Geest Plc

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Geest Plc

Midgate House, Midgate
Peterborough PE1 1TN
United Kingdom
Telephone: (+ 44) 1775-761-111
Fax: (+ 44) 1775-763-009
Web site: http://www.geest.co.uk

Public Company
Incorporated: 1935 as Geest Horticultural Products
Employees: 7,884
Sales: £526 million (US$845.1 million) (1999)
Stock Exchanges: London
Ticker Symbol: GET
NAIC: 311991 Perishable Prepared Food Manufacturing

Geest Plc is a leading producer and distributor of fresh chilled foods to the U.K., Benelux, and French markets. The company’s range of more than 1,400 products includes lines of ready meals, breads, pizzas, salads, whole produce and prepared fruits and vegetables, condiments, and other products found in supermarkets and convenience stores. The bulk of the company’s sales are made through fresh prepared foods, which accounted for 75 percent of the group’s 1999 sales of £526 million (US$845.1 million). The company has made strong investments, however, as well as a notable number of acquisitions and joint venture partnerships, to boost its activities in other fast-growing fresh convenience foods segments, such as salads (the company has a 46 percent market share for this segment in the United Kingdom) and stir-fry, dips, soups and sauces, pizza, and pasta. A major area of investment focus for Geest is the ready-meals market, a segment growing by some ten percent per year as changes in consumer attitudes, as well as steady increases in both the quality and variety of these foods, have combined with changes in consumer kitchen habits (in the United Kingdom, the average time spent on food preparation per day has dropped to just half an hour in the late 1990s, compared with one and one-half hours in the 1980s) to drive this category. The average consumer probably does not know Geest at all, however, as the company sells its products through the major supermarket chains, including Marks and Spencer’s, Tesco, and Sainsbury’s, its three largest customers in the United Kingdom, who in turn sell the company’s products under their own brand names and labels. The majority of the company’s sales are made in the United Kingdom; Geest’s 1999 acquisition of Vaco, of Geel, Belgium, and a five-year supply contract signed with The Netherlands’ Albert Heijn supermarket chain, however, have already raised sales in the Benelux countries to three percent of Geest’s total sales. In 2000, the company also moved into the French market, notably with the acquisition of Cinquiéme Saison, a supplier of fresh salads to that country’s major supermarket retailers. The company’s expansion and focus on the fresh prepared food market has been led by chairman Ian Menzies-Gow since 1996.

From Flowers to Bananas: 1950s

The Geest name came to England in the 1930s from The Netherlands, when brothers John and Leonard van Geest left their family’s flower-growing business to expand operations across the North Sea, opening a flower bulb import company in the United Kingdom. The van Geest family had been involved in flower growing and horticulture since the late 19th century. After helping to establish the family’s operations in England, brother John van Geest left to start his own business. That company, founded in Lincolnshire in 1935 as Geest Horticultural Products, began growing its own flower bulbs for sale in the United Kingdom, rather than relying on Dutch imports.

Geest Horticultural Products began to see strong growth following World War II, particularly after it diversified into a new product area—that of importing and distributing fresh produce—in the late 1940s. Many of the company’s products came from The Netherlands, such as its tomatoes, as that country began development of an extensive network of greenhouses that were to make it one of the world’s leading hydroponics-based vegetable producers. The Geest catalog soon extended to cucumbers, melons, carrots, and other fruits and vegetables. The company was quick to develop a large degree of vertical integration, gaining control of nearly every aspect of its product offerings, including growing, shipping, handling, distribution, even manufacturing its own boxes and other logistics supports.

Until the 1950s, imports of bananas to the United Kingdom had been almost entirely under Ireland-based Fyffes’ control. Geest, however, decided to challenge that company’s dominance of the banana trade, as the fruit swiftly gained popularity among British consumers. Geest started its own banana import operations in the early 1950s, turning specifically to the countries in the Windward Islands chain—St. Lucia, St. Vincent, the Grenadines, Grenada, and Dominica—for their banana production. The company also played a major role in developing the banana industry on these islands and elsewhere in the Caribbean. Through its banana imports and its other produce interests, the company also was able to attract a number of the United Kingdom’s largest supermarket chains to its growing customer lists. In the late 1950s, the company’s banana imports had flourished, and the company even started its own shipping line, offering vacation cruises as well as cargo space for its banana imports. By the 1960s, Geest had successfully captured 50 percent of the U.K. banana market from Fyffes.

