The Rising Influence of Rising Affluence

[DewDiligence]

HNZ Acquires Chinese Soy-Sauce Maker for $165M

[#msg-50806342 is a good backgrounder on how HNZ is a beneficiary of The Global Demographic Tailwind.]

http://online.wsj.com/article/SB10001424052748704895204575320713046148480.html

›JUNE 21, 2010, 11:34 A.M. ET
By TESS STYNES

H.J. Heinz Co. agreed to acquire Chinese soy-sauce maker Foodstar from private-equity firm Transpac Industrial Holding Ltd., providing the food company entry into China's fast-growing soy-sauce market.

Heinz will pay $165 million cash when the deal closes, with a potential performance-based payout in 2014. The size of that potential payout wasn't disclosed.

Heinz and other food processors have been focusing on emerging markets for growth as sales slow in more established markets such as the U.S. and Britain. The maker of ketchup, baked beans and Classico pasta sauce expects the purchase will raise its annual sales in China to about $300 million.

Heinz President and Chief Executive William R. Johnson said the deal "is another important step in our strategy to accelerate growth in dynamic emerging markets like China, where Heinz is already well positioned with our growing infant nutrition business and Long Fong, a leading brand of frozen dim sum."

Emerging markets, including China, generated about 30% of Heinz's sales growth and 15% of total sales in the fiscal year ended April 28. The company expects emerging markets to generate as much as 25% of sales by 2016.

Guangzhou-based Foodstar, which also produces fermented bean curd, a flavor-enhancer, has four factories and 2,500 employees in China, with a new manufacturing plant under construction in Shanghai. According to Heinz, China's retail soy-sauce market is growing 7% to 8% a year.

Heinz last month reported fiscal fourth-quarter earnings rose 9.9% and boosted its quarterly dividend citing growth prospects in emerging markets.‹