Bright Food Group of China agreed to sell Weetabix to Post Holdings for about £1.4 billion (Dh6.5bn) after owning the British breakfast staple for five years, during which it struggled to interest Chinese consumers in cold cereal.
The deal for the maker of the oval-shaped cereal bricks, traditionally consumed with milk, was confirmed by the Bright Food spokesman Pan Jianjun on Tuesday. Bright Food owns a 60 per cent stake, while Baring Private Equity Asia holds the remaining 40 per cent.
Bright Food’s acquisition of Weetabix in 2012 was one of several deals with foreign food companies as China’s second-largest food company attempted to expand its global footprint. It said it wanted to grow the brand in China and overseas and floated the idea of listing the cereal maker in 2014, but it never gained enough traction in China, where consumers traditionally eat hot breakfasts such as congee.
“We can see that demand for cereals is growing due to health-consciousness, especially among female consumers exposed to western lifestyles, but Weetabix did not make much inroads, probably because Bright Food does not have experience in this area,” said Jiaqi Du, a research manager for packaged food at Euromonitor International in Shanghai.
Weetabix gets the majority of its sales from the United Kingdom, which accounted for £290 million of its £346m of revenue in the year ended January 2, 2016, according to financial statements. Total sales dropped 1.6 per cent from a year earlier, and profit fell 15 per cent to £84.6m.
China’s breakfast cereal market was worth US$933m in 2016, according to Euromonitor, with ready-to-eat cereals like Weetabix accounting for about one-quarter of that total.
Representatives for Post did not respond to requests for comment.
Bright Food’s Pan said overseas acquisitions remain an important part of the company’s strategy to become an “internationally influential, multinational company”.
* Bloomberg
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