AB Foods merges Ryvita brand with Jordans

The international food and retail group Associated British Foods (ABF) is to merge its Ryvita business with Jordans, the manufacturer of breakfast cereals and cereal bars, and has vowed to deliver "high single digit" sales growth at both brands over the next few years.

ABF's finance director, John Bason, said it would grow Jordans' sales internationally and in the convenience market, such as at petrol stations, but added that the increased scale would benefit all sales channels for both brands.

Mr Bason said that Jordans' growth potential was biggest in North America and continental Europe, although it has some presence in these markets already. "The merged company has got the consumer trend towards healthy eating, which is a growing market, going for it. High single digit [sales growth] is where you would look," he said.

ABF, whose brands include Ovaltine, Twinings and Kingsmill, will take a 62 per cent stake in the business combining Jordans and Ryvita. The deal follows ABF's acquisition of a 20 per cent stake in Jordans last September. "Lots of opportunities were identified and we are now taking it further," said Mr Bason.

He forecast that both businesses would post combined sales of £150m for its financial year to September 2009. For ABF's financial year to 15 September 2007, Ryvita's sales were £50m. Jordans delivered unaudited sales of £85m in the year to 29 February.

The Shore Capital analyst Darren Shirley said: "I would suspect that Jordans has the higher growth potential than Ryvita at this moment in time. Ryvita will probably do with a bit of pepping up and the Jordans' team giving it a bit more TLC [tender loving care] than it would probably get in the ABF grocery division."

Bill and David Jordan started the Jordans cereal business in 1972, while the Ryvita brand, which has become a byword for crispy bread, was founded 80 years ago. ABF said the Jordan family would still be "fully involved" in the business.

Last May, ABF agreed to acquire Patak's, the Indian food company known for its curry pastes, from the founding Pathak family.

Mr Bason said that both brands, which use complementary manufacturing technologies, would continue to be developed. ABF has no plans to close any of both businesses' manufacturing sites, but said there could be redundancies among back-office staff involved with administrative tasks.