Zetar seeks next acquisition in snack market

By Peter Stiff

- Last updated on GMT

Related tags Candy bar Confectionery

After encouraging first half 2005 results, food buyout company
Zetar will look to build in 2006 by acquiring a snack foods

The confectionery and snack foods company had first-half pre-tax sales of £21.9 million (€32m), with an operating profit of £739,000 (€1m) in its first year of operation.

Its sole business is Kinnerton, which it bought last year.

Zetar chief executive Ian Blackburn told ConfectioneryNews.com that the next acquisition is likely to be a snack company.

Blackburn said that the company was pleased with the progress it had made so far and that further growth was to be expected.

"We've only been going for a year and we're on schedule, having already bought one company. I'd say we would be totally on schedule if we acquire another before April and I expect we will be successful,"​ Blackburn said.

He added the acquisition of a snack foods company would complement Kinnerton, enabling the company to make full use of licensing agreements and also help build brands.

A snack business would also fit in to the long-term plan of having three divisions to Zetar.

The Kinnerton business would become the chocolate confectionery branch, sitting aside a savoury snack division. The third division would be made up of overseas companies, likely to be based in France or the Benelux region.

Overseas companies would facilitate European growth for Zetar with the goal of national distribution on the continent through a major retailer.

Blackburn also revealed that the company had undertaken new banking arrangements with Barclay's, refinancing debt at a more favorable basis, gaining further capital to be used for acquisitions.

Zetar was created, and floated on the alternative investments market (AIM), to enter what Blackburn saw as an extremely fragmented confectionery market. The company aims to acquire businesses with significant potential and consolidate them into a more profitable unit.

Blackburn believes Kinnerton is solving the problem of seasonal sale reliance by expanding own label sales. He sees growth in that area.

Growing year round sales through manufacturing own label and adult product lines was an important step for the company.

The launch of the cocoa deli range, now stocked in major retailers such as Tesco, is helping this strategy.

The products, premium chocolate lollipops in collaboration with Lily O'Brien, mark a concerted effort to enter the adult indulgence market and secure valuable year-round sales.

To build on the success of the launch Kinnerton is installing a new production line at its factory in Norfolk to manufacture new products.

The facilities will include an extrusion line.

Greater production facilities will be needed to meet the demand for the licensed confectionery products Kinnerton is famous for.

"We've successfully managed to negotiate licensing agreements for the Spiderman 3 and second Pirates of the Caribbean films to add to our ever-greens such as the Simpson's,"​ Blackburn said.

Kinnerton was Zetar's first acquisition made in April last year.

Kinnerton's first half, ending 31 October 2005, sales were £16.7 million, up from £15.3 million the previous year.

After eight months the confectioner's sales had reached £32.2 million, up from the £30.4 achieved in the first eight months of 2004.

The sales increase was aided by a company record six million advent calendars being sold.

Increased sales in the first half is of particular importance to Kinnerton as it signals a step away from its dependence on seasonal trade.

Kinnerton specialises in children's and niche confectionery and is notable for its lucrative licensing agreements and its nut-free production facilities.

The company had a 2004/2005 turnover of £50 million and with strong Easter sales forecast, will look to better this by the end of its current financial year on 30 April.

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