Top 10 FMCG Companies in United Kingdom (UK) 2015
Here is a list of the top 10 FMCG companies in UK in 2015. UK is the one country which has the richest history amongst all countries in the world. UK is one of the top five economies in the world and second in Europe. The industrial revolution brought about significant changes with the industries like automobiles, textile, aerospace, technology, consumer goods etc growing at a fast pace. By 2014, UK was the fastest growing country in Europe.
10. Mondi
Mondi plc is an international packaging and paper group employing over 24,400 people.
Sales ($ Bn): 8.5
Profits ($ Bn): 0.625
Assets ($ Bn): 7.7
Market Value ($ Bn): 9.5
With 102 operations across more than 30 countries, it is predominantly in central Europe, Russia and South Africa. It is fully integrated across the packaging and paper value chain – from the growing of wood and the manufacture of pulp and paper (packaging paper and uncoated fine paper), to the conversion of packaging papers into corrugated packaging, industrial bags, extrusion coatings and release liner. In 2014 it recorded total revenues of $8.5 billion dollars and has a market cap of around $9.5 billion dollar. Mondi is one of the few British companies associated with its colonial past. Its roots are in South Africa where Anglo-American Inc one of the world’s largest mining company founded mills in South Africa’s Durban. Later when it became an independent entity it expanded across several countries through acquisition of mills and development of new technologies for packaging and paper resulting into it being the market leader in the segment. It is one of the few companies having dual listing in Johanesberg stock exchange and London Stock Exchange. Its headquartered in London.
9. Tesco
This company is slightly different from normal FMCG list.
Sales ($ Bn): 102.6
Profits ($ Bn): 0.264
Assets ($ Bn): 86
Market Value ($ Bn): 29.7
But since its huge retail operations and high private label sold under the brand Tesco, this company has huge potential of disrupting the industry. Headquartered in Cheshunt, Hertfordshire, United Kingdom, Tesco is a British multinational grocery and general merchandise company. Measured by profits it comes third and by revenues 2nd Tesco is considered to be the Walmart of U.K. Its business operations spreads over 12 countries in Europe and Asia in form of super market and hyper market stores. It is market leader in groceries in U.K as well as Asian countries like Thailand and Malaysia
Founded in 1919 by Jack Cohen as a small grocery shop, the name Tesco originated from combination of a retail shipment of initials T.E and surname of Jack Cohen. Since inception it has focused mainly on grocery retailing in the U.K but in the past 20 years Tesco has increasingly diversified by investing capital to grow organically by selling items like electronics and clothing and even financial services. Post 1990s Tesco re-positioned itself as one stop solution of all shopping needs of people from all strata of society opening differentiated stores. This strategy was successful making Tesco a 2500 store company by 2015. In India it has opened stored in partnership with Tata Enterprise since FDI is allowed only upto 49%. It has huge private label operations in its stores and due to its extensive reach has pricing power over various brands. Since currently there is only one entity Tesco which comprises of variety of subsidiaries it is difficult to assess the retailing business. It has highest value of physical assets in our list and in 2014 had a high revenue of $102 billion highest in the list but due to high investment in assets and managing of stores its profits are less and so is the market capitalization.
8. J Sainsbury
Similar to Tesco Sainsbury's is one of the largest chain of supermarkets in the United Kingdom and has market share of 16.9% in the sector.
Sales ($ Bn): 39.6
Profits ($ Bn): 0.053
Assets ($ Bn): 26.7
Market Value ($ Bn): 7.5
This company was pioneer of self-servicing stores in United Kingdom. It was founded in 1869 by John James Sainsbury starting from a shop in Drury Lane, London. From there the company became the largest grocery retailer in the UK but was overtook by Tesco in 1995. J Sainsbury is the holding company of the group headquartered in London and is divided into three divisions, Sainsbury's Supermarkets Ltd, Sainsbury's Convenience and Sainsbury's Bank.
