Turkey's Pladis looks at Nestle's US candy as part of expansion (updated)

Chocoladefabriken Lindt & Spruengli AG

22/09/2017 15:12

* CEO says no decision made on whether to bid 
    * Pladis aims to double chocolate sales 
    * Has launched Godiva in supermarkets 
 
 (Writes through with further quotes) 
    By Martinne Geller 
    LONDON, Sept 22 (Reuters) - Pladis, the Turkish company that 
owns Godiva chocolate and McVitie's biscuits, is considering 
making an offer for Nestle's  NESN.S  U.S. confectionery assets, 
which could be valued at around $2 billion, as part of its 
international expansion plans. 
    A bid for Nestle's U.S. portfolio -- which includes regional 
mass-market brands such as Butterfinger, Crunch and 100 Grand -- 
would appear to mark a shift from Pladis's stated strategy of 
focusing on the high end of the market, which is performing 
better than mid-tier brands. 
    "We are looking at Nestle's confectionery assets in the 
U.S.," Chief Executive Cem Karakas told Reuters. "Certainly we 
haven't made a decision, but we are looking at it." 
    Nestle said in June it might sell its U.S. confectionery 
business, the latest sign of pressure on the North American 
market following last year's failed bid by Mondelez 
International  MDLZ.O  for Hershey  HSY.N .  urn:newsml:reuters.com:*:nL8N1JC4WV  
 urn:newsml:reuters.com:*:nL3N1BA4KS 
    Pladis, itself born from a string of acquisitions, is not 
working with external financial advisors on the process, which 
has also attracted Lemonheads owner Ferrara.  urn:newsml:reuters.com:*:nL1N1KC1A1    
    Pladis, a subsidiary of Turkey's Yildiz Holding, is 
interested in bolt-on acquisitions that give it manufacturing 
capacity or distribution in particular markets, Karakas said. 
    The global confectionery market will have retail sales of 
about $102.5 billion this year, according to Euromonitor. 
    Over the past five years, higher-end brands such as Ferrero 
Rocher, Lindor and Ritter have all grown more than 7 percent, 
while mass-market brands like Cadbury, Hershey's and Mars have 
grown about 3 percent or less. 
    Consumers' preference for artisanal or quality brands 
offsets some of the pressure exerted by growing health 
consciousness and moves away from sugary snacks. 
     
    BRANCHING OUT  
    Pladis is aiming to double its chocolate sales by the end of 
2019, and turn Godiva into a 2 billion pound a year brand by 
2021. 
    It has been working toward that goal with this year's 
supermarket launch of Godiva chocolate bars, in flavours 
including blood orange, hazelnut and caramel. The move is aimed 
at expanding the brand away from the luxury boutiques where it 
has largely been sold. 
    The launch began in Turkey, Saudi Arabia and elsewhere in 
the Gulf, followed by the United States, Britain, the 
Netherlands and China. 
    In the next couple of months, the new bars - which in 
Britain cost 1.50 pounds ($2) on promotion at supermarket 
Sainsbury's  SBRY.L  - will go on sale in Sweden and South 
Africa. 
    Godiva will generate annual supermarket sales of 500 million 
pounds by 2021, Karakas said, up from about 120 million pounds 
now. It currently generates about 800 million pounds of sales 
from boutiques, department stores, duty-free shops and online. 
    Yildiz, Turkey's largest food group, has since 2007 spent 
$850 million to buy Godiva, as well as an estimated 2 billion 
pounds on McVitie's owner United Biscuits and $221 million on 
DeMet's Candy, maker of Flipz chocolate pretzels. 
    Last year, Yildiz combined those assets with its own Ulker 
 ULKER.IS  business to form London-based Pladis, with a view to 
listing it on the London Stock Exchange in 2020 or 2021.  
    Pladis, which does not include the larger Godiva retail 
store network, is on track for revenue of 3.2 billion pounds by 
the end of 2019, up from 2.2 billion pounds last year.  
    "It seems that with a bit of a stretch, we'll be able to get 
there," Karakas said. Pladis has hired a raft of senior managers 
from diverse industries to infuse the company with new ideas. 
Karakas is counting on a start-up mentality to accelerate sales. 
    "We are going to accelerate," he said. "It's very obvious 
and very doable."  
    Sales rose 8 percent in the first half of the year, about 
twice the industry average, he said. He hopes to end the year 
with double-digit growth. 
 ($1 = 0.7412 pounds) 
 
 (Reporting by Martinne Geller; Editing by Keith Weir) 
 ((martinne.geller@thomsonreuters.com; +44)(0)(2075420797; 
Reuters Messaging: martinne.geller.reuters.com@reuters.net)) 
 
Keywords: PLADIS STRATEGY/