Vertical integration for a food business

Vertical integration for a food business

Vertical integration for a food business – Identify opportunities to create a high value product and reduce food waste by HYLMAN

The client and context:

  • The client is a large-scale, international food business. The company has a high degree of vertical integration and goes from the primary sector of agriculture to processed food products.
  • The company is committed to buying large quantities of produce from growers and they want to offer the best possible price to growers.

The challenges:

  • The client was looking to integrate a new high value manufacturing product into their production chain, and evaluates the right strategy to integrate this new product into the business (acquisition/build from scratch/subcontract)

What have we done:

  • We explored a variety of potential manufacturing products to determine if they met the project’s financial goals.
  • We conducted a market study for a brand-new product line that had high potential for penetration and yielded appropriate profitability. We then explored the integration of this product into the customer’s production chain
  • We developed an implementation model that includes a subcontracting agreement and a successful product launch. The work performed included business model selection, supplier selection, mode of operation and financial management (for board approval).

What we achieved:

  • Double the yield to growers for the specific category of products.
  • Reduction of food waste by 5,000 tons/year
  • Creation of a new business line with a gross margin higher than the group average by approximately 10 percentage points.
  • Improving the overall profitability of the group and creating a value of 10-15 million euros for the shareholders.

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