Alberta hog producers could find their meat more in demand if Fletcher’s Fine Foods Ltd. goes ahead with plans to invest in an Ontario deli company, according to a Fletcher’s official.
“It’s a good thing for pork in Alberta,” said Fletcher’s vice-president George Paleologou, on the company’s intention to buy 26.3 percent of Piller Sausages & Delicatessens Ltd. and Kretschmar Inc. (the Piller Group).
The deal, for an undisclosed amount of cash and Fletcher’s shares, was expected to be wrapped up Feb. 2, but there was no final word at press time. Fletcher’s has the option to increase its ownership in the company to 40 percent over five years.
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Piller Group will get up to 50 percent of its raw pork from Fletcher’s Red Deer, Alta., slaughter plant. Fletcher’s recently spent $28.5 million to expand the plan.
Paleologou thinks the Piller Group will require leg and trim products, but he couldn’t say how much.
“It could be substantial because they’re a fairly good size.”
Most of the compensation Piller Group gets from the deal, which consists mainly of cash, will go to expansion plans that include a 90,000 sq. foot distribution centre with a plant in Waterloo, Ont. It is also expanding its salami capacity.
“In order to continue to aggressively grow our company we needed capital and a reliable and consistent source of high-quality raw material. Fletcher’s was able to provide solutions for both needs,” said Piller Group president Willi Huber in a news release.
Fletcher’s, which expects 1998 sales to be around $400 million, said investing in the Piller Group will give it a presence in Ontario.
Fletcher’s plans to continue to explore deli investments, said Paleologou, adding the company is talking to a number of specialty product makers.
“We would like to stay away from the low-end commodity end because the margins tend to be a lot lower there,” said Paleologou, noting Fletcher’s wants sales to be $1 billion by 2002.
The Piller Group’s sales were over $100 million for 1998.
