In the wake of the news that the UK company United Biscuits has been bought by Turkey’s Yildiz, Mintel’s Global Food Trends Analyst Jodie Minotto explores the partnership.
The Yildiz/UB deal is a particularly good one. Yildiz’s biscuit business, Ülker is the jewel in the company’s crown and is their strength. The UB deal significantly elevates Ülker in the global biscuits category to the position of third largest player after Mondelez and Kellogg, number two player in Europe and moves them closer toward their goal of becoming a leader in the global biscuits category. Ülker have a strong focus on biscuits, cakes and chocolate and this is a combination that has proved successful for global category leader Mondelēz in terms of complementarity of consumption occasions, consumers and the ability to extend brands such as chocolate into bakery and vice versa.
The UB and Ülker businesses are also an excellent fit geographically speaking. The deal provides Ülker with access to relatively stable markets, strong brands and a wide network of production facilities. The stability is particularly important given the volatility they face in the Middle Eastern and African markets they are expanding into. Ülker have also stated their plans to enter the Latin American and Russian markets and the UB acquisition is unlikely to be very helpful in advancing these plans. However, Ülker have also indicated they are planning further acquisitions and these are likely to be focused on delivering them an advantage in these two important biscuit markets.
Further to this, Yildiz is well established in its region and has been focused on developing the opportunities that are arising. Its 2007 acquisition of Godiva was clearly a more global acquisition and has broadened its geographical footprint and provided it with a presence in the premium end of the category. For Ülker, this deal provides them with a strong position in the relatively stable European biscuit market, a region where it lacks a strong presence. It also builds upon UB’s investments in the Middle East and Africa and their efforts to establish the McVities brand in India.
In addition, UB has a solid revenue and production base in the UK and Europe, which will provide stability as the newly expanded Ülker biscuits business expands into the Middle East, Africa and Russia, which remain volatile. UB also provide Ülker with the number two position in the European biscuit market, a significant achievement given their goal of becoming a global leader in the category.
Finally, UB has already made progress in establishing its brands in Africa and the Middle East with recent investments in Saudi based Rana Confectionery and Nigerian biscuit maker A&P Foods. UB also exports to the massive Indian biscuit market, where its British heritage provides it with an advantage given its colonial ties to the country.
As a result of the UB deal, Ülker is now faced with a large portfolio of regional brands, yet they lack strong powerbrands that can be leveraged in the way that Oreo and Ritz are by Mondelēz. Ülker must now balance their ambitions to continue expanding globally with a need to invest in building and establishing powerbrands, which are essential in the arsenal of every global consumer goods company.
Whilst the outcome is not at all surprising, Ülker appear to have the most to gain given their ambitions and also seem to be the firm most firmly focused on the bakery category.
