From its humble beginnings as an Irish dairy cooperative, Kerry Group has transformed into the largest player in the ingredients and flavours market, catering to the food, beverage and food-service industries. Its journey to the top has been marked by dynamic growth and strategic acquisition, with 150 deals struck to buy companies around the globe making it one of the largest businesses in Ireland.
Shaping the global food industry since its inception, the Kerry Group’s 18,000 plus products include household favourites consumed by people every single day. As of May 2020, it employs over 26,000 people in its manufacturing, sales and technical centres worldwide, counting 1,000 R&D scientists and with $8.1 billion sales in 2020 so far. With an impressive long-term performance record and with increasing earnings and dividends over a long period despite investing heavily in its growth and operating efficiency initiatives, the Kerry Group is a force to be reckoned with.
A brief history of the Kerry Group
From its delectable sausages and cooked meats by big names like Denny, Richmond, Fridge Raiders and Mattessons to its ever so popular dairy spreads by the likes of Dairygold and LowLow and children’s cheese snacks with Strings & Things, for the Kerry Group it all started from one green field site in Listowel, Ireland. Founded in 1972 by three shareholders – state-owned Dairy Disposal Company, a federation of eight small farmer co-operatives in Kerry and US company Erie Casein Company Inc. – their vision spread beyond having just milk, butter and cream. As their dream of reaching other markets grew, they embarked on building a bigger enterprise year–on–year, eventually becoming a leading player in the global food industry.
Despite starting off as one of the smallest agricultural cooperatives back in the 70s, the company managed to expand its milk business by making use of milk supplies and processing them, while providing on-farm services to farmers in the area, generating regular profits unlike several of its counterparts. With the aim to curb being exclusively dependent on dairy products, it launched a corporate plan to concentrate on research and development, opening offices abroad and moving into the convenience foods and chilled snacks sectors with the acquisition of Denny and Duffy’s, while establishing a presence in the US and Europe.
Much of this growth has come by way of acquisitions, so much so that since 2004 the company has spent billions of dollars buying companies. Some of its most notable acquisitions have been those of Noon Products, known for their Indian and Thai ready-made meals, Mattessons Wall’s which brought major UK household brands under its wing, SDF foods Malaysia, which marked its first move into manufacturing in the South East of Asia and Australian food group Burns Philip, expanding its presence in the area. In addition, it inaugurated a number of regional development and application centres in places such as Moscow, Dubai and Durban, while it opened an R&D centre in Singapore with the aim to support innovation in the Asian Pacific, Middle East and African region.
For more than three decades, the Kerry Group has moved from producing low-value ingredients to becoming a manufacturer of high-value flavourings. With headquarters in Tralee, Ireland, today the Kerry Group operates through the Taste & Nutrition segment, which manufactures and distributes a range of solutions, together with functional ingredients and actives used in the global food, beverage and pharmaceutical industries, as well as its Consumer Foods segment, which manufactures and supplies both added value branded and consumer branded chilled food products to the Irish, UK and selected international markets.
More recently, the company has immersed itself into sustainable nutrition, setting out an ambitious sustainability strategy which aims to reach over two billion people with sustainable nutrition solutions by the year 2030, while it also plans to take steps that will address the growing climate crisis, such as becoming a net zero business by 2050.
And just like its products balance taste and nutrition, likewise the company has found the perfect equilibrium between investment and growth. The company has nabbed the number one spot in both the UK and Ireland for being the top sausage, cooked meat, spreads and children’s cheese snack brands, amongst others, while it has been lauded for being the top customer brand supplier of chilled and frozen ready meals. It supplies over 15,000 foods, food ingredients and flavour products to clients in more than 140 countries worldwide, marking sustained profitable growth with annualised revenue of €7.2 billion and becoming one of the most traded stocks on the Irish Stock Exchange (ISE).
Reportedly, the flavoursome, melt in your mouth chocolate Maltesers, a favourite chocolate bonbon for more than 80 years, includes a crucial ingredient which is exclusively supplied by the Kerry Group – its filling!
The Kerry Group goes public
The company went public on the Dublin Stock Exchange in 1986, offering its shares at IR£52 pence per share. Raising €9.6 million, the capital was considered relatively small, yet it was a milestone for the company, while it paved the way for the food sector to emerge on the Irish exchange and influenced other Irish cooperatives to follow suit. On April 1990, it was also listed on the London Stock Exchange.
Should you invest in the Kerry Group?
Whereas the COVID-19 pandemic has certainly affected the industry, the company has delivered positive earnings growth in each of the last five years, while it has a relatively resilient business model as its ingredient business has increased at a consistent rate even during recession years. Its core business centred on integrated and flavour solutions offered to various sectors ranging from the food and beverage to the pharmaceutical industries accounts for 88% of its profits and 81% of its sales, serving as the company’s main growth engine. Revenue in 2019 reached €7.2 billion, while its market cap as of January 2020 stands $21.36 billion.
With millions of people throughout the world consuming foods or beverage products containing the Group’s taste and nutrition solutions, its strong financial position, scalable business model and an excellent track record of successfully integrating new companies, the Kerry Group is set to continue growing and developing its global business, making its stock one worth keeping your eyes on for those investors seeking a mix of solid growth prospects and a resilient outlook in a variety of market conditions.
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