Famous Brands announces two acquisitions

One company which is certainly not hanging around is Famous Brands. They released two expansion announcements in the last week which we look into now.


The first announcement was a relationship the company has struck up with Netcare.


"The Netcare Group, which operates South Africa's largest private hospital network, has awarded Creative Coffees franchising company, a division of Famous Brands, a contract to provide a branded restaurant and retail solution to the hospital group under the Net Cafe trademark."


It makes sense, numbers passing through our private hospitals are growing. Patients and their guests need refreshments. If the quality is good, which you would expect from Famous Brands, then it is a no brainer. And they are getting innovative, this from the Managing Executive of Creative Coffees, Brent Kairuz.


"The new Net Cafe outlets will be designed to deliver an exceptional experience to all Netcare customers. This will include customised offerings in certain retail environments such as on-site preparation of flowers and gifts. Within a hospital environment, retail is a significant component of the overall sales mix of a hospital coffee shop because there is a strong demand from consumers for convenience purchases."


And then today they announced the purchase of well known brands Europa and Fego Caffe'. The consideration is not material so no number was given but I'm sure management did their due diligence carefully. CEO Kevin Hedderwick made some interesting comments, the one that caught my eye the most was the following.


"Current trends clearly illustrate that the food service market is underpinned by four major growth sectors: breakfast, coffee, snacking and chicken, and both Europa and Fego Caffe extend our presence within those categories."


You see we don't have that Starbucks culture which is very much based on people walking through the city streets. We have shopping malls and let's be honest, people love to sit, drink coffee and eat. Coffee is a great business with big margins and the growth in breakfast again underpins that thesis of faster lifestyles with less time for cooking.


Famous Brands now really do dominate the coffee market in SA with House of Coffees, Mugg and Bean, Brazilian Cafe and Wimpy along with these new acquisitions. They have a knack for buying the right companies at the right time. I like the theme, i like the ambitious proactive management and I like their dominant position in the market. We continue to add to this one.