Prepared Foods Specialist for the 21st Century

Although Geest also became one of the United Kingdom’s most prominent flower and bulb importers in the United Kingdom, it quickly became most identified with its banana business. Yet in the early 1970s, the company took its first step toward a diversification that later was to redefine the company entirely.

Geest’s produce imports positioned it to move into a new product area. As the United Kingdom’s chains of supermarkets developed, the country’s consumer habits also were changing. Frozen foods and meals had become a mainstay of many kitchens, particularly as more and more women began joining the workforce. This trend in turn led to a need for many consumers for so-called “timesaving” foods, such as prepared meats and salads. Geest opened its first facility for producing prepared salads in Spalding in 1972. This diversification led the company to change its name to Geest Holdings Plc.

By the 1980s, consumer habits had sufficiently altered as to support a greater number of investments in the fresh prepared foods market. Geest began its own push into this category in the mid-1980s, when it took a listing on the London Stock Exchange. The listing, which enabled the Geest family to cash out on its holdings, also saw the company’s name changed to simply Geest Plc. With this new access to investment capital, Geest began to step up its prepared foods holdings. In the late 1980s, the company acquired two new subsidiaries, Katies Kitchen, which added fresh pizza selections in 1988; and Bourne Salads, acquired in 1989, which increased the company’s own salad production capacity. At the same time, Geest launched a new subsidiary, Spalding Ready Meals, which brought the company into a new—and fast-growing—category in 1988.

Geest entered the 1990s with still more acquisitions, including those of The Pasta Company in 1990, and Kent Salads and English Village Salads in 1991. The company’s push into fresh prepared foods coincided with a downturn in its core banana import business. The early 1990s in fact saw Geest’s banana business reeling from several natural and economic disasters. After bearing the brunt of a number of tropical storms and flooding, which wiped out parts of its banana production, the company also faced an outbreak of Black Sagitoka, which destroyed large portions of its banana crops. Coupled with these problems were a number of economic pressures, such as the fixing of new import quotas by the GATT treaty and an ensuing glut of bananas on the European market as producers rushed to get their bananas onto the continent before the new quotas took effect. The glut significantly decreased prices at a time when Geest, forced to seek its bananas from the so-called Dollar Banana producers of Latin America (which were not given the preferential import tariffs as banana producers in the former European colonies—a subject that was to erupt into a trade war in the late 1990s), was paying higher prices for its bananas.

If Geest’s banana business was troubled, its fresh prepared foods business was taking off in the early 1990s. A new series of acquisitions, together with the launches of a number of new subsidiaries, continued to boost this segment of the company’s operations toward the middle of the decade. Among the company’s new subsidiaries and acquisitions were Abbeyvale Foods, Caledonian Produce, Spalding Soups & Sauces, the Bakery, and Spalding Dips & Dressings, all added or launched in 1993. The following year, the company acquired Spring Valley and South Africa Geest Foodservice, adding a new fresh tropical fruits imports component. These acquisitions and investments led Geest to sell off its underperforming Wholesales Market division in 1994.

Geest continued to develop its prepared foods business and also began to prepare a move from its United Kingdom base onto the European continent, when it created its Geest Foods Europe subsidiary in 1995. One year later, Geest made the next move in what had been the company’s transformation, when it agreed to sell off its banana operations to a joint venture formed between Fyffes and a company set up among the Windwards Islands nations to take control of their own banana production for the first time. Shorn of its banana business, the trimmed down Geest was welcomed by the stock market, which quickly doubled the company’s share price. Nonetheless, the company was soon the subject of takeover speculation, as larger food groups—such as Unilever and Hillsdown Holding—eyed increases in their own fresh prepared foods business.

Company Perspectives:

Vision statement: To become the best fresh prepared food and produce company wherever we operate. We shall achieve this by excelling in service, quality, value and innovation to the delight of our customers. We shall grow in any geographic market where customer partnership and consumer demand can be developed.

