August 17, 2004

Smithfield Foods Increases Influence In European Meat Production
 

US processing giant Smithfield Foods has increased its share of Spanish pork processor Campofrio Alimentacion from 15.2 per cent to 22.4 per cent, thereby further strengthening its influence in Europe's ever-consolidating meat processing industry.

Campofrio is the largest meat processor in Spain and one of Europe's largest diversified meat processors with annual sales of about €1 billion. Primarily a processor of pork and further processed pork products, Campofrio is the market leader in Spain and has operations in Portugal, Russia, Poland, Romania and France, and exports to over 40 countries.

Smithfield acquired the Campofrio shares at a discount to Thursday's closing price on the Madrid Stock Exchange. The $49 million acquisition of the shares has been therefore seen as a canny business move by industry experts.

The acquisition can also be seen as part of a concerted effort from Smithfield to exert greater influence in the European meat market, and suggests that the meat industry is undergoing further consolidation. Many in the industry point out that the ongoing consolidation of European supermarket chains means that they are inevitably seeking big meat suppliers.

Those on the processing side therefore, have little choice but to merge if they are to survive.

And in February, Smithfield Foods announced that it had completed acquisitions of two complementary meat companies in the UK, the Norwich Food Company and Ridpath Pek. The newly acquired companies have now been combined to form Smithfield Foods, which the group expects to generate 2004 revenues of US$65 million.

With annualised sales of $9 billion, Smithfield Foods is the leading processor and marketer of fresh pork and processed meats in the United States, as well as the largest producer of hogs. But following these acquisitions, the group is well on the way to becoming truly globalised.