Kellogg seizes on Egypt's breakfast cereal surge with Mass Food buy

28-Sep-2015 - Last updated on 30-Sep-2015 at 11:23 GMT

Kellogg's aims to strengthen emerging market foothold by acquiring Mass Food Group. Photo credit: Mass Food

The Kellogg Company has acquired Egypt’s leading cereal company Mass Food Group for $50m as the country's breakfast cereal category registers rapid growth.

The move, according to Kellogg, helps advance its emerging market growth strategy. Mass Food had a retail value share of 47% of the Egyptian breakfast cereal market in 2014, according to Euromonitor International.

Kris Charles, a Kellogg spokesperson, told BakeryandSnacks that Egypt is a growing market with a strong economy, something that provides Kellogg with a tremendous opportunity for growth.

“We see tremendous growth opportunities for both our cereal and snacks businesses in Egypt,” he said. “Demand for breakfast cereals, cereal bars, snacks and confectionery products in Egypt has increased over the past few years, driven by growth in population and food consumption trends.”

Over the past two years, he said the Egyptian breakfast cereal market saw a 46% growth in sales value and a 36.6% growth in volume of sales. Consumer awareness continues to grow in this region, Charles said.

A ‘strategic fit’

Chris Hood, president of Kellogg Europe, said Mass Food is an “excellent strategic fit” for Kellogg.

"The combination of Mass Food Group's manufacturing capabilities, established local brands, and sales and distribution infrastructure, coupled with Kellogg's product innovation, international sales knowledge, iconic brands and marketing expertise, will help unlock the growth potential of the cereal category in the key markets of Egypt and North Africa,” he said.

Mass Food Group is Egypt’s No. 1 cereal producer and the first brand to introduce cereal to the Egyptian market. Started in 1996, the company has since grown into an $18 million business in years since it was founded.

The company also produces cereal bars and exports to 30 markets in Europe, East Asia and Africa. This will very likely help Kellogg with a better angle into other modern and emerging snack markets.

Tamer El Bahay, vice president of Mass Food Group, said he is proud that his company was acquired by Kellogg and believes the two companies can emerge into an even stronger brand under renewed leadership.

Building an emerging market empire

Kellogg CEO John Bryant said this acquisition helps the company move further toward strengthening their emerging market growth, something he discussed during the recent Barclays Global Consumer Staples Conference.

"We are building a strong foundation for emerging market growth,” he said. "We're delighted to welcome Mass Food Group to the Kellogg family.”

The company noted in its release announcing the acquisition that this isn’t the first Egyptian addition of the year, as Kellogg purchased Bisco Misr, a packaged biscuit company earlier this year.

The company also now has a joint venture with Tolaram Africa to develop snacks and breakfast foods in the West African market. In addition, Kellogg acquired 50% of Multipro, a sales and distribution company in Nigeria and Ghana earlier this year.