Speaking to FoodManufacture.co.uk following the acquisition of French ice cream maker Rolland, R&R chief executive James Lambert said more acquisitions were on the cards.
He added: “We will acquire more businesses. If you look at the European ice cream market, there are really only two players – Unilever and R&R – that are genuinely profitable and have the cash to invest. It is such a capital-intensive industry that scale really matters.
“The retail sector is consolidating fast, and retailers such as Aldi - our biggest customer - want to deal with fewer, bigger suppliers that can supply them in multiple markets across Europe. There are really only two companies capable of doing that.”
Retail consolidation meant more buying power was in fewer hands, he said: “Look at the UK market. We’ve already lost Somerfield, Safeway and Netto in a very short period and we’ll lose others. And it’s happening across Europe.”
Inflation
While dairy markets and UK milk prices had been relatively stable over the past year, dairy commodity prices had started to rise again, he added.
“Dairy prices went from a low to a real high and back down again, and now we’re seeing another correction. I think there are going to be significant price increases and anyone that doesn’t push them through will be in trouble.”
Capital investment
R&R plans to make a significant investment in new equipment at Rolland’s factory in Plouédern in Brittany, revealed Lambert.
“Obviously we need to conduct a thorough review of the range and capabilities but the plan is to make a significant investment in the site, which will probably take at least 18 months. The likelihood is that new equipment will go in during winter 2011, but there is a lot we can do in the meantime to improve efficiency.”
R&R is also investing £2m into an 8,000-pallet automated warehousing facility at its Leeming Bar site in the UK, where it has just invested £2.5m in a waste treatment plant using reverse osmosis technology to process waste water. A dryer to dry the sludge from the plant will “probably be installed next year”, said Lambert.
Rolland acquisition
The Rolland acquisition has turned R&R into the second largest ice cream maker supplying supermarkets in the UK, Germany and France with sales volumes topping 500m litres, said Lambert. “The main thing it gives us is scale, so that we are even better placed to deal with major customers across Europe. But it’s also about buying and selling better.”
Rolland, which was founded in 1898, has two factories in France - at Plouédern in Brittany and in the Poitou Charente region - producing 65m litres of branded, own-label and licensed ice cream a year.
While France accounts for three-quarters of its sales, it also exports to nearly 20 countries worldwide including Japan.
R&R Ice Cream was created in 2006 by Oaktree Capital Management, bringing together Richmond Ice Cream in the UK and Roncadin in Germany.