Vion exits UK meat industry
The future of the meat processing sector is uncertain following Vion’s decision to quit the UK.
The company, which employs 13,000 people in the UK across 38 sites, has announced plans to sell off its UK pork, red meat and poultry units.
“Working with our advisers Rabobank/Rothschild, we have already started detailed discussions with a number of interested parties, including management, regarding the acquisition of the various parts of the UK business and these are progressing well,” said Vion UK chairman Peter Barr.
Vion is a privately owned Dutch company with one shareholder – the Dutch southern farmers’ union, which has 18,000 members. The company entered the UK market in the late 1990s, when it acquired Key Country Foods, followed by Tranfield and then the Grampian Country Food Group in 2008.
This week’s news follows Vion’s failure to find a buyer for its Hall’s of Broxburn plant, which processes 70% of Scottish pigmeat.
British Meat Processors Association director Stephen Rossides said: “Vion’s decision highlights the difficult commercial trading environment for many UK food businesses.
“The company is a major player in all the meats and its exit from the UK raises many questions as to how the market and remaining UK meat companies will respond and adapt to the new circumstances.”
FARMERS WEEKLY COMMENTVion’s announcement will not come as a shock to those in the meat processing industry, but it is bound to worry many producers up and down the country.
As stock numbers decline and throughput continues to be a problem in many abattoirs nationwide, some might argue that consolidation of the sector was inevitable.
Rumours are already circulating about potential buyers for the business, with industry insiders speculating it will be broken up.
With most of the sector operating on very tight margins, raising finance will be a huge challenge.
This week’s news raises an important question as to whether there is a structural problem specific to the UK’s meat and food processing sector or whether this is a global issue?
Gemma Mackenzie, deputy business editor
High livestock prices, tight supplies and the difficult economic position faced by consumers made the meat market a difficult one.
“There is aggregate overcapacity in the UK meat processing industry because of tight livestock supplies – it’s a big challenge to companies at the moment,” he added.
Analyst David Pattison from Plimsoll Publishing said the news didn’t come as a surprise.
The meat processing market had grown by about 5% year on year, but it was becoming increasingly competitive at the top end, with big players vying for market share and large contracts, he said.
Buyers would be more attracted to sites processing added-value cuts, branded products and the more modern units; geography would play a big role in the sale.
“Farmers are always at the thin end because they have the depreciating commodity, but with a new supplier looking for that commodity it is an opportunity to renegotiate and start afresh.”
Meadow Quality pig marketing adviser Kevin Bird said many producers were yet to be told the news by Vion. However, producers supplying the company should not be worried by the news, as there were other meat processing options out there, he added.
NFU chief livestock adviser Pete Garbutt said he had been reassured by Vion that it was business as normal until the sites were sold.
“We are going to meet Vion in the very near future to get clarity on what this will mean for producers. At the moment, the industry is in a position of uncertainty,” he said.
“Obviously, if it does turn into a situation where farmer suppliers are threatened in terms of contracts, the NFU has a lot of support available for members.”
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