As per a press release of the company, on April 30, 2019, John Bean Technology (JBT) acquired Proseal, a United Kingdom based, provider of tray sealing technology for the food industry, in a deal worth USD 246 million. JBT then acquired Prime Equipment Group, a US company dealing in primary and water re-use solutions for the poultry industry, for USD 65 million on June 5, 2019. Regarding these acquisitions, JBT CEO Tom Giacomini said, “The goal of JBT is to become full line solutions provider for poultry customers with the addition of the primary processing capabilities of Prime. The areas of automation and water re-use can be addressed by deep expertise, reputation, and high-quality products and services by Prime, combined with the strategy and winning culture at JBT.” Chicago-headquartered JBT expects that in 2019, both acquisitions would add anywhere between USD 80 million and USD 85 million to its revenue. The potential lies in leveraging JBT’s global reach as Prime’s annual revenue of USD 45 million is only from the US.
MARKET DYNAMICS
The global poultry processing equipment market is highly competitive, with a large number of global and local market players such as Marel HF (Iceland), Key Technology, Inc. (US), Brower Equipment Inc. (US), Bayle SA (France), and CG Manufacturing and Distribution Limited (Canada). Players in this market have adopted various strategies to expand their global footprint and increase their market shares. Agreements & contracts, partnerships, new product launches, expansions & investments, and mergers & acquisitions are some of the key strategies adopted by players to achieve growth in the poultry processing equipment market.
MARKETSANDMARKETS™ VIEW POINT
Global meat production has increased rapidly over the past 50 years; total production has grown 4-5 fold since 1961 (Ritchie & Roser, 2017) . This is attributed to the positive correlation between increased income and per capita consumption of income-elastic food. For instance, in developing countries, the increase in consumption of convenience food and rise in demand for protein-rich food, owing to changes in the perception of the consumer, are boosted by the presence of small and medium enterprises.
According to the Population Reference Bureau, the demand for fast food is projected to double by 2030, and 20% of that increase is attributed to population growth. The growing demand for fast food chains is expanding their operations across the globe. This has led to an increase in the demand for poultry meat, pre-processed poultry products, and processed poultry products, which has further led to expansions in poultry processing facilities, ultimately leading to an increase in the demand for poultry processing equipment.
FIGURE 1 POULTRY PROCESSING EQUIPMENT MARKET FORECAST TO 2020
e – Estimated; p – Projected
Source: MarketsandMarkets™ Analysis
One-third of the global poultry production and processing equipment market was accounted by North- American region in 2018. Urbanization and demand for processed poultry products, which is suitable for home use and fast food are potential market drivers, as stated by Nishikant Yadav (Manager, Food and Agribusiness at MarketsandMarkets™)
The practice of processing poultry has seen significant changes, owing to the developments in the poultry processing equipment industry. Poultry processing is now carried out with the help of automated equipment which come with the latest technologies such as X-ray scanners, high-speed composite alloy cutting blades, and sensors. The mechanization of this process has not only influenced and reduced the labor-intensive work but has also led to positive changes in safety issues in processing industries.
Increasing raw material and logistical costs and capital investment are the major restraining factors for the poultry processing equipment market.
IMPACT OF THE ACQUISITION ON JBT
After establishing itself in the US market, JBT is looking to expand its presence in Asian countries. The company focuses on innovations based on public need by investing in R&D. Since 2012, JBT has been largely adopting inorganic expansion through acquisitions of and agreements with innovators; it is this strategy that led to the acquisition of Prime, one of its competitors. The company also expanded through frequent acquisitions in North America and Europe to secure its market presence. According to Indu Patel, PhD (Senior Research Analyst, Food & Beverage at MarketsandMarkets™), as the key players in the market are JBT and Prime, the latter’s acquisition will lead to reduced cost of manufacturing and an increase in its market share. Through this acquisition, JBT will also increase its market diversification by launching new products.