Learn the five most powerful companies in British food
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| INTRODUCTION |
| Kellie: The top five most powerful companies in British food. |
| Kellie: Over the next few minutes we’ll be talking about the companies that make waves in British foods and are household names. |
| Gina: They’re the companies that put the food on the tables of the British public. |
Lesson focus |
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| Kellie: Let’s start, as always, with number 5 – Whitbread. |
| Gina: Whitbread operates in many fields, such as hotels, coffee shops and restaurants. It was founded in 1742 and was named Whitbread after one of the founders. |
| Kellie: Now it operates in many fields, but I’m sure it didn’t start out like that in 1742. |
| Gina: No, it started as a brewery. The company sold all of its breweries in 2001 though. |
| Kellie: We mentioned in the last lesson that Whitbread owns Costa Coffee. |
| Gina: Ah, well remembered! Yes, it owns Costa Coffee as well as restaurant chains such as Brewers Fayre and Beefeater. Previously it has owned Pizza Hut and TGI Fridays. |
| Kellie: It must have a decent net income each year then. |
| Gina: And we’re back to the money again! In 2012, Whitbread’s net income was £266 million. |
| Kellie: Not bad, not bad! Number 4 is a company we’ve spoken about in previous lessons already – Tesco. |
| Gina: Tesco are one of the major companies in Britain, not just for food, but in more general terms too. It started as a chain of market stalls in 1919 ran by Jack Cohen. He took the “C-O” that begins his surname and added it to the “T-E-S” of tea maker T.E.Stockwell to get the company name. |
| Kellie: How did he progress from market stalls to the biggest supermarket chain in the country? |
| Gina: He opened a store in 1924 in Middlesex and it grew from there. By 1939 he had 100 stores. Now, Tesco has 3,141 stores. |
| Kellie: Tesco has diversified too, hasn’t it? It has smaller stores, express stores and also sells more than just groceries. |
| Gina: In the mid-90s it began selling more than groceries and now you can buy electronics, phones and petrol. It’s present in 14 countries across Europe, Asia and America and is the second largest retailer in the world behind Walmart. |
| Kellie: Next we should talk about money. |
| Gina: I was getting there! The net income in 2012 was £124 million but the revenue was £64.826 billion. |
| Kellie: You’d have to sell a lot of groceries to generate that revenue! Number 3 is Associated British Foods. |
| Gina: Associated British Foods was founded in 1935 as Allied Bakeries Limited and was largely a bakery. In 1939 it acquired Weston Foods and this subsidiary trades across the US and Australia. |
| Kellie: When did it become Associated British Foods? |
| Gina: That was in 1960. ABF has a history of acquiring other companies and it added the rival bakery AB Hemmings Bakeries and the supermarket chain Fine Fare. |
| Kellie: What food brands does it own? I think there are some pretty famous brands under the ABF banner. |
| Gina: You think right! It owns brands such as Twinings, Ryvita and Ovaltine. Its subsidiaries include British Sugar, Allied Mills and the clothes retailer Primark. |
| Kellie: There are some very famous brands there. With a sugar company and mill, it must make many of its ingredients itself. |
| Gina: Yeah, ABF is the second largest producer of sugar and baker’s yeast in the world. ABF is present in 46 countries and employs over 106,000 people. |
| Kellie: You know what I’m going to ask about next, right? |
| Gina: The 2012 net profit was £583 million. |
| Kellie: You know me so well! Now I know the money, we can move onto number 2 – Cadbury. |
| Gina: The history of Cadbury is very interesting, I think. It was established in 1824 in Birmingham by John Cadbury. He started by selling tea, coffee and drinking chocolate but later started concentrating on chocolate. |
| Kellie: It was a real family company, wasn’t it? |
| Gina: Yeah. John started the company but it was his son George that developed the majority of it, including the planned estate Bourneville that became a model village for the Cadbury workers to live in. |
| Kellie: I love that story of an actual model village being built for the employees. |
| Gina: I know, it’s a great story! After a merger and later de-merger with Schweppes, Kraft Food made an offer to buy Cadbury in 2009. |
| Kellie: I remember that. People weren’t very happy about it. |
| Gina: Neither was Cadbury at the time because the company felt that Kraft were undervaluing it. Kraft made a new offer that worked out to £8.40 a share, a total of £11.5 billion for one hundred percent. Kraft started buying shares and hit 71% in February 2010, giving it ownership. |
| Kellie: It was a big acquisition for Kraft Foods as Cadbury is very successful worldwide. |
| Gina: Yeah, Cadbury is in 50 countries worldwide and is the second largest confectionery company behind Mars. It had a net income of £364 million in 2012. |
| Kellie: I didn’t even need to ask you that time! |
| Gina: I thought I’d preempt the question. |
| Kellie: Finally, is our number 1 Diageo. |
| Gina: I don’t think Diageo is as well known as most of the other names on our list. |
| Kellie: No, I don’t think so either. But, they’re number 1 for a reason! |
| Gina: Of course! It was formed in 1997 when Guinness merged with Grand Metropolitian. It is the owner of many famous alcohol brands. |
| Kellie: Presumably it owns Guinness, but what else does it own? |
| Gina: It owns the best selling vodka, Scotch whiskey, liquor and stout lines in the world. |
| Kellie: Let me guess… Smirnoff, Johnnie Walker, Baileys and the previously mentioned Guinness? |
| Gina: Yeah, amongst other brands. It’s also the largest producer of spirits and whiskey in the world. |
| Kellie: Sounds like a huge company. |
| Gina: It is. It has offices in 80 countries, sells in 180 countries and employs around 25,000 people. The net income in 2012 was £2.072 billion. |
| Kellie: Wow! That is why it is number one. |
| Gina: Yes it is. It may not have a well known name, but the figures don’t lie! |
| Kellie: No, they don’t. Well, that’s all for this lesson. |
Outro |
| Gina: We’ll see you next time for lesson 24. In the meantime, check out the lesson notes to reinforce what you’ve learned in this lesson! |
| Kellie: Thank you and goodbye! |
| Gina: Bye! |
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