Welcome to Europe!
June 24, 2015
by Joel Crews
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Innovation is a top priority for Moy Park.
GREELEY, Colo. – With its foot already in the door in global markets that include production in North America, South America, Southeast Asia and Australia, officials with JBS SA, say the acquisition of Moy Park Holdings Europe Ltd. from Marfrig Global Foods SA for $1.5 billion, opens the door wide open for the company to enter the European market. During a call with analysts on June 23, Jerry O’Callaghan said the deal was the right one for JBS at the right time.
“This, in our view, is a moment for us to enter the European market,” said O’Callaghan, and to do so in a relevant manner with JBS bringing its production, innovation and brands to the global table.
The 70-plus-year-old company is, like other subsidiaries of JBS, vertically integrated and is focused primarily on fresh poultry production and sales mainly in the UK and is growing in its convenience foods offerings. UK-based Moy Park is an established entity in Ireland and England with retail customers that include all the major companies, including Tesco, ASDA, Sainsbury’s, Waitrose and others in addition to foodservice customers ranging from McDonald’s to KFC to Burger King and Pizza Hut.
He pointed out that 73 percent of Moy Park’s sales in the UK and Ireland are in the retail category, with foodservice accounting for 14 percent of sales and 13 percent in the “other” category. Twenty-one percent of its sales are in continental Europe, where convenience-based offerings include burgers for many foodservice customers as well as some non-meat items. Across Europe, 78 percent of its sales are in the foodservice category, and 22 percent are in the retail segment.
Besides its fresh products, the company offers ready-to-eat products, including microwaveable and ovenable products. “And they also have the coated products, breaded in the US, those coated products which again, are ready-to-consume products,” according to O'Callaghan.
He said innovation is a top priority for Moy Park, which has 12,000 employees across Northern Ireland, the UK, Holland, France and Holland. With 13 production units operated by the company, more than 70 people work in its R&D department. The focus of late for these team members has been convenience foods.
“There's barbecue or ovenable chickens; there are some ready-to-eat chicken breast and other items,” O’Callagha said. “Moy Park does a lot of work in terms of consumer insights to support innovation and the development of convenient products and up-to-date products for the modern consumer. They've launched a large variety of new products over the last 10 years.”
The acquisition also represents growth for the JBS, which is part of its methodical expansion plans.
“If we look at our South American business for instance, we've been developing a lot of branded and ready to eat products at our JBS foods division, and recently we acquired a company in Australia called Primo Smallgoods, which is also very focused on prepared foods and convenient products,” O’Callaghan said. “So this is an expansion of our prepared foods category in a new market with added value and with brands inside the European market.”
Consumers in Europe are demanding more options in the natural and organic poultry category, and Moy Park is well positioned for this increase in demand, which isn’t limited to Europe.
“We also see this in North America with a big move towards antibiotic-free products in North America,” O’Callaghan said. “So Moy Park is a relevant company which brings us a lot of knowledge around natural and organic poultry production.”
Bringing together the two companies, according to JBS, will create at least $50 million in synergies. These synergies include “non-core” items, including items ranging from packaging to ingredients as well as best practices in handling and in operations. “A lot of that would be to do with feed conversion and efficiencies associated with feed conversion,” O’Callaghan said.