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International Bestfoods: looking to consolidate - Views on News from Equitymaster
 
 
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  • Dec 9, 1999

    International Bestfoods: looking to consolidate

    International Bestfoods is thinking really big. The company is planning to add more brands to its product portfolio through acquisitions and introducing more products under its existing brands.

    International Bestfoods is a 74% subsidiary of US$ 8.4 bn foods major Bestfoods. The company has a strong presence in culinary segment with Knorr range of soups, Brown & Polson (Custard), Rex (Jelly) in its portfolio. It also manufactures Glucovita (glucose).

    It had recently acquired the Captain Cook range of staple foods (flour and salt) from DCW Home Products and Tarla Dalal range of ready mixes. The company aims to grow by entering new product segments to broaden its range. It has reinvented the entire brand promotion campaign for Captain Cook range of flour and Salt. It has also lined up a range of Brown and Polson cake mixes. It is currently focussing on expanding its caterplan business (caterplan Business of Bestfoods USA has a world-wide turnover of US $ 1.3 bn, which is 15% of total turnover). This business addresses the needs of the hotel industry, restaurants and other institutions. It is also eyeing tetrapack fruit juices segment and is likely to introduce its international brand 'Ades'.

    All in all, the company has identified four core areas of operation to expand its product base. These are Sweet, Savoury, Staples and Drinks. It has made significant investments to beef up its distribution network.

    All these moves are an indication that the company wants to be one of the top food companies in the country. But brand extensions and acquisitions are no guarantors for this. Apart from salt, which is a mass consumption product, all its product categories have a limited consumer profile (at least for now). But as market dynamics change with rising incomes, the consumption pattern will skew towards branded food products. International Bestfoods strategy, at best, can be described as a groundwork to tap the latent demand in future (if there is one).

     

     

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