Dalgety, PLC.

views updated

Dalgety, PLC.

19 Hanover Square
London W1R 9DA
United Kingdom
(01) 499-7712

Public Company
Incorporated: 1884 as Dalgety and Company, Ltd.
Employees: 24,000
Sales: £4.6 billion (US$8.32 billion)
Stock Index: London

Dalgety has grown from an Australian merchant house connected with the wool trade to become one of the world’s largest food and agricultural conglomerates. Today the company has major holdings in England, Canada, the United States, and Australia and is engaged in such varied activities as snack food production, cereal milling, pig breeding, and fast food distribution.

The company was founded by Frederick Dalgety, a Scotsman who emigrated to Australia in 1833 at the age of 16. Dalgety apprenticed with a Sydney merchant until 1840, when he moved to Melbourne and found a job as the manager of a wool trading firm. Dalgety soon secured a partnership in the business, and, when his partners left the firm, he formed his own company in 1846. Dalgety and Company outfitted sheep ranchers with supplies and financed them in anticipation of yearly wool sales. The firm then shipped wool to England, where it was sold to the textile industry.

The Australian wool market collapsed in the late 1840s, and Dalgety would have been hard-pressed to continue had it not been for the discovery of gold in Australia in 1851. Dalgety and Company made a fortune supplying prospectors with food and digging equipment. The company also bought gold from the miners and then sold it abroad for a substantial profit. Although the gold rush brought Frederick Dalgety sudden wealth, he did not abandon his original business. The wool market recovered from its slump and Dalgety expanded his firm’s activities throughout the continent and to New Zealand. Dalgety’s connections with the wool trade became so pervasive that sheep farmers nicknamed the company and its representatives “Uncle Dal.”

In 1854 Dalgety established an office in London to expedite his overseas transactions and thereafter managed his business from England. As Dalgety’s firm came to dominate the Australian and New Zealand wool market, it became apparent that incorporation was necessary to supply the needed capital. Thus, in 1884 the business was floated as a public limited company with a capital of £4 million. The share issue was a great success, and Frederick Dalgety acted as the company’s first chairman until his death in 1894.

The new company experienced a number of hardships in its early years. In 1893 an Australian banking crisis led to financial contraction on that continent. Then, Australia’s agrarian economy was devastated by the Great Drought, from 1895 to 1902. Dalgety’s new chairman, Edmund Doxat, saw fit to charter a new course for the company. Dependence on wool had left Dalgety vulnerable to the drought, so Doxat began a policy of diversification.

The new process of refrigeration allowed Dalgety to tap into New Zealand’s farming communities. Lamb and mutton as well as butter and cheese could now be transported safely to European markets. Refrigeration gave rise to a New Zealand dairy industry which eventually rivaled Europe’s. Entry into the food business helped Dalgety weather the Great Drought, and the company began the 20th century with newfound strengths.

The early years of the new century were a prosperous time for Dalgety. World War I later stimulated wool production, for uniforms, and the postwar economic boom increased the demand for Australian and New Zealand food products. Dalgety benefited greatly from the prosperity of the 1920s, but, like many other businesses, was caught unaware by the stock market crash of 1929. The Depression was a lean time for the company, marked by losses and employee pay cuts. Although the outbreak of World War II in 1939 ended the Depression, wartime price controls and regulations prevented Dalgety from reaping the full benefits of the economic upswing.

The Allied victory in 1945 inaugurated a period of unprecedented growth for Western business generally, but not for Dalgety and the wool trade. In the decade following World War II, the advent of synthetic fibers such as rayon and orlon greatly undermined the wool industry. Because of falling profits during the 1950s, Dalgety attempted to narrow its field of competition by acquiring rival wool firms. The company’s amalgamation policy culminated in the 1962 merger with the New Zealand Loan and Mercantile Agency, making Dalgety the largest wool broker in the world. Near monopoly status, however, could not protect the company from seasonal swings in the wool market or fluctuations in the Australian climate.

During the 1960s drought once more wreaked havoc on the Australian wool industry. Dalgety had survived drought in the 1890s through diversification, and the company’s management again decided to expand into other fields. From the late 1960s onwards, a series of acquisitions brought Dalgety into a vast range of agricultural and food businesses that eventually resulted in today’s multinational conglomerate.

