Villeneuve d’Ascq, France-headquartered Bonduelle SCA is said to be preparing to make an offer to buy the Green Giant frozen and canned vegetable business in the United States. According to a Reuters dispatch on July 20, it is working with the Centerview Partners private equity group to raise sufficient capital for a winning bid.
Green Giant, owned by Golden Valley, Minnesota-based General Mills since its acquisition in 2001, reportedly generates upwards of $700 million in sales per annum. However, after taking a $260 million one-time write-down impairment charge on the value of the brand in late May, General Mills decided to engage the Rothschild investment bank to explore the possibilities of selling the unit.
“We made a strategic decision to redirect certain resources supporting our Green Giant business in our US retail segment to other businesses within the segment. Therefore, future sales and profitability projections in our long range plan for this business declined,” the company declared in a press release.
Bonduelle, which has a market capitalization of EUR 796 million ($861 million), produces canned vegetables for Green Giant in Canada, where it operates three canneries and four frozen vegetable plants. The company also has four frozen vegetable packing facilities in the United States, which were acquired from Allens, Inc. in 2012.
Globally, Bonduelle sells more than 500 varieties of vegetables in over 100 countries. It sources crops from approximately 128,000 hectares of farmland, and processes the raw material into value added consumer products at 58 sites in Europe, Latin America and North America. Founded in 1853, the family-run company’s turnover in 2014 amounted to EUR 1,896 million.
There are more than 160 products in the Green Giant line, ranging from mono packs of corn, peas, broccoli and baby brussels sprouts with butter to blends and mixes such as Asiago Parmesan Rissotto Vegetables and Italian Herb Steamers. In business for 112 years, the Minneapolis, Minnesota-headquartered company’s animated Jolly Green Giant mascot has been an American brand icon since its first television advertising appearance in 1958.
While volume sales of branded frozen vegetables in the US market have been relatively flat in recent years, Green Giant has not been losing money loser, according to Ken Powell, General Mills’ chairman and chief executive officer. “It’s a good, profitable brand,” he insists.
Foodservice Opportunity Knocks
Having said that, the company believes that greener pastures for growth in the frozen food field lie elsewhere, such as at breakfast table – particularly on menus in away-from-home venues, where Americans fork over nearly half of the $1.4 trillion spent annually on food and drink.
Frozen breakfast products have been introduced to cater to the needs of school meal providers. Speaking at General Mills’ July 14 investor day conference, Bethany Quam, vice president of convenience stores and foodservice, informed analysts and shareholders:
“We developed this Pillsbury branded line five years ago for school foodservice operators who wanted an easy and convenient way to serve breakfast that kids could eat right in the classroom. Sales have grown at a strong double-digit compound rate and we have added new varieties of heat-and-eat breakfast baked goods, including new creamy cheese-filled mini bagels that launched this spring.”
She added: “We are now bringing this heat-and-serve convenience to school lunch with Old El Paso Gorditas. They heat right in the package, so it is an easy way to serve a hot lunch with little mess. Five billion lunches are served in schools annually. That is more than twice the number of school breakfasts, so we see great opportunity to expand this line.”