No 'Dog Days' for Candy
Most of you have undoubtedly heard and used the term “dog days of summer.” Typically, the phrase correlates with the months of July and August, referring to the hottest days of the year in the Northern Hemisphere, a time when dogs - and humans - feel listless.
I suppose the term “lazy, hazy days of summer” also works, but the image of a hound sleeping on the porch with his or her tongue hanging out is just that much more intense.
Several events that occurred during the past month (and continuing into July) have reminded me that the “dogs days of summer” may only have sentimental significance and no longer relate to today’s instant messaging, instant texting world.
For example, in our News & Analysis section, we report on the latest flurry of acquisitions, such as Lotte’s pickup of the E.Wedel brands from Kraft Foods, Grupo Bimbo’s take-over of Dulces Vera and the Oryxa Capital purchase of Kraft Foods’ Kandia-Excelent business in Romania.
The E.Wedel and Kandia-Excelent acquisitions were to be expected, of course, since the EU Commission had ruled that in order for Kraft to purchase Cadbury, it had to divest itself of certain businesses to ensure competitiveness within those markets.
Most observers had expected Nestlé to pick up the E.Wedel business, which would have complimented its chocolate business in Poland. The fact that Lotte acquired it sends yet another signal that the Japanese multinational is a force to be reckoned with in the global confectionery sector. And remember, the E.Wedel acquisition follows Lotte’s pickup of Guylain two years ago.
But Lotte isn’t the only company that’s been aggressively expanding. Grupo Bimbo, one of the largest bakery conglomerates in the world, has turned its sights to snacking these days, garnering both sweet and savory companies. Its Dulces Vera acquisition provides a good fit strategically and logistically. Moreover, I suspect there will be a few more add-ons before Grupo Bimbo’s done.
Meanwhile, Oryxa Capital’s decision to pick up the Kandia-Excelent business reaffirms investors’ confidence in confectionery operations.
Such confidence about the future of the industry can be seen in The Hershey Co.’s announcement last month to invest between $200 and $225 million in plant upgrades at its West Hershey facility as well as another $50 million to $75 million in distribution and administrative facilities in Hershey, Pa.
The investment, unfortunately, dovetails with a loss of jobs - between 500 and 600, according to the company. The hope is that several of Hershey’s employees will be able to transition from jobs they’ve held at the more than 100-year-old downtown Hershey plant to those in West Hershey.
The main thrust behind the move, as David West, Hershey’s president and ceo, explains, “is to create a highly flexible, cost-effective manufacturing facility that will enable us to remain competitive with global players while satisfying the needs of retail customers and consumers.”
But you don’t have to be a multinational to invest for competitive reasons. This month’s profile on DeMet’s Candy Co. clearly demonstrates pluck and foresight from a midsized player.
I’m expecting additional news about acquisitions as well as investments during the remaining dog days of summer. So look for more headlines amidst heat waves and high humidities.
But unlike the popular belief going back to Roman times, when the dog days were viewed as a time “when the seas boiled, wine turned sour, dogs grew mad, and all creatures became languid, causing to man burning fevers, hysterics, and frenzies,” the weeks ahead should signal a less sinister summer, albeit a turbulent one.
Hence, no need to sacrifice a brown dog, as the Romans did to appease Sirius, the Dog Star. Better to throw some steaks, sausages or shrimp on the barbecue as we watch the headlines roll.
