Bright Food Group Acquisition of Italian Olive Oil Major

Guangming Food Group, which is committed to "going to sea", has not affected its overseas layout in the slightest, although it has missed many times with overseas mergers and acquisitions. On October 7, Guangming Food Group announced once again that it would acquire a majority stake in Salov Group, an Italian olive oil company, in an attempt to play a big part in the Chinese olive oil market.

In the view of the industry, the development of olive oil industry in China is not perfect because of the rising of olive oil industry. This poses a big problem for Guangming, a new entrant. Whether Guangming's overseas layout will go smoothly or not is still unclear.

A monopolized market

On the morning of October 1, Beijing time, Yimin Food Factory 1 (Group) Co., Ltd., a subsidiary of Guangming Food Group, reached an agreement with the Fontana family in Milan to announce the acquisition of a majority stake in Salov Group, Italy.

It is understood that Salov Group specializes in the production and sale of olive oil, with a revenue of about 330 million euros. Its products are sold to more than 60 countries worldwide, and are leading brands in the United States and the United Kingdom.

"As the parent company of Yimin Group, Guangming Food Group regards this acquisition as part of the process of Guangming internationalization." Bright side to the "China Times" reporter said.

According to Pan Jianjun, a spokesman for Guangming Food Group, it has been a year since the group and Salov contacted and signed the contract. In the meantime, all the work has progressed smoothly. In addition, the olive oil of Salov Group has entered the Chinese market through Yimin Group, such as Metro Supermarket and First Food Store.

"In the future, besides consolidating and developing the original foreign markets, we should further expand the Chinese market." Pan Jianjun said.

In fact, the strategic intent of Guangming's acquisition is obvious. As a comprehensive food company, Guangming Food Group has covered dairy products, sugar, wine, leisure food and canned food. The acquisition of Salov not only makes up for the regret of the vacancy in olive oil industry, but also is a good opportunity to enter the olive oil industry just emerging in China and India.

According to the data of the International Olive Oil Commission, global olive oil consumption has increased steadily in the past 20 years. At present, the annual consumption is about 2.3 million tons, partly due to the surge in demand in developing countries such as China and India.

Influenced by this consumption demand, edible oil giants such as COFCO, Luhua and Jinlong fish have entered the field of olive oil to expand their territory, and the industry is generally optimistic about the future of this category. Not only that, Yingli Group, a photovoltaic giant, entered the olive oil market two years ago and took a "low price" market-grabbing route. The price of squeezed olive oil is 30% lower than that of similar products.

Although olive oil has become more and more popular in recent years, it is still largely monopolized by importing enterprises, and the price is expensive. Landing in Beijing East Mall and Taobao online sales platform, reporters observed that olive oil products are generally from Spain and Italy and other overseas countries, and the price is above 100 yuan, relative to other types of edible oil is high-end prices.

Apart from high prices, the problem facing Guangming Food Group is much more than that. An unnamed oil practitioner pointed out that although olive oil consumption increased rapidly, higher than other kinds of edible oil, but because olive oil is still in its infancy in China, there are many phenomena such as uneven quality and consumers do not know how to choose.

However, Zhu Danpeng, a researcher at the China Food Business Research Institute, also believes that olive oil listed companies with guaranteed raw materials and performance support may be indirectly affected by the problem of gutter oil in Taiwan and the reduction of olive oil production in Spain.

Pay the tuition fee for overseas mergers and acquisitions

Bright Food Group from Wang Zongnan period to the current chairman of Lv Yongjie period, since 2010, in a short period of four years, has acquired a number of enterprises or equity, including New Zealand Synlait Dairy, Vitamin and Spain's Tnuva. This is also a rare precedent in the history of overseas acquisitions by Chinese enterprises in the past.

In January this year, it was reported that Guangming Food Group would launch a reform plan for its state-owned assets. At that time, Ge Junjie, vice president of Guangming Food Group, said that internationalization was the focus of the reform of Guangming's state-owned assets.

It is understood that at present, Guangming Food Group has begun to distribute dairy, wine and sugar industries in Australia and New Zealand, wine and sugar industries in North and South America, and leisure food industries in Europe. "For accelerating the internationalization strategy, we should consider whether it conforms to our strategy, whether there is synergy, whether the risk is controllable, whether the cost of acquisition is reasonable and other comprehensive factors." Ge Junjie emphasized.

However, it should be noted that while successful acquisition, Guangming has also experienced a lot of overseas acquisition failures. Bright Food Group also paid tuition fees for overseas acquisitions before acquiring 60% of Weetabix and 75% of Manason, an Australian food company. Due to the lack of experience in overseas M&A, it has also missed out on two promising overseas projects.

In July 2010, after Guangming lowered its original offer of A$1.75 billion to A$1.7 billion at the last minute of its CSR acquisition, Singapore Fengyi International Group took the opportunity to take the lead. The company's acquisition price was just A$1.75 billion previously proposed by Guangming. Insiders of Guangming Group have expressed to reporters with regret that they had lost without experience and had not signed exclusive agreements during the negotiations. In addition, there is also a competition for Yogurt from France.