Western Cape Business News

Send  Share  RSS  Twitter  23 Feb 2012

FOOD & BEVERAGES: Tiger Swallows All Of Langeberg


Recent Western Cape Business News

CONSUMER goods conglomerate Tiger Brands has acquired the remaining shares that it did not own in Western Cape-based deciduous fruit canning specialist Langeberg and Ashton Foods.

In December Tiger Brands – which owns well-known brands like Tastic and All Joy – announced an agreement with Ashton Canning to acquire the 33.3% shares in Langeberg and Ashton Foods for an undisclosed sum.

Langeberg Foods was bought out by Tiger Brands and delisted from the JSE about 12 years ago, but was merged with Ashton Foods in 2004. At that time the newly combined entity – which is now focussed on the export market – held 68% of the national canned deciduous fruit market and 50% in the national fruit puree market.

Tiger Brands has snatched 100% of the canning company after what appears to be a tough trading period for deciduous fruit canners – which might suggest the tag on the canning business was not on the pricey side.

Langeberg and Ashton Foods rank as one of the largest global fruit canners with the bulk of the production exported to markets in the Far East, Europe and Middle East. Some of the best known brands manufactured by Langeberg and Ashton Foods include Gold Reef and Silverleaf.

But in the year to end September 2011, Langeberg and Ashton Foods’ fruits export business was negatively impacted by the strong Rand (over 85% of production is exported) as well as weak demand in developed markets.

This saw a 15.6% drop in volumes and an 11% reduction in turnover with flat prices reported in Europe.

What’s more, European and South American countries continued to provide subsidies to their canned fruit industries, which - together with duty structures in these regions - impacted Langeberg and Ashton Foods’ competitiveness.

Last year Tiger Brands indicated that cutting overheads and improving yields had reduced costs at Langeberg and Ashton Foods. These actions saw Langeberg and Ashton Foods halve its losses in 2011 to R43.3 million from around R85 million in 2010. Tiger Brands has indicated that profitability at Langeberg and Ashton Foods was expected to be restored in 2012 – although the company warned the recovery would be subject to volatility in foreign currency exchange rates.

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