Japanese Company Mizkan to Purchase Ragu and Bertolli Sauces for $2.15 Billion

Business In Other News - May 24th, 2014
Ragu-and-Bertolli

Major Japanese condiment maker Mizkan Group will take over Unilever’s pasta sauce operations under the Ragu and Bertolli brands starting next month.

The Handa-based company agreed to buy the North American pasta sauce business for $2.15 billion, including two US production sites—a processing and packaging plant in Owensboro, Kentucky, and a tomato processing operation in Stockton, California.

The Ragu and Bertolli brands have annual sales of more than $600 million and have a combined 33% share of consumer market for pasta sauce in North America, Unilever said.

The sale of its top sauce brands is the latest in a string of divestments by the Anglo-Dutch company under CEO Paul Polman, who wanted to move away from the food business and focus on personal care brands.

“This sale represents one of the final steps in reshaping our portfolio in North America to deliver sustainable growth for Unilever,” said Kees Kruythoff, president of Unilever North America. He added that it would allow Unilever to “sharpen its focus with our foods business,” composed of brands like Hellman’s mayonnaise, Knorr soup stock and the Slim-Fast range of diet foods.

Last year, the company sold its Wish-Bone salad dressing to Pinnacle Foods Inc for $580 million and Skippy peanut butter to Hormel Foods Corp for $700 million. It also sold its European meat-snacks business to American food producer Jack Links.

Since heading the company, Polman openly expressed his plans to focus on “personal care” and “home care” products. Personal care products account for 36% of Unilever’s $68.2 billion in annual sales, up from 27% in 2008. The food division now makes up 27% of revenue, compared with more than 35% the same year.

“We are trying to grow faster in areas where we are more profitable,” Polman said in an interview earlier this year.

For Mizkan, a 200-year-old privately owned food group based in Handa, Aichi Prefecture, the deal boosts its western reach.

The company said that with the Ragu and Bertolli deal, overseas sales would account for more than 50% of its total, up from about 34%. While overseas sales jumped 66% in the year ended February 28, its domestic sales grew just 1%.

“We will disperse management resources” to the world, Chairman and CEO Kazuhide Nakana told a news conference. The deal “represents an important milestone in our global expansion strategy,” Nakano said.

The company has been buying quite a few foreign brands over the past years, gobbling up the firms behind such well known products as Angostura Bitters, Branston Pickle, and Sarson’s Vinegar recently.

By Maesie Bertumen

Image: “Cheesy Ragu in Japan” by feministjulie/Flickr

Ragu and Bertolli, Mizkan, Unilever North America