1492553423260 - Weetabix venture in China turns to soggy mush

Weetabix venture in China turns to soggy mush

A deal made five years ago to try to capitalise on the Chinese appetite for Western brands, including breakfast cereals, has come to an end with the Chinese owners accepting it was unlikely to establish the Weetabix brand as a household name in China.

Chinese consumers are better known for a diet of noodles or rice for breakfast and steadfastly refused to swing their purchasing power behind Weetabix, the British cereal, similar to New Zealand’s Weetbix.

The Weetabix saga began in 2012 when one of China’s state-owned Bright Food, an aggressively expanding company, took control of the company from Lion Capital in an overseas food push from Australia to Israel.

Weetabix is Britain’s second-largest ready-to-eat cereal maker overall, and Weetabix is the nation’s top-selling brand.

Bright agreed to buy a 60 percent stake in Weetabix in 2012 from private equity firm Lion Capital in a deal that valued it at 1.2 billion pounds. Baring Private Equity Asia subsequently bought Lion’s remaining stake in 2015.

But now Bright Food has called time on Weetabix and sold it to US cereal company Post Holdings.

The deal will add the Weetabix, Alpen and Barbara’s brands to a portfolio of cereals including Honey Bunches of Oats and Grape-Nuts. It will allow for expanded distribution of Post products in a number of international markets, while expanding Weetabix and Barbara’s in North America.

“Combining together two category leaders continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets,” said Rob Vitale, Post’s chief executive, in a statement.

The sale did not signal the end of Bright’s international ambitions, Shanghai-based Bright spokesman Pan Jianjun said.

“This is a part of our internationalisation strategy. Selling assets enables us to better expand. Going forward Bright will stick to our overseas push,” he said.

Reuters reported in January that Post Holdings, the No.3 U.S. cereal company, was among four interested parties vying for Weetabix, a business founded 85 years ago.

Bright hired Goldman Sachs to run an auction for the well-known British brand less than five years after the Chinese company agreed to take control of it, with sources familiar with the matter saying Bright it had struggled to crack the Chinese market, where many consumers tend to eat hot breakfasts.

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