Current largest individual stake holder in the company is Sainsbury family’s Lord Sainsbury of Turville with 4.99%. Since divesture and restructuring this company has improved its operating performance and is ranked above Tesco even though Tesco is much larger in terms of revenues. The Sainsbury brand is quite famous in the U.K and this company plans to leverage the brand diversifying into Sainsbury Café, hotels and has much interest in real-estate too. Like Tesco it also has plethora of private labels and pricing power. In 2014 it recorded revenue of $39.6 billion. Following a single brand strategy Sainsbury has potential to divest in any ancillary business and give competition to its market leaders. Also its financial division is much more than controlling function and one of the reason for its high market capitalization is the huge investments made by financial division giving them ability to compete in economic downturns.
7. Imperial Tobacco Group
Imperial tobacco group is the 4th largest international company in the industry in the world based on market share.
Sales ($ Bn): 22.7
Profits ($ Bn): 2.4
Assets ($ Bn): 42.2
Market Value ($ Bn): 44.8
It is also the world’s largest producer which is little different strategy from its rivals of diversifying in ancillary business. It is headquartered in Bristol, United Kingdom. It has 51 factories worldwide and has selling operations in over 160 countries. Along with its brands it has brands like Rizla which pioneered branded rolling papers and is market leader in the same. In 2014 it recorded revenue of around $23 billion. It’s history started in 1901 when 13 british companies merged to form one. The company formed an alliance with an American company to form British American tobacco whose purpose was to keep the two companies having conflicts while doing business in each other’s territories. It has pursued a series of acquisition to strengthen its position in the market and was a common trend in the industry resulting into five major companies controlling majority of sale across the world. The group is now a hugely diversified company with business interests in hotels under name of imperial group, breweries, retail etc.
The group is also the founder of one of the largest FMCG Company of India which was subsidiary under the group but now is a public listed company.
6. Diageo
Headquartered in London, UK Diageo is a British multinational beverages company.
Sales ($ Bn): 16.8
Profits ($ Bn): 3.2
Assets ($ Bn): 43.5
Market Value ($ Bn): 71
It is the world's largest producer of spirits and a major producer of wine. In India Diageo is known for its brand Smirn Off which is world’s biggest brand by sales in Vodka and Johnnie Walker which one of the most famous Scotch whisky. As of 2014 Diageo has operations in over 80 countries with its products being sold in 180 countries. The word Diageo orginated from combination of greek and latin word meaning company gives pleasure every day which is also the mission of the company. In India it is recently in news with major controversies in its controlling stake of United Spirits and challenged the position of its chairman Vijay Malya. Every year as per Diageo’s website they produce more than 6.5 billion liters of beverages from more than 100 sites in 30 countries. Diageo divides its market as 21 geographically based markets in over 180 countries employing 28,000 people across our global business. 39% of Diageo’s business is in the emerging markets in Latin America, Asia, Africa, Eastern Europe and Turkey. This presence is balanced through our strong businesses in the world’s most profitable beverage market, the United States, and an integrated Western European business Their supply function involves distilling, brewing, bottling, packaging and distribution world-wide. Diageo has won several accolades for environment friendly practices and are recognized as leaders in environmental sustainability. They have an International Supply Centre, based in Europe which manages exports and produces many of their flagship brands. ISC manages workforce of over 4,000 people managing the global supply chain network spreaded around more than 55 sites in Western Europe In 2014 Diageo recorded around $16.8 billion in revenues.
5. Associated British Foods
Headquartered in London, United Kingdom Associated British Foods is a British multinational food processing and retailing company.
