Kraft Acquires Biscuit Maker For US$150mn
The Middle East and North Africa (MENA) region is well known for its sweet tooth , resulting in some of the world's highest per capita sugar consumption rates . While the free-spending Gulf region is awash with deep-pocketed consumers, with the exception of Saudi Arabia there are too few of them to place the region at the cornerstone of many major food multinationals ' regional growth strat egies . North Africa , on the other hand , makes up for its lack of spending power per person with some excellent long-term growth prospects. The likes of Danone , Nestlé and Kraft Foods have been tuned into this for a while and , more recently , this has translated into some major deal activity with Morocco the main benefactor. Earlier in 2012, Danone acquired Central Laitiere , Morocco's leading privately owned dairy company, for about EUR550mn. Kraft has now paid about US$150mn to buy one of the country's leading biscuit companies, Bim o, from the state-owned National Investment Company .
|Rising From Low Base|
|Morocco Per Capita Food Consumption (US$) - Historic & Forecast - 2005-2016|
One point we made when the Danone-Central Laitiere deal was announced that is also relevant here is that Morocco provides an excellent base from which to target opportunities across the wider North African region, where we believe there is plenty of room for growth in branded confectionery products despite the political and economic upheaval that has gripped so much of the region. Morocco's biscuit industry is competitive with domestic companies like Bimo increasingly having to compete with imported products from Europe owing to Morocco's strong relations with mainland Europe. With Kraft now fully on board having previously owned around half of Bimo, it is now in a much stronger position to be even more competitive in Morocco , and therefore also in the wider region.
Given the inherent popularity of biscuits and the fact that confectioneries are so popular, the argument that consumption of branded cookies will continue to grow as incomes rise over the long-term seems pretty straightforward. Throw in Kraft's backing from an investment, distribution marketing et al. point of view , and you have a deal that looks good from almost everyone's point of view.