In 1966 Dalgety bought the two Balfour Guthrie companies of North America. This acquisition consisted of a Canadian trading company with a major interest in western Canada’s lumber industry, and a poultry business in the United States. Dalgety next acquired two British firms: the feed company, Grossmith Agricultural Industries, in 1969, and a pig-breeding concern called the Pig Improvement Company, in 1970. In 1972 Dalgety purchased Associated British Maltsters, Britain’s largest malting firm, for £19 million. With these acquisitions, the company moved away from its original base in Australia and New Zealand so that by 1976, the vast majority of Dalgety’s profits came from activities in England, Canada, and the United States.

Dalgety underwent a marked shift of direction into the food business during the 1970s and 1980s. In 1977, food processing and distribution accounted for only 16% of Dalgety’s product sales, but by 1981 this sector had risen to 45%, while the company’s agri-business sector became less important. The shift toward food began in 1977, when Dalgety initiated a hostile takeover of Spillers, the British flour milling and grocery giant. There was a fierce battle between the two companies, both of which waged heated press campaigns to win the support of Spillers’ shareholders. Dalgety finally acquired Spillers in 1979 for £76.5 million, giving the company a leading role in grocery product manufacture. That same year Dalgety purchased the American company Martin-Brower, one of the world’s largest distributors of fast food and supplier to MacDonald’s restaurants in the United States and Canada. Dalgety once again increased its food product holdings in 1985 with the acquisition of the Anglo-American firm Gill and Duffus, the world’s largest trader of cocoa.

During the 1980s Dalgety became a major supplier of ingredients to food manufacturers. In addition to its flour, malt, and cocoa businesses, Dalgety acquired the ingredients firms James Fleming of England and Modern Maid Food Products of America. These companies produce flavorings, coatings, and glazes for baked goods and frozen foods.

In 1987 Dalgety initiated a vigorous rationalization program to reduce company debt from previous acquisitions and concentrate on its core food business. Dalgety therefore sold a number of subsidiaries, including Balfour Guthrie and Associated British Maltsters. By late 1987 the company’s asset disposal had raised some £150 million for continued expansion into the food industry.

Dalgety has since moved into the lucrative snack food business, purchasing in 1987 the four Golden Wonder companies of England and Holland, producers of a popular line of potato chips and processed snacks. The following year Dalgety acquired Continental Savouries, a British company that manufactures frozen pizza. The addition of Hunters’ Foods in 1989 gave Dalgety the leading role in British snack foods.

Recent acquisitions in the food sector include the British egg distributor, Goldenlay Eggs, and America’s largest asparagus distributor, Lee Brands. One of the company’s most promising new ventures is Dalgety Inc., an American subsidiary that supplies supermarkets with fresh produce. Dalgety is also much involved in the development of microwave food products.

Dalgety has already established joint ventures in Japan and China, and hopes to expand further into the vast Asian market in the future. Altogether, the company is well placed for continued growth in the food industry.

Principal Subsidiaries:

Dalgety Agriculture Ltd.; Dalgety Produce Ltd.; Dalgety Agriculture Ltd.; Dalgety Engineers Ltd.; Dalgety Meat Products Ltd.; Dalgety Farm Eggs Ltd.; Deans Farm Eggs Ltd.; Golden Wonder Ltd.; Golden Wonder (Holland) BV.; Lecureur SA (98% France); Lucas Ingredients Ltd.; Memory Lane Cakes Ltd.; The Pig Improvement Company Ltd.; Pig Improvement Co. Inc.; Homepride Foods Ltd.; Crown Noodle Co. Ltd.; Preservenbedrijf BV. (Holland); Spillers Foods Ltd.; Spillers Milling Ltd.; British Cocoa Mills Ltd.; Gill & Duffus Inc. (USA); Gill & Duffus Ltd.; Gill & Duffus SA (83%) (Switzerland); Joanes Industrial SA (Brazil); Pacol Limited; Usicafe Comissaria & Exportada Ltda (Brazil); Dalgety Farmers Ltd. (69%); Martin-Brower of Canada Ltd.; The Martin-Brower Co. Inc.; Modern Maid Food Products Inc.; Cairns Holdings Ltd. (30%) (Zimbabwe); National Foods Holding Ltd. (17%) (Zimbabwe).