23 May 2008 - FLEXNEWS reported this morning that Swiss food group Hero, via its US subsidiary Beech-Nut Nutrition Corporation, said it had broken ground on a new state-of-the-art infant-nutrition production facility in New York state.
The USD 124 million invested in the plant, which is expected to open in late 2009, represents the largest single capital expenditure project undertaken by the Group.
Stefan F. Heidenreich, Hero's CEO commented: "With the prospect of a new cutting-edge production facility, we are confident that Beech-Nut will be able to increase growth and efficiency and become an even stronger infant-nutrition player in North America."
The Swiss financial press reports that the new factory will help Hero gain significant market share in the US baby food industry and that pressure will be put on Nestle-Gerber, the current market leader.
The reports add that when Hero acquired Beech-Nut in October 2005 it became the second largest baby food company in the US and now the company has a 17% market share.
The market is clearly dominated by Nestle-Gerber with its 70% share ever since Nestle acquired the former Novartis company in April 2007. However, Hero intends to bite into the leader’s share and hopes to cater for 25% of the US baby food market by 2011.
Hero’s sales of baby food products grew 20% in 2007 and amounted to 750 million swiss francs (USD 729 million), or 40% of Hero’s total sales last year.
The company told the Swiss financial press that it is not worried by its competitor Danone even though the French giant acquired Numico in November last year. A Hero spokesperson said that Danone is not present in the US baby food market for glass jar products or milk powder.
Established in 1886 in Lenzburg, Hero’s majority shareholder is Germany’s Dr Arend Oetker with 49%. Ever since Hero withdrew from the Swiss bourse in 2003, the company has been hunting for acquisitions in the baby food sector.
The company, with its workforce of 3,500, acquired the Galactina, Adapta and Céralino brands from Twinings subsidiary Wander AG, the producer of Ovaltine, in 2004. During that year, Hero also bought the Sunar brand from H.J. Heinz.
In 2006, the company acquired Swedish baby food producer Semper AB and, in February this year, Hero purchased British brand Organix.
Commenting on the Organix acquisition at the time, Stefan F. Heidenreich said: “Organix represents an excellent addition to the Hero family of brands. Not only does it give the Group an first-class position in the UK which we believe we can develop leveraging the innovation successes we have achieved in other infant markets, but also it provides us with whole new areas of insight and expertise in the areas of organic and toddler foods that will significantly enhance the Group’s nutritional credentials internationally.”
According to the Swiss reports, Hero is expecting to see its turnover grow to 2 billion Swiss francs, or USD 1.9 billion in 2008.
