Grand Met clears out the pantry

Grand Metropolitan has begun a clear-out of its lesser known European food brands in order to concentrate on market leaders such as Pillsbury, Haagen-Dazs, Old El Paso and Green Giant.

The company sold its Erasco food business in Germany yesterday to the Campbell Soup company of the US for pounds 140m. It has also hung the "for sale" sign over a raft of under-performing names which include Shippams pastes, Memory Lane cakes, Fleurs de Lys in the UK and Brassard in France and Germany. These businesses are expected to fetch an additional pounds 80m-pounds 100m though some analysts say they could yield as much as pounds 150m.

GrandMet Foods Europe will be renamed Pillsbury Europe from the beginning of October and its headquarters will be relocated from Paris to Uxbridge.

The move is part of a strategic review of the group's European foods business by Paul Walsh, chief executive of the Pillsbury division. A shake- up has been long anticipated as it has been among Grand Met's worst performing divisions.

The group was losing money until a couple of years ago and last year recorded operating profits of just pounds 23m on sales of pounds 600m. In the six months to March it made profits of pounds 7m on sales of almost pounds 400m.

Grand Met, whose chairman is George Bull, said it expected to sell most of the businesses along with the Pearle opticians division by the time of its full-year results in December. Pearle is forecast to raise around pounds 130m-pounds 140m.

Erasco, which is the market leader in canned and ready-made soups in Germany, made operating profits of pounds 14m last year on sales of pounds 150m. The food disposals will require a goodwill write-off of pounds 220m.

Grand Met finance director Gerald Corbett said the businesses were being sold as they were lower-margin businesses that were not market leaders in their sectors. "We decided we should free up resources to focus on our major brands," he said.

"The European food industry is extremely competitive and not very profitable. By comparison, the US food industry has higher margins, less own-label penetration and less powerful retailers."

Mr Corbett said the group had already received several expressions of interest for the food businesses.

The funds raised are likely to be used to pay down Grand Met's pounds 2.9bn debt pile though, it will also be able to concentrate marketing spending behind its major brands. Mr Corbett ruled out a significant acquisition.

The streamlining of the Grand Met portfolio met with approval in the City. John Spicer of SBC Warburg said: "It is not a big surprise but we are happy that they are doing it. It [the European food business] was really a conglomeration of small, national businesses. They haven't really gone anywhere for the last few years and it would have been difficult for them to expand."

The disposals would leave only Burger King as the one remaining candidate for sale. Though the company insists there are no plans to sell the business, there has been consistent speculation that a spin-off is likely. Grand Met shares rose 2.5p to 471.5p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea