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Rhodes Food Group acquires Del Monte canning operation |
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July 2010 |
Pending approval by the Competition Commission of SA, Rhodes Food Group (Pty) Ltd, headquartered at Groot Drakenstein (near Paarl in the Western Cape), will acquire the SA fruit canning operations of US-based Fresh Del Monte Produce Corp.
Rhodes Food Group has fruit and vegetable canning operations in the
Western Cape, Limpopo and Swaziland and its products are sold globally
under the Rhodes brand and as various supermarkets' private labels.
The Del Monte canning operation, based in Tulbagh in the Western Cape,
cans apricots, peaches, pears and fruit cocktail. It will complement
Rhodes' existing operations and product range, which also includes
pineapple, citrus and a range of fruit in plastic pots and re-sealable
jars from its Swaziland operations.
Del Monte's Tulbagh factory is larger and more modern than the existing
Rhodes Food Group factory at Groot Drakenstein and rationalisation
between them is inevitable. The reason for the acquisition is
fundamentally to create economies of scale and efficiencies, and to
reduce costs.
The SA fruit canning industry, like all fruit canning industries is facing a difficult international market.
In SA, the situation is made worse by the continued strength of the rand.
In recent financial results of Tiger Brands, a considerable loss was
reported for the Ashton/Tiger Brands fruit canning joint-venture.
Del Monte had very small market share in canned fruits in SA - almost
all of the Tulbagh factory's production was exported. Fresh Del Monte
Produce Corp had being primarily focused on its fresh products
internationally; it had apparently not focused its canning facility in
SA, which was a small part of its overall business.
The acquisition, assuming it is approved by the Competition Commission,
will reduce the SA deciduous fruit industry to only two operators -
compared to 17 at one time.
Post-acquisition, Rhodes Food Group and former Del Monte operations
would constitute 25-30% of SA canned deciduous production, with Ashton
/Tiger Brands having the balance.
Rhodes Food Group is SA's leading producer of chilled, ready meals and
a major player in the SA pie market with its Magpie brand. It also has
a vertically integrated dairy operation, which produces a range of
dairy products including speciality cheeses under the Portobello brand.
Rhodes Food Group company is a major supplier to Woolworths.
The transaction, if approved by the Competition Commission, will be
effective from 1 October, in time for the SA summer fruit season.
Rhodes Food Group: Tel 021-870-4000.
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