12 Jul 2021 Premier FMCG expands confectionery portfolio with acquisition of Mister Sweet
Premier FMCG, a subsidiary of local investment holding company Brait, has been given the official OK to acquire Mister Sweet, the sugar-based confectionery business of Lodestone Brands.
The purchase – for an undisclosed sum – is in line with Premier’s growth strategy; the acquisition of the well-known brands ie, Mister Sweet, Candy Tops, Champion, Rascals, and Frutus, will expand its current Manhattan Sweets and Super C Sweets candy portfolio.
This transaction makes Premier the second largest manufacturer in South Africa of sugar-based confectionery, offering a full range of products, as well as doubling the its market share.
Premier’s sugar-based confectionery products include gums and jellies, chews, compressed tablets, marshmallows and hardboiled candy, while Mister Sweet’s portfolio includes gums and jellies, marshmallows, liquorice, sugar panned products such as speckled eggs, chocolate panned products, toffee, peanut brittle and nougat.
Brait says the acquisition “will result in significant cost savings from: operating a combined sales finance and administration structure; the insourcing of Mister Sweet’s warehousing and logistics to use Premier’s platform; and procurement synergies on raw and packing materials.”
Premier commissioned a newly built confectionery manufacturing factory in Gauteng in the first quarter of the year, marking its entry into the boiled candy market segment that included the launch of its new range of Manhattan Candies, Manhattan Pops and Super C Fruity C Candies to the market in March 2021.
“The fit between the Mister Sweet and Premier FMCG portfolios will enable the combined entity to add value and grow the category in terms of innovation, brand leverage, and operational efficiencies.” Kobus Gertenbach – CEO
The deal will result in Premier’s increased participation in the sugar-based confectionery category with a revenue contribution of over R1bn ($74.18m) and a market share value increase from 7.7% to 13.8% on a 12-month basis.
Going forward, Premier FMCG will operate centres of excellence at its two sugar-based confection manufacturing sites in Gauteng, resulting in efficiencies by aligning production capabilities and seeking opportunities for expansion through investment in its capabilities, brands, and people.
Competition Tribunal conditional approval
The acquisition of Mister Sweet received a nod from the Competition Tribunal in May 2021, on the basis that it is unlikely to substantially prevent or lessen competition in the national market for the manufacture and supply of sugar-based confectionary products.
However, on public interest grounds the Minister of Trade, Industry and Competition raised concerns over anticipated merger-related retrenchments.
Following engagements with the Minister, the merger parties agreed to conditions where a moratorium was placed on 19 non-executive positions initially earmarked for retrenchment for a period of 24 months after the merger implementation date – effectively reducing the number of anticipated retrenchments.
In terms of the conditions the total number of potential retrenchments is limited to six (6) employees.
The Tribunal approved the merger subject to the condition, that should vacancies become available due to resignation or natural attrition during the 24-month moratorium period, Premier will endeavour to fill the vacancies from the 19 non-executive employees who would otherwise be retrenched after the 24-month moratorium.
According to Research and Markets, South Africa’s confectionery industry comprising the chocolate market, was valued at approximately R6.4bn ($474m) and sugar confectionery, was valued between R12.5bn ($927m) and R13.5bn ($1bn) in 2019.
Source: www.foodbusinessafrica.com; Premier FMCG, Brait