UB lines up acquisition to build biscuit business

United Biscuits, owner of the Penguin and Hula Hoops brands, is to continue the expansion of its biscuit business with the acquisition of a small to medium-sized biscuit company.

Group chief executive Eric Nicoli told Marketing Week that UB has lined up a target: “We have got a company in mind,” he says.

UB has an acquisition war chest following the 265m asset swap deal with PepsiCo last November, although 150m has been earmarked for dividends to shareholders.

Analysts believe UB may bid for the biscuit business of Hillsdown, which manufactures cakes and biscuits under Cadbury licence, or Jacobs Bakery, owned by French food company Danone, although this could cause UB monopoly problems in the UK market.

Nicoli was speaking following the restructure of UB into two divisions: McVitie’s Group, the international biscuit business including McVitie’s UK; and UK Foods which contains KP Foods, UB frozen and chilled food, McVitie’s Prepared Foods, Linda McCartney’s meat-free products and Young’s seafood (MW February 19).

He stressed UB’s commitment to invest in the McVitie’s Go Ahead! range of low-fat snacks, biscuits, cakes and pizzas and launch it into all UB’s markets under that name.

He says: “We will take Go Ahead! into all our markets in due course – the low-fat proposition is relevant in every developed market.” Nicoli also wants to encourage cross-fertilisation, and cites the example of a Swedish cake slice, branded Verkade, which has been successfully transferred to the Go Ahead! range under the McVitie’s brand.

Nicoli also identifies the children’s biscuit market as a key growth area. “There’s still plenty of room for development in the children’s market with new pack formats.”

The three-finger Penguin Pick-Up Pack, on trial in Scotland, will be rolled out nationally. Billed as a rival to Kit Kat, it takes the Penguin biscuit onto confectionery counters for the first time.

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