IAWS strategy to dictate plans for key sites

IAWS Group made it clear to the markets yesterday it was not going to allow its two strategic land banks in Cork and Dublin to dictate its future strategy.

At current prices the combined lot of 75 acres based in Cork’s docklands and on the cusp of the M50 could be worth €500m-plus by the time it is finally sold. Presumably that is what the food group will do, given its insistence that it is not a property play.

If it deals cleverly then it will get a huge cash windfall and long-term stake in whatever developments emerge from the two sites.

Money it can put to good use to further its footprint in its key lifestyle foods division and its emerging Origin Enterprise that houses the property business and its original business of farm inputs, marine oils and ambient foods which is incorporated under the Shamrock Foods banner.

More to the point, however, the strong growth in the lifestyle food operations in the first half of 2007 will continue to drive the business of IAWS in the second half and beyond.

It is generally expected that the food group will deliver per share growth of 14% annually for the next three years continuing the strong growth path it has been on since it first stepped into that market nine years ago.

For IAWS, it could be said it has been a game of two halves since it debuted on the stock market in 1988.

The first nine years saw it evolve into a well developed operation incorporating R&H Hall the provender milling group, the marine oils business and its fertiliser operations in Ireland and Britain.

That business provided the launch point for the part baked bread and lifestyle foods business, now incorporating finger foods, part baked breads artisan breads and the Otis Spunkmeyer business which provided frozen doughnuts and other offerings to 66,000 outlets across the US.

At this stage the group is given to talking about having two iconic brands in the US, the other being La Brea artisan breads, which now supplies to stores across the US.

When it was bought a few years back La Brea was predominantly a West Coast operation, but the group added another major production facility on the East Coast and it now has a reach right across the States with its attractive range of breads.

These are also being made in Ireland and their potential across a wide range of markets is still there to be exploited. It is difficult not to be impressed.

Tim Hortons in Canada where the group makes baked goods for its 2,000 plus stores is also delivering strong growth and plans to open 500 stores in the US are well under way.

It is also committed to opening a further 1,000 plus stores in Canada and the slow burn possibilities from the joint ventures are also significant.

At this point, IAWS is in high growth niche segments of the bakery and food-to- go markets.

It has major markets in Britain, Ireland, France, the US and Canada and the potential to mix and match its various offerings between markets suggests significant further potential.

However, not all markets are the same and what plays in one will not necessarily work in another.

That said the IAWS footprint has continued to grow and the takeover of Otis Spunkmeyer back in November looks to have been a very strategic fit.

It looks as if the logic of the markets IAWS entered since it spent its first €70m on Cuisine de France saw a step change for the group, and the group has allowed the strategic thinking behind that move to inform every step it has taken since.

It is difficult to see any weakness in the overall strategy although the product lines hardly qualify for the health and wellness tag that is becoming so fashionable with today’s increasingly discerning consumers.