxury in itself,” Guzmán added.
MPF currently employs 800 staff and generates around 10,000 indirect jobs in the economy. The company works hand-in-hand with small farmers, helping them to cultivate certified organic cocoa and purchasing the harvested product.
