On 31 March, Wessanen sealed the last move in its six-year strategy to become what it calls a "pure player in healthy and sustainable food". That evening, the Dutch food group behind brands including Bjorg, Zonnetura and Kallo announced it had finalised the sale of US drinks unit American Beverage Corp.
It was the last of a series of disposals Wessanen had made to change its business to one focusing on healthier food (notwithstanding one of its major brands is Clipper Tea) and on Europe. That strategy, kicked off in 2009/10, has not just seen Wessanen act as seller. In 2013, Wessanen acquired France-based organic and fairtrade food firm France Alter Eco. Last December, Wessanen moved for Italian dairy-free drinks maker Abafoods, a deal it closed in January.
However, more assets have been offloaded than been taken on as Wessanen's management team - including CFO Ronald Merckx - have looked to reshape the business and, at the same, time steadily improve its financial performance.
Wessanen saw sales and profits rise in 2014, a trend that continued in the first quarter of this year. Company and M&A watchers now believe Wessanen is in a position to make further acquisitions. "Importantly from an M&A perspective, the group was in a net cash position for the first time in several years - EUR27m at year-end. That's a significant amount, given the small size of most potential targets in Wessanen's universe," Stefan Kirk, M&A consultant and just-food columnist, wrote on our pages last month.
Speaking to just-food, Merckx, who joined Wessanen in 2011, says the company is looking to make further acquisitions and has the financial firepower. "We have a significant war-chest available to do acquisitions. We are very busy looking at targets and trying to fill the M&A pipeline," he says. "We've done one deal with Abafoods in Q1. We will want to do a number of things in the next 12-18 months to use the cash and grow the company on top of the autonomous growth that we're seeing."
Unsurprisingly, Merckx refuses to be drawn on specific targets but does give some indication of the factors Wessanen is weighing up.
"We would try and look at acquisitions to bolster and create a little bit more critical mass in our smaller markets - Germany, the Netherlands and the UK. Secondly, look at strengthening some of our core product categories like what we have done with Abafoods for dairy alternatives. To some extent we might like at geographic expansion; if you look for instance at Scandinavia, Austria, Switzerland, [they are strong markets in terms of healthy food and high per capita consumption of organic food for instance. They might provide interesting opportunities for M&A," Merckx explains. That's what we would like but there is also the reality of course. You have to go out and kiss a lot of frogs to find that prince. There is an element of what is available and whether it fits any of these criteria."
Merckx insists Wessanen is there is no "strong priority" among the different criteria. "As long as they meet any of those criteria those are the things we could look at. We would looks at cases on merit," he says. "Also, given the nature of the M&A process, you see a lot of companies that are family-owned and therefore the M&A process can take a little bit longer. You have to drink a lot of coffee with people and convince them Wessanen could be a good owner and that means we are casting the net relatively wide."
Natural, healthy and sustainable foods are, of course, all areas Wessanen's larger peers are looking at more closely both through innovation, product renovation and M&A. Competition is likely to increase, both for sales and for assets. Merckx, however, is sanguine about that prospect, believing Wessanen can benefit from a growing market and arguing some of the brands and businesses that may become available would be too minor for some of the giants of the European food industry.
"In the Netherlands, [leading retailer and Ahold arm] Albert Heijn is even advertising on TV with their own private-label range of organic food. It basically means that they now see it as something for the mass market. That will drive overall growth and we will be able to frame our slice of that growing pie. It's good for everybody," Merckx says. "On the other hand, some of the big CPG companies - the Nestles and Unilevers of this world - I'm not sure this is big enough for them though. That may seem a little bit like a contradiction [but] brands would have to be bigger than EUR150m to make sense. Through M&A that would be quite difficult. A lot of these brands operate on a local scale. If you look at our portfolio - apart from Clipper Tea and Whole Earth a little bit - a lot of the brands are local brands and I think that's a little bit less interesting for the multinationals. They want brands that they can develop at a European or global scale."
Of course, the focus Wessanen has introduced to its own business could make it a relatively more attractive takeover target. Did Wessanen's management have an eye on a possible sale of the company at some point down the line when it set about revamping the business?
Merckx insists the "transformation" of Wessanen was done for the good of the group. "It was never done with the intent make it ready for a takeover," he says. "That was always done basically with the idea to almost create a new company and build on some of the things in there but with the recognition that a lot of companies that were part of the Wessanen stable had to go bec there was so little future in them and there was no synergy between large parts of the business. To be honest, it would have been easier to sell off all of the companies individually."
He adds: "Some analysts write of course that there could be a takeover. All I could say about that would be speculation because I don't know what people are doing in little back rooms perhaps. We'll see that when we see it. We are managing the business in a way that creates a lot of shareholder value and as long as we continue to do that, the risk probably of a takeover diminishes."
For the year ahead, Wessanen will keep an eye on acquisition opportunities, Merckx says, while looking to grow its existing brands and drive efficiency within the business. Looking further ahead, Merckx is clear on how he would like Wessanen to have developed. "If we spoke again in 2018, I would expect we've grown a number of our brands to a bigger size. Hopefully we'd have grown market share, which would imply growth slightly ahead or in line at the top end of that 5-7% range. That would be a very creditable performance. Another point would be to have executed an M&A pipeline and to be able to do one deal a year or so. Thirdly to increase further I think the profitability of the company to bring the EBIT percentage more in line with what you would expect of a company in our industry. That will be somewhere between 8-10%."
After a tumultuous decade or so, there is a new sense of clarity at Wessanen.
