Del Monte Pacific buying 40 per cent stake in Bharti group's FieldFresh
By Our Corporate Bureau | 29 Sep 2007
Philippines-based Del Monte Pacific Limited is taking over 40 per cent of EL Rothschild's 50 per cent equity in FieldFresh, in which the other partner, Bharti Enterprises, one of India's leading business groups, owns 50 per cent. Rothschild will retain 10 per cent.
The deal is reported to have been signed for a price of $20.9 million. FieldFresh, which started in 2005, had an initial investment of $50 million and planned to bring 20,000 acres under cultivation countrywide.
FieldFresh, formed in September 2004, has been exporting fresh fruits and vegetables to the UK, the Middle East and Europe. The venture has not been a commercial success yet, partly, it is said, because of India's poor infrastructure, which results in spoilage of fresh produce on its way to the export markets. With the entry of Del Monte Pacific as a strategic partner, FieldFresh will move from just fresh produce to processing.
Says Rakesh Bharti Mittal, vice-chairman, Bharti Enterprises, "Having created the basic building blocks of the business in the fresh produce category, we are looking at expanding our operations through processing and value added products. Del Monte will bring to FieldFresh its immense strength and experience in the area of processing and branded food products." He sees the venture becoming "a significant player in this segment". The company will continue to export fresh produce.
The move into processed foods at FieldFresh will help the Bharti group stock its grocery retail chain with its own private label of processed foods. In a market that is gradually getting crowded by brands such as Tropicana from PepsiCo, Real from Dabur, and now Minute Maid from Coca-Cola, besides sundry other brands, including those from Hindustan Unilever, ITC, Godrej Foods and Parle Agro (of Frooti fame), this could help Bharti strengthen margins.
It's early days yet for India's grocery retail chains. But its entry into processing would also give Bharti some leverage when the group collides head-on with Mukesh Ambani's Reliance Fresh grocery chain, which is on an aggressive drive to link up with farmers as well as to set up a widespread network of retail outlets. Bharti is also going head-to-head with the other Ambani brother, Anil, whose Reliance Communications and Bharti's Airtel are fighting it out in the telecommunications market.
Del Monte Pacific, which is not to be confused with Del Monte Corporation or Fresh Del Monte Produce, is into processing, marketing and distribution of food and beverage products (as are the companies with 'Del Monte' in their names). Its operations cover the Philippines, China and India, and it exports to other markets in the world. Its strengths are in processed pineapple products, followed by mixed fruits, tomato sauce, spaghetti sauce, juice and tomato ketchup. In India, it produces and sells mango pulp and puree, and FieldFresh will now acquire these manufacturing facilities.
The Del Monte brand is sold across the world; but its ownership is split. The websites of Del Monte Corporation of the US and Fresh Del Monte Produce spell out in no uncertain terms that they have nothing to do with the other Del Montes. To put it in perspective, see the company's history in Del Monte who? Del Monte Pacific.
Del Monte Pacific is the smallest of the various Del Monte brand-owning companies. Del Monte Corporation of the US, had sales of $3.42 billion in its fiscal ended 29 April 2007. Fresh Del Monte Produce had sales of $3.21 billion in 2006. Kikkoman Corporation, which in January 1990 bought perpetual marketing rights for the Del Monte brand in the Asian-Pacific region, excluding the Philippines, had sales of $3.33 billion in the year ended March 2007. Del Monte Pacific had sales of $243 million in 2006.
Del Monte Pacific Ltd, listed on the Singapore stock exchange, is owned eighty per cent by NutriAsia Pacific Ltd, a part of the NutriAsia group of companies, which is in turn majority-owned by the Campos family of the Philippines. This group is in the liquid condiments, specialty sauces and cooking oil business in the Philippines. Its flagship brand UFC dominates the local catsup and hot chili sauce categories.
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Joselito D Campos Jr |
Joselito D. Campos Jr., managing director of Del Monte Pacific says, "India is the second largest producer of fruits and vegetables in the world, but with an insignificant percentage of processed foods." He also points to the fact that 20-25 per cent of fruits and vegetables grown in India are wasted due to spoilage. In other words, there is a massive scope for growth.
Lady Lynn Forester de Rothschild, chief executive of EL Rothschild Limited, a brand of the Rothschild banking family, says, "We are delighted to have brought this company (FieldFresh) to a point where it has attracted large international players like Del Monte Pacific. We see this transaction as one template for what we can do in India.
"We are committed to a broad range of investments in India where EL Rothschild partners with the best international brands to bring expertise, distribution and capital into the best operations in India for a win-win situation for all parties. This is a positive way for us to participate in the explosive economic growth of India. Our continued investment in FieldFresh represents our belief in the strong future for the venture as it moves to the next level."