This was because fresh prepared foods was making steady inroads in consumers’ food purchases budgets. As the average time spent per day in food preparation dropped to just half an hour in the United Kingdom, and renewed growth in the British economy was creating new numbers of overworked, but well-paid, workers, the fresh prepared foods categories were gaining more and more floor space in the United Kingdom’s supermarkets. At the same time, changes in store opening rules—such as the ending of restrictions on Sunday openings—were making these foods more available to consumers than ever before. By the late 1990s, the various fresh prepared foods segments were growing an average of ten percent per year. Geest’s position at the start of the trend had enabled the company to build up per-segment market share stakes of as much as 40 percent and more.

Meanwhile, Geest was adding to its holdings. In 1996, after the sale of the banana division, the company made its first acquisition on the European continent, of Vaco, a maker of fresh ready meals based in Belgium, giving it a wider access to the countries in the Benelux region. The company also reached an agreement with The Netherlands’ Albert Heijn, a subsidiary of the world’s number three retailer, Royal Ahold, to supply the Albert Heijn chain of 650 supermarkets with fresh ready meals.

Acquisitions continued to mark Geest’s growth through the late 1990s as it sought to expand its production capacity as well as its variety of food products. In 1997 the company added J. Pao & Sons Ltd., Geest Iberia, Savon Valley Foods, and Geest Tilbrook. Taking a break over 1998, the company returned again to the expansion trail in 1999, adding France’s Cinquieme Saison (giving the company access to the French market for the first time), Wingland Foods, Yorkshire Fresh Salads, and the Fresh Snack Company. The company also formed the joint ventures Geest QV and Enzafruit Worldwide, which saw the company move its fresh fruit and produce operations out from under its full control—a move that some analysts saw as a prelude to the company’s exit from these markets.

Geest’s transformation into a leading fresh prepared foods company continued into 2000 as the company started up a new subsidiary, Alresford Salads, built up from facilities acquired from The Watercress Company. At the same time, Geest stepped up its investments in its production capacity, adding three new plants in the first half of the year. The company was heartened by continued gains in the fresh prepared foods market overall, especially as its own growth continued to outpace the food market in general. In addition, although the United Kingdom represented one of the largest single markets for fresh prepared meals, the trend toward decreasing food preparation time and increased acceptance of prepared foods was expected to take off on the European continent as well, giving Geest a lot to look forward to in the new century.

Principal Subsidiaries

Abbeyvale Foods; The Bakery; Bourne Salads; Caledonian; Cinquieme Saison (France); English Village Salads; ENZAFRUIT Worldwide (50%); The Fresh Snack Company; Geest QV (50%); Katies Kitchen; Kent Salads; The Pasta Company; Saxon Valley; Spalding Ready Meals; Spring Valley (South Africa); Tilbrook; Vaco (Belgium); Yorkshire Fresh Salads.

Principal Competitors

Booker Plc; Chiquita Brands International Inc.; Dole Food Company Inc.; Fyffes Plc; Hazlewood Foods Plc; Hibernia Foods Plc; Hillsdown Holdings Ltd.; Northern Foods Plc; Unilever; Uniq plc.

Key Dates:

1930:: John and Leonard van Geest start up flower bulb import business in United Kingdom.
1935:: John van Geest launches Geest Horticultural Products.
1940s:: Company begins produce imports.
1953:: Company begins banana imports.
1959:: Import shipping and cruise line is launched.
1972:: Company opens salad preparation facility in Spalding; changes name to Geest Holdings.
1986:: Geest Holdings goes public on the London stock exchange and changes name to Geest Plc.
1988:: Company acquires Katies Kitchen; launches Spalding Ready Meals.
1989:: Company acquires Bourne Salads.
1990:: Company acquires The Pasta Company.
1991:: Company adds Kent Salads and English Village Salads.
1993:: Company adds Abbeyvale Foods, Caledonian Produce, Spalding Soups & Sauces, the Bakery, and Spalding Dips & Dressings.
1994:: Company sells off Wholesale Market division.
1996:: Company sells off Banana division.
1997:: Company adds J. Pao & Sons Ltd., Geest Iberia, Savon Valley Foods, and Geest Tilbrook.
1999:: Enzafruit joint venture is created; Cinquieme Saison (France) is acquired.
2000:: Alresford Salads is created.