As soon as “618” was over, Yizi international, which owns Orio, hyunmai and other brands, added a food company to the “shopping cart”. This time, it will cost nearly 20billion yuan.
On June 21, Yizi announced an agreement to purchase Clif Bar & company, an American manufacturer of organic nutrition energy rods, for us $2.9 billion (about 19.5 billion yuan). Through this acquisition, Yizi will be able to obtain “trend brands” in many American markets, including Clif, Luna and Clif kid. This also means that the latest round of “buy buy” model of Yizi to achieve growth cannot be stopped at all.
In addition, the acquisition also expanded Yizi’s global snack bar business to more than $1billion. At present, under this business segment, it also includes perfect snacks, an American refrigerated snack brand, and grenade, a British nutritional food brand. Yizi described the acquisition as promoting its strategy of reshaping its portfolio to maintain higher long-term growth.
In a briefing, Dirk Van de put, CEO of Yizi, said that as the company continued to expand its high growth snack business, the above transaction further promoted Yizi’s determination to lead the future snack development, that is, to win in chocolate, biscuits and baked snacks.
Fengpude also described Clif Bar & Company as a “leader and innovator” in the field of sustainable snacks in the United States. He welcomed the company’s employees to join Yizi.
The transaction is expected to be completed in the third quarter and achieve revenue growth in the second year. By using the scale of Yizi in the world and North America to create cost synergies, Clif will further expand its distribution and penetration into existing and new customer channels in the United States. In addition, yizihui will continue to let Clif operate at its former headquarters in California, and continue to let Clif produce at its factories in Idaho and Indiana.
Fengpude, CEO of Yizi
So what kind of company is Clif, which attracted Yizi to spend $2.9 billion?
After visiting Clif’s official website, xiaoshidai learned that the company was founded by Gary Erickson after a ride in memory of his father Clifford. Clif’s first product was launched in the United States in 1992. In 2000, Gary Erickson claimed that a company had offered us $120million to implement the acquisition, but it was rejected, and he continued to keep his family business identity. In 2007, Clif first explored the international market and entered the UK. Currently, Clif’s employees hold shares in the company.
The snack generation also noticed that Clif’s products are not only for adults, but also for children and pets. Compared with other energy bars and meal replacement bars, the main selling point of the company’s products is organic, and it is also developing plant-based products. It claims that about 80% of the raw materials purchased are organic or certified by Rainforest Alliance. In addition, it continues to dig deep into the “moat” of environmental protection, and vigorously publicizes the concepts highly recognized by consumers in developed countries, such as zero waste, green energy, and environmental packaging.
Although Clif mainly focuses on the North American market, on an e-commerce platform, xiaoshidai saw that the brand had entered the Chinese market through “overseas shopping”. One of them sold for 186 yuan (12 pieces *68g), but the sales volume was not high. Some sellers pointed out that Clif is a “high-end product” in the energy bar, which is suitable for eating as a meal substitute, riding or hiking.
Back to Yizi’s strategy. The company said that the latest acquisition reflected that Yizi continued to give priority to the fast-growing snack segment in key regions.
Under this strategy, Yizi has been “buying and buying” one after another recently. For example, this year, it announced an agreement to acquire ricolino, a Mexican confectionery company, from Grupo bimbo (binburg group), and completed the acquisition of chipita S.A., a pastry company in central and Eastern Europe.
In 2021, Yizi acquired grenade, a British nutritional food company, Gourmet Food Holdings, an Australian biscuit company, and Hu, an American healthy snack company.
According to a table released by Yizi (as shown in the figure above), the company uses four dimensions to measure whether the above target companies are in line with its own strategy, including: improving well-being (Note: healthy and nutritious food), high-end products, filling the gap (Yizi’s geography, etc.) and (and Yizi’s) adjacent categories. Among them, Clif, newly acquired, meets the two dimensions of promoting well-being and neighboring categories.
In fact, Yizi is currently undergoing an “asset rotation”. The US based snack giant has a product line of chocolates, cookies, solid drinks, gum and candy. Among them, chocolate and biscuits account for about 80% of Yizi’s product portfolio. Fengpude pointed out that their revenue and share have achieved “amazing growth” in the past few years, but other categories accounting for about 20% of the product portfolio are regarded as non core assets.
According to his latest arrangement, Yizi needs to divest some non core businesses to provide funds for more acquisitions. To this end, he announced last month that he would divest the chewing gum business in developed countries and planned to divest the global business of the “Lotus” brand.
Behind the “asset rotation” is the growth “ambition” of the snack giant. Previously, Yizi set its long-term organic net income growth target at 3%-5%, higher than the performance guidance description that it had to grow by more than 3%. To this end, the company will create value through organic growth and targeted acquisitions. The focus of future acquisitions is to expand its influence in chocolate, biscuits and baked desserts.
In the Chinese market, Yizi’s above strategy has been implemented, although the amount involved is not as significant as this transaction. In November last year, Yizi China reached a strategic cooperation and investment agreement with Enxi village, a roaster. Yizi China will make minority equity investment in Enxi village industry. This is the first time Yizi has invested in a Chinese local food company.
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