Cargill acquires tomato products division from Unilever
Valor Econômico 09/27/10
Cargill signed on Friday the purchase of the tomato business of Unilever, including the brands Elefante, Pomarola, Tarantella and Extratomate, for R$ 600 million (US$ 342.9 million). Part of Goiânia plant where those products are made will be transferred to the control of Cargill. The lines Hellmann's (mayonnaise, ketchup and sauces) and Arisco (tomato sauces, ketchup, mayonnaise, instant pasta and other products) remain under the control of Unilever and will continue being made at the same unit.In the negotiation with Cargill, Unilever established an agreement so that the tomato sauces and pastes intended for the food service market (packages with one kilogram or more for restaurants, for example) be produced by Cargill, but sold by Unilever. The agreement is good for five years and it may be renewed. Cargill should take over the tomato sauce operations until the end of this year. The fact the manufacturing structure of Goiânia will be shared by both companies is not a disadvantage for Cargill, according to Marcelo Martins, Director of Cargill Foods Brasil. "Quite the contrary, it's an opportunity to intensify our businesses with Unilever, which is our client at global level", he says.
The acquisition strengthens the retail operation of Cargill. "The tomato brands and products complement our portfolio of items for the retail, which already features Liza and Mazola oils, Gallo olive oil, Maria and Olivia blended oils, and the Del Verde mayonnaise, salad sauces, olives and pasta, which we import from Italy. We can even say we now have the whole pasta dish", jokes Martins. "We are buying strong brands that will help us gain more volume in the retail", adds the Executive of Cargill. Pomarola is the leading brand in the market for ready-to-eat sauteed sauces in the country, followed by Fujini, of Fujini Alimentos.
"Having more products to sell the self-service channel cheapens the operation for Cargill, which will use the same sales force and the same logistics structure to sell even more products, thus becoming more profitable", says Fabiana Fakhoury, Director of the consulting firm Alvarez & Marsal. "Besides, after the sale of Seara to Marfrig last year, Cargill had more than US$ 900 million in cash and shareholders hate parked cash" completes the consultant.
Cargill, largest agribusiness company in the world, concentrates its businesses on the manufacturing inputs for the food industry. But in Brazil and Venezuela, the Minneapolis-company also has its arm of products for the retail. Unilever, which announced its intention to sell the unit in May, decided to dispose of the business on behalf of a global strategy of the company. "The idea is to focus on categories in which we can have faster growth", says Luiz Carlos Dutra, Vice President of Corporate Affairs of Unilever Brasil. "There is a time when we have to reduce the portfolio and make choices", he completes. With the sale, Unilever now has 25 brands in the country.
The market of ready-to-eat tomato sauces, unlike that of pastes and pulps, grew 13% in volume in 2009. The sales, according to Nielsen, went from 156.1 million kilograms in 2008 to 177.6 million kilograms last year, amounting to R$ 769.7 million (US$ 439.8 million). But the increase of brands and producers decreased the margins of the business. Today there are more than 300 brands fighting for the consumer preference. The sales of mashed tomatoes and tomato pastes, in turn, fell 6.2% in 2009, amounting to R$ 626.8 million (US$ 358.2 million), for pastes, and R$ 114.6 million (US$ 65.5 million), for mashed tomatoes.
In 2009, Banco do Povo Paulista (São Paulo People's Bank) made 25.5 thousand loans totaling the granting of R$ 92.2 million. The program should make another R$ 120 million available in 2010.
State Program of Professional Training: It offers free training courses in specialized education institutions and scholarships of R$ 210 for three months for unemployed workers with incomplete elementary education who are not entitled to unemployment compensation. 43 thousand people benefited from the program in 2009 and R$ 90 million were invested. The forecast for 2010 is to train 60 thousand people, with 140 million Reais in investments.