Kellogg’s BiscoMisr buy a vehicle to Middle East & Africa: Analyst

Yesterday, Kellogg agreed to acquire 59.9% shares in BiscoMisr for $87m after private equity firm Abraaj pulled out of the bidding.

‘Attractive’ biscuit market​

Pinar Hosafci, food analyst at Euromonitor International, told ConfectioneryNews that the Kellogg’s buy tied perfectly with its aims to move into emerging markets and high growth categories to offset declining US cereal sales.

“Middle East and Africa is one of the fastest growing regions for the global biscuits market and Egypt with its 90 million population and a growing demand for biscuits and confectionery products is one of the most attractive countries in the region,” ​she said.

Strong growth in filled biscuits​

The Egyptian biscuit market has been among the fastest growing biscuit market globally in the past five years, according to Euromonitor figures.

“Filled biscuits, such as wafers, performed particularly strongly, growing at a current value CAGR of 27% over 2009-2014 and hence provide the best opportunities for Kellogg,"​ said Hosafci. “Savory biscuits and crackers are also showing strong growth and should be at the forefront of innovation for Kellogg.”  ​

She added: “Kellogg will use BiscoMisr as a vehicle to introduce its brands in Egypt and potentially to the rest of the region.”​

Market shares​

The BiscoMisr buy gives Kellogg its first real presence in the Egyptian biscuit market. In 2013, BiscoMisr held a 6.6% share of the Egyptian biscuits market, mainly catering to the premium end.

The buy also adds 0.8% to Kellogg’s second-place market share in the Egyptian ready-to-eat cereals market of 24.4%.

Private equity firm Abraaj withdrew its bid for BiscoMisr last week. “The share price might have gone above what Abraaj is willing to afford,” ​said Hosafci.

BiscoMisr profile​

BiscoMisr was established in 1957 and operates three factories. Its headquarter facility in Cairo produces energy bar Datto, wafer biscuits, corn flakes, baked goods, cakes, and seasonal confections Kahk and ghorayeba.

The firm’s Arabisco factory in the Al Nozha district was acquired in 1963 and produces plain, filled, coated and salty biscuits and some seasonal confections such as BiscoMisr’s famous Eid biscuits.

Its third factory was built in 1987 and is located in Al Seyouf. This facility produces Luxe Biscuits, fundo cakes, Fresh biscuits and Mint.

Euromonitor expects the Egyptian biscuits market to record a compound annual growth rate of 1% in value terms in the next five years and 6% in volume, driven by value for money products.