Cultural insight alert: Chinese consumers “prefer a hot, rice-based breakfast to cold cereal.”
Chinese company buys 60% of The Weetabix food company. Less than five years later, they sell it on to a large US firm. Seems like an everyday tale of international commerce. But that’s too dull. No, it’s because the Chinese company failed to persuade enough Chinese people to change their eating habits. Or maybe it’s about Brexit. Here’s the BBC:
UK cereal firm Weetabix is to be bought by US firm Post Holdings for $1.8bn (£1.4bn), its owner has confirmed. Weetabix - made in the UK since 1932 - was put up for sale in January by China's Bright Food, which bought a 60% stake in 2012.
Bright's acquisition was the largest by a Chinese firm at the time, but it is believed to have struggled to build significant market share in China.
Chinese consumers prefer a hot, rice-based breakfast to cold cereal. While Weetabix doubled sales in China in 2016, the UK still accounts for the majority of its sales.
[..] "Weetabix has struggled to crack the Chinese market, so it is no surprise to see Bright Food selling up," said George Salmon, equity analyst at Hargreaves Lansdown.
Struggled? I’d say that doubling sales in one year is fairly impressive, and of course the UK is far and away their biggest market and that was unlikely to change any time soon.
Here’s the Guardian, with the same themes:
When Shanghai-based Bright Food bought Weetabix, it had hoped the cereal would become popular in China as part of a general trend towards more western eating habits. However, while sales of Weetabix have risen in China, market share has disappointed as traditional rice and steamed bread remain popular breakfast staples.
[..] George Salmon, equity analyst at Hargreaves Lansdown, said [..] “Weetabix has struggled to crack the Chinese market, so it is no surprise to see Bright Food selling up.”
George Salmon has been busy talking to journalists, hasn’t he. He seems to have persuaded The Guardian, who even have another story: Why the Chinese didn’t fall for Weetabix’s soggy serving of mush. Except that sales doubled in one year (see BBC story above). The FT is a little better:
[..] Bright Food, the Shanghai-based group that bought a 60 per cent stake in the 85-year-old breakfast brand in 2012 for £1.2bn, and Baring Private Equity Asia agreed to sell after several months of negotiations with multiple parties.
[..] The deal is the latest in a wave of takeovers of British assets after the UK voted in June last year to leave the EU, though Weetabix had been in foreign ownership.
Ah, Brexit. Must get that into the story – but they have to admit that the company was already foreign-owned. Then we learn that the current owners still see potential in China:
Bright Food and Baring are not abandoning the Chinese cereal market entirely. Post will enter into a joint venture with Bright Food in China, and Baring will manage the Weetabix Chinese operations.
Would they be doing that if they had really failed to develop the brand in China?
The boring truth is that Post are willing to pay a good price to add Weetabix (and the company’s other brands such as Alpen and Ready Brek) to their existing portfolio of cereal brands. But it’s more interesting to talk about Chinese breakfast choices and Brexit.