Sales ($ Bn): 21.4
Profits ($ Bn): 1.3
Assets ($ Bn): 17
Market Value ($ Bn): 33.9
ABF is a diversified group with operations divided into five business segments: Sugar; Agriculture; Retail; Grocery; and Ingredients. Its ingredients business segment is the 2nd largest producer of sugar and baker’s yeast in the world. Its grocery division produces both branded and private label items for sale. Like Tesco it manages significant amount of last point delivery through its retail operations which has around 200 outlets across various European countries like UK, Portugal, France, Belgium, Germany, Ireland, Netherland etc. Its famous brands include Ovaltine, Twinings, Mozreal etc. Associated British foods was founded by W. Garfield Weston in 1935 initially as Food Investments Limited with purpose of selling agricultural products. In 1960 it changed its name to ABF. Later it grew acquisition and divestiture of several entities. Its major agricultural units of products like sugar, enzymes are subsidiaries operating independently and serving its in-house consumer division. Its majority stake is still controlled by a trust under the name of Garfield Weston. Unlike other FMCG companies Associated British foods has major interest in the supply side of raw materials with its agri-business especially sugar being among the world’s largest. This unique positioning of covering all channels of procuring to reaching customers gives associated british foods a unique advantage to compete in future. In 2014 it recorded revenue of $21.4 billion. Since present in retail it has huge investments in physical assets giving it a high market capitalization of $33.9 billion but this asset investments stops the cash on hand available for ABF and hence growth rate have lagged behind the other FMCG companies.
4. Sabmiller
Headquartered in London, England Sabmiller is world’s second largest brewer with operations world-wide.
Sales ($ Bn): 16.7
Profits ($ Bn): 3.6
Assets ($ Bn): 52.8
Market Value ($ Bn): 87.3
It is also a major bottler of Coca-Cola handling the European operations of Coco-cola. Its brands include Fosters, Pilsner Urquell, Gorsuch, Miller, Peroni. It has operations in 80 countries present in all the 6 continents SABMiller’s traces its origins back to South African Breweries commonly known as SAB in 1895 where it was established to serve the new mining industries emerged with establishment of British colonies in Johannesburg and nearby areas. It was the first industrial company to be listed in Johannesburg stock exchange. Later in the 20th century it expanded its operations world-wide through acquisitions of brands as well as breweries. In 1955 SAB acquired two breweries in South Africa which were even bigger than their size making them able to capture 98% of market in South Africa. Post that SAB increased diversification especially to European market. Due to tax reasons and high demand of breweries and branded in European regions it shifted its headquartered to London in 1999. Acquisition of Miller breweries from Altria group strengthen its north American operations in 2002 gives it the current name Sabmiller. This company follows a localized marketing strategy with different variants of beer for different African countries.and is one of the unique company of having good hold over African market due to its beginning from there. Recent acquisitions include that of Fosters beer which gave them one of their most famous global brand. Unlike other companies this company doesnot have United Kingdom origins but is headquartered there due to operational reasons. Today it has manufacturing operations in over 80 countries. In 2014 it recorded a revenue of $16.7 billion with net profit of $3.6 billion.
3. Reckitt Benckiser
Famous for Dettol and Harpic brand RB is one of the largest FMCG Company with over 200 countries selling their products.
Sales ($ Bn): 14.5
Profits ($ Bn): 5.3
Assets ($ Bn): 26
Market Value ($ Bn): 62.4
It is headquartered in Slough, Berkshire. Formed by the merger of by the merger of Reckitt & Colman plc of UK and Benckiser NV of Netherland in 1999 RB operates in health, hygiene and home products segments. In 2014 it recorded revenues of $14.5 billion and has market capitalization of $63 billion dollars. Company’s history follows the parallel development of both companies Reckitt and Benckiser. Reckitt started its business operations in 1840 by Issac Reckitt as a starch producer. Later it diversified into household business and followed a series of acquisition Harpic being a prominent one. Benckiser was founded by Johnathan.A.Benckiser in Germany in 1823 as a manufacturer of chemicals used mainly for industrial purposes. Post mergers both companies realized cost synergies resulting into higher operating profits and consolidated operations. Also RB has increased their innovation quotient and has one of the fastest launches of new brands in the market. Also looking at recent acquisitions of pharmaceuticals companies RB is diversifying into therapeutic drugs along with it existing brands of over the counter drugs. Its CEO is Rakesh Kapoor from India who was VP of Consumer products division. RB also has concept of Power Brands which are its highest selling products and has global unified strategy to market those products across various countries and retail channels. The company's strategy is to have a highly focused portfolio concentrating on its 19 most profitable brands, which are responsible for 70% of net revenues. RB organises its products category based as health, hygiene and home and industry based as food, pharma and portfolio brands The company's strategy is to have a highly focused portfolio concentrating on its 19 most profitable brands, which are responsible for 70% of net revenues
2. British American Tobacco
Commonly known as BAT was formed in 1901.
