Finsbury Food expands in the free-from market
Finsbury Food Group has strengthened its presence in the free-from market by buying gluten-free bread and morning goods manufacturer Yorkshire Farm Bakery and its gluten-free pre-mix supplier A&P Foods.
A&P and Yorkshire Farm employ 100 people between them and focus their sales on the UK’s top supermarkets, which account for two thirds of their business. Their combined sales were 7.3M in the year ended March 2007, with forecast sales for March 2008 being at least £8.5M. Baked goods manufacturer Finsbury said the acquisition would offer the greatest degree of protection from a downturn in the economy.
Dave Brooks, Finsbury Food Group chief executive, said the company’s annual sales in the free-from market amounted to £3M. He anticipated the purchase would more than triple that figure, with a further target of £20-25M in gluten-free sales in the next three years. However, he said the intention was to boost its share of the free-from market through organic growth, rather than more acquisitions, going forward.
Finsbury has created a new trading company, Livwell, to complete the acquisition and undertaking of the two companies for a debt-free consideration of £8.9M. A total of £4.8M will be paid on completion, with the remainder payable in stages. The final payment of £2.5M is scheduled for July 2010.
A&P shares Yorkshire Farm’s site in Hull and also supplies ingredients for United Central Bakeries, part of Finsbury. “The opportunity [for acquisition] came up just before Christmas,” said Brooks.
According to Mintel, the free-from market was worth £180M at retail prices in 2007 and will double by 2012. Half of that figure is represented by gluten-free products.
“The UK retail market offers huge scope for growth as more consumers choose a wheat-free diet, and the UK medical prescription market, which is twice the size of the retail market, brings new opportunity,” said Brooks. “There is also significant scope to develop a stronger export business as awareness grows in Europe.”
