Glisten moves into health segment with Halo buy
confectionery group Glisten said that it expected to make further
acquisitions in niche markets, as it sought to build on strong
sales over the last three years. Now, less than three months later,
the company has unveiled its latest takeover target - Halo Foods, a
manufacturer of healthy cereal bars. Chris Jones reports.
Glisten produces a wide range of confectionery products, from chocolate-coated raisins and edible decorations to sugar-coated almonds, popcorn and jelly beans, and has grown steadily since its creation in 2001, mostly though acquisitions.
As chief executive Paul Simmonds said back in September, the rationale behind most of these early acquisitions was to offer as wide a range of products as possible to the major multiple grocers, making Glisten their preferred own label partner across a number of core product sectors.
Now that the company has this solid base on which to build, it is keen to exploit more varied confectionery markets, and the takeover of Halo Foods will certainly push the company into new areas.
"This is the most significant acquisition we have made sine floatation in June 2002, not only doubling our sales but taking us into the fast-growing cereal bar market," said chairman Jeremy Hamer. "With this acquisition we can now develop Glisten in three distinct sectors of confectionery, cereal bars and ingredients, all of which satisfy our criteria of being niche."
Glisten will pay £5.94 million for Halo Foods, with an additional £8 million due upon Halo Foods meeting certain profit targets in 2005 and 2006. Halo's profits in 2003 were £1.64 million on revenues of £28.5 million.
The cereal bars business accounts for around 70 per cent of Halo's sales, and includes not only standard cereal bars but also slimming and energy bars - indeed, the company has a profitable business supplying cereal bars to a number of the UK's leading slimming clubs. Like Glisten, it has a particularly strong presence in the own label sector, supplying most of the leading British high street retailers.
Despite the obvious opportunities for growth in the cereal bar segment - sales of cereal bars nearly trebled between 1998 and 2003 to reach £182 million, according to market analysts Mintel - Glisten will not necessarily find its new acquisition easy to handle.
The diet bar market is more competitive than ever, not least because of the arrival of the Atkins low-carb diet system there in January, and Halo Foods found itself dropping into the red in the first four months of 2004 as it struggled to compete with the high-profile diet fad.
But following the launch of its own new bars, the company returned to the black, and the new owners remain confident of profitable growth going forward. With the cereal bar market remaining underexploited, at least compared to the £6 billion confectionery sector and the £1.2 billion crisps and snacks market, there is certainly good cause to be optimistic. Mintel predicts a 45 per cent increase in demand for health bars between 2004 and 2007.
But the cereal bar business was not the only part of Halo Foods which attracted Glisten. The company also has an ingredients business, Nimbus Foods, providing products such as toffee, chocolate or fudge pieces to the bakery, ice cream and desserts markets, which compliments Glisten's existing decorations activities, which focuses primarily on the ice cream market. Halo also has a limited range of niche confectionery products (nut brittle and chewing nuts) which are non-core to Halo but fit very well with Glisten's existing confectionery business.
Founded by current chairman Peter Saunders in 1976, this is not the first time that Halo Foods has been sold. In 1983 it was acquired by confectionery group Rowntree Mackintosh, but was sold back to Saunders in 1992 a year after that firm was itself bought by Swiss giant Nestlé - which considered it a non-core asset.