Sales ($ Bn): 23
Profits ($ Bn): 5.1
Assets ($ Bn): 40.8
Market Value ($ Bn): 99.6
When initially the industry started consolidating with major players expanding, a territory clash begun between the two biggest player at that time. BAT was formed to mutually benefit both the companies and all trademarks and export operations in other countries were marketed under BAT. It is headquartered in London, United Kingdom. In India BAT owns significant stake in ITC, and market some of the products through it. The campaign of Wills brand of BAT for Indian cricket team was conducted by ITC. Since under the alliance major overseas operations of selling were performed under BAT, BAT became one of the major global players with operations ranging in over 180 markets. Its famous brands include Lucky Strike, Dunhill, Wills etc which are a combination of acquisition and in-house development. Till 2002 it was also marketing Marlboro brand itself in U.K whose rights it acquired but was contested by Philip Morris. Since its long history of over 100 years, BAT has diversified into various operations like Retail, financial services etc and currently it owns major stakes into server financial services companies which is one of the reasons for high market capitalization and higher earnings from ancillary business. BAT business model includes procuring raw materials through contracted farmers rather than owning its own field and servicing those farmers through their in-house technicians hence minimizing the supply liability risk. In 2014 it had revenues of $23 billion. World-wide it has 44 factories present in 41 countries and has centralized supply chain management operations, exporting to countries where it does not have factories.
1. Unilever
Co-headquartered in Rosterdam and London this British Dutch company is one of the largest FMCG companies.
Sales ($ Bn): 68
Profits ($ Bn): 7
Assets ($ Bn): 58.39
Market Value ($ Bn): 84.34
It is famous for its products like Lipton, Lux, Knorr, Dove, Ponds etc. Founded in 1929 with merger of Lever brothers and Margarine Unie this company mainly deals in food, beverages, cleaning agents and personal care products. Unilever has over 400 brands operational and claims to touch lives of over 2 billion people every day through its products. Unilever has its business divided into 4 major segment of which personal care segment is the highest revenue generating business. Till 1997 Unilever had a huge present in chemical manufacturing but then it divested its chemical business as ICI and focus mainly on consumer segment.
It its 100 years of history Unilever made series of acquisition like Lipton, Brooke Bond, Ben and Jerry's etc. In 2014 Unilever recorded over $68.5 billion in revenue and $7.8 billion in profits .Although it lacks behind in terms of revenue compared to the top 2, it aims for a sustainable business models which is visible by its activities around the globe. By 2020 it has promised to reduce the carbon footprints produced by its manufacturing units to half and improve sustainability in terms of agriculture sourcing benefiting lives of thousands of its suppliers. Having vast operations across the world owning over 400 brands and subsidiaries in almost 100 countries this company is clearly poised to give a tough fight to top 2 in terms of revenues, profits as well as brand equity. Unilever has followed a subsidiary model partnering with local intelligence to market their products. Hindustan UniLever is their notable subsidy in which it holds 67.25% of stake.
Ranking Methodology
Step 1: Top 10 FMCG companies were shortlisted based on their market capitalization on London Stock Exchange
Step 2: 4 parameters were considered to arrive at ranking namely Revenues, Profits, Total Assets and Market Capitalization
Step 3: Asset turnover ratio (Sales/ Total Assets), Profits and Market capitalization values were normalized using min-max normalization
Step 4: Weighted score of Asset turnover ratio, profits and market cap with 0.3, 0.5 and 0.2 respectively was computed to get final ranks
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