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Food manufacturing giant acquires largest producer of organic products in Baltics

by LLB Finance Reporter
3rd Oct 23 5:49 am

Global food trends in the aftermath of the COVID-19 pandemic and the cost of living crisis have highlighted shifting customer demands for ready-to-eat, and sustainable meals.

Due (in part) to these circumstances, the global ready meals market has already grown from $154.5 billion in 2022 to $169.01 billion in 2023 at a compound annual growth rate of 9.4%.

Following suit, Kauno Grūdai, one of the largest food manufacturing companies in Lithuania, has acquired shares of Auga Group, one of the largest producers of organic products in the Baltic States.

Under the terms of the agreement, the buyer will acquire the shares of Auga Group’s soup and canned products production unit Grybai LT.

The acquired company Grybai LT operates a modern robotic factory covering an area of around 3,600 sq meters. The main products include ready-to-eat organic soups, curries, cereal meals, and organic vegetables in packets – around 70 product names. The annual production is 8-9 million packets of various products which are exported to more than 30 countries. In 2022, Grybai LT’s revenue totaled EUR 7.1 million.

Meeting the demand for quick and inexpensive meals

“We have agreed that for 18 months we will be able to use the Auga brand for ready-to-eat soups, stews, and cereals. Afterward, we will replace it with our own brand — Activus, which is aimed at active and busy people who take care of themselves, especially the younger generation,” says Andrius Pranckevičius, CEO of AB Kauno Grūdai.”

Offering customers a line of organic and eco-conscious soups, stews, cereal dishes, and organic vegetables in packets will not only help meet growing interest in sustainable products — an entirely new segment for Kauno Grūdai — but will also lead the company to previously unexplored markets such as North America and Asia. Grybai LT has already established itself as a market player in the UK, Sweden, France, Spain, and Germany, where Kauno Grūdai aims to assume leadership and continue expanding its operations.

The acquisition of Grybai LT holds great significance for Kauno Grūdai, as it complements the company’s production with a section of organic, ready-made food products.  Furthermore, it provides an opportunity to explore new markets for other products produced by the company, such as instant noodles, instant porridges, and others.

The company decided to go ahead with the deal because it is interested in growing in the food products market and adapting to consumer demands. ”Our goal is to expand by diversifying our activities, and the most appealing option appears to be expansion in the ready-made food segment. following the acquisition of Grybai LT, three new product groups will be added to our portfolio,” he explained.

Kauno Grūdai to strengthen as a global food producer

With an annual consumption of about 1.8 million tonnes of soups and 1.3 million tonnes of ready-to-eat meals, the European ready-made food market is tremendously vast. However, Grybai LT can now generate roughly 3,000 tonnes, meaning there is plenty of opportunity for expansion.

The company’s line of instant noodles products is already well established in the EU market, having partnered with 30 of the EU’s top supermarket chains. The company aims to achieve profitable sales of soups, stews, and other packaged meals here as well. Kauno Grūdai hopes to expand manufacturing to 24 hours a day and sell additional goods to clients who already buy its instant porridges and instant noodles in the EU.

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