ALI Group: Kitchen Equipment Brands in a Spin

 
If you have popular makes of cooking, refrigeration or warewashing equipment in your kitchen, there’s a good chance that some of them recently changed hands. The past year has seen exceptional acquisition activity in foodservice equipment, notably ALI’s takeover of AGA Foodservice last December and the auction of Enodis this July, won by Manitowoc. Bruce Whitehall reports.
 

 
Professional kitchen equipment was once a sleepy segment of the engineering industry, characterised by family businesses and small-scale production. But internationalisation, particularly of fast-food and hotel chains, has encouraged a handful of global groups with huge portfolios of industrial products to take an interest in many of Europe’s best-known foodservice equipment brands. The names of these key players are in some cases less well-known to buyers than their brand-names and, in most cases, foodservice equipment represents a relatively minor part of their activities. For example, just 12% of the sales of the USA’s ITW group ($16 bn operating revenues last year) is attributable to its foodservice brands, which now include over a dozen big commercial kitchen names including Hobart, Foster, Bonnet, Avery Berkel, Thirode, Traulsen, MBM, Gaylord, Vulcan and Wolf. Electrolux, another global giant with annual sales worth SEK105 bn (which on current rates converts to €11.1 bn) is a well-known name in the professional kitchen. But, in fact, its foodservice products account for just 7% of group sales, worth around €780 m.
 
The lion’s share of the group’s global sales is derived from household equipment. Manitowoc, which took over the extensive Enodis portfolio in July this year(see box p. 76), is different again. To date, the company has been betterknown for its cranes and marine equipment. Its existing foodservice interests – mainly refrigeration and ice-makers, worth $438 m annually – accounted for just 11% of sales. That, of course, is destined to change as it absorbs the activities of Enodis, which derived its $1.7 bn global sales from foodservice and food retail equipment.
 

 
There is one exception to the pattern of diversified giants muscling in on foodservice equipment. Italy’s privately owned ALI Group, which now commands a portfolio of over 65 brands, has no interests outside of foodservice and bakery equipment. It just keeps growing within its chosen niche and, while it does not have the total financial firepower of ITW, Manitowoc or Electrolux, it now boasts a commanding international presence, especially across Europe. Direct comparisons of the different groups are made difficult by varying product definitions and a shortage of segment sales data but ALI, with yearly sales now expected to top €1.3 bn, has a strong claim to being Europe’s largest equipment supplier. ITW, with over $1.9 bn annual sales from commercial food equipment and related services, is bigger globally but has a sizeable proportion of North American activity. The same applies to the Enodis business. By contrast, nearly 70% of ALI’s business is in Europe. For ALI, a big change came at the end of December 2007 with the purchase of AGA Foodservice, a London-listed conglomerate which in many respects had emulated ALI in the way it had built up a broad portfolio of foodservice brands. These accquisitions included respected names in cooking (Falcon/UK and Eloma/ Germany), refrigeration (Williams and Victory) and bakery (Bongard and Pavailler in France, Belshaw and Adamatic in the USA, Mono in the UK). The takeover of AGA’s 15 brands, which had annual sales of GBP270 m, was the largest ever undertaken by ALI’s founder and president Luciano Berti. He admits to having watched the Enodis saga with close interest over the past two years, ever since the Enodis management had indicated that the company was ‘in play’ for potential bids. “Wetried several times to make a deal but never succeeded,” he comments. “Now, after the AGA acquisition, we have no money left, for the time being at least.“
 
The acquisition trail What drives Berti to keep enlarging the ALI business? “Brand equity is essential in creating sustainability of the business,” he points out. “Our market approach focuses on conveying the full value of the product.” His interest in foodservice dates back to the early 1960s when he gained a 30% interest in a company which made commercial dishwashers. This led to the establishment of Comenda which, with both its own and badged products, quickly became a significant international player in warewashing. By the 1970s, the company, renamed ALI, was exporting over 75% of its production and had granted local manufacturing/assembly licenses in countries such as Canada, Australia and South Africa.
 

 
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| 20 October 2008 | Bruce Whitehall |