Moirs Biscuits

Crumbs … Pioneer about to toss its biscuit business?

Cape Town-based consumer brands giant Pioneer Foods Group is looking very serious about cutting out operations that are not going to fatten up its operating margins. Next to go… Moir’s?

As Cape Business News reports, Pioneer is relinquishing its unprofitable arrangement – via subsidiary Ceres Beverages – to bottle iconic soft-drink Pepsi, and has walked away from its commodity businesses – unbundling the poultry, eggs and animal feeds businesses into Quantum Foods.

These changes are courtesy new CEO Phil Roux, who is intent on focusing Pioneer on its power brands like Spekko, Weet-Bix, White Star, Safari, Pro-Nutro, Sasko and Liqui-Fruit. This strategy has already paid off with Pioneer’s operating margin looking a lot plumper at 9,5% at the end of 2014 compared with a much leaner 7.1% in 2013.

The latest rumbling from Bellville are that Pioneer could look to offloading its Moir’s biscuit operations. Pioneer are really up against it in the biscuit market with the category champion AVI completely dominating the supermarket shelves.

Pioneer moved into the biscuit segment in 2004 with the acquisition of Kwality Biscuits. The company then re-branded rebranded a range of biscuits to build on the legacy of the well known Moir’s name – including Tea Lovers, Marie, Lemon Creams and Munch a Lot.

In the last financial year to end September 2014 Pioneer directors reported that biscuits achieved targeted volume growth, but unfortunately at crumbling margins.

A presentation at Pioneer’s recent AGM showed that rice, biscuits, baking aids and pasta were the categories where the company lost market shares during the first three months of its new financial year.

It is unlikely Pioneer’s biscuit business will fetch a huge price, but that’s the way the cookie crumbles if your brands are not market leaders. Still the savings in management team could be invaluable in the years ahead as Pioneer hones its new business model…..

Cape Business News: Read the full article

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Pioneer Foods has ambitious plans for biscuit market