Dateline Southeast Asia

Del Monte buries the hatchet ahead of retail and NPD joint-venture

By RJ Whitehead

- Last updated on GMT

Del Monte buries the hatchet ahead of retail and NPD joint-venture
Philippines-based Del Monte Pacific has entered into a joint-venture with Arab-owned Fresh Del Monte Produce to expand its refrigerated fruit-based lines. 

The move puts to an end a legal spat between the two companies, and will also lead to the international introduction of branded retail outlets that have already seen success in the Middle East. 

The two companies, which operate businesses that were once par of America’s Del Monte Corporation, have agreed on a full and final settlement of all active litigation.

We are pleased that we have resolved our differences and put to rest the financial uncertainty that can arise from prolonged litigation​,” Del Monte Pacific’s chairman, Rolando Gapud, said in a statement.

We look forward to combining the resources of Del Monte Pacific, our US subsidiary Del Monte Foods, and Fresh Del Monte Produce, and focusing our joint efforts on exciting new business opportunities that will provide consumers with more premium quality, healthy products​.”

The joint venture will initially focus on the American market, with the potential for expansion into other countries where the companies’ businesses complement each other.

The Del Monte retail outlets will stock a variety of new products, including a line of chilled juices, new varieties of prepared refrigerated fruit snacks, and guacamole and avocado products. 

This partnership offers tremendous opportunities for both companies to innovate on a much broader and deeper scale than either company can accomplish individually​,” said Mohammad Abu-Ghazaleh, chairman and chief executive of Fresh Del Monte Produce. 

Each company brings a high level of knowledge, experience and commitment that comes from developing and building the iconic, trusted Del Monte brand. We also share similar visions for creating products and experiences that will meet the evolving needs of today’s consumer​.” 

In addition to retail and new product ventures, the companies have also agreed to a long-term mutual supply agreement to accelerate the expansion of Del Monte product sales in markets around the world. 

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The partnership will target the regions of Southern Mindanao and Southern Leyte in the Philippines and Amurang in Indonesia’s North Sulawesi province. 

The countries are the world’s biggest coconut producers and exporters. Farmers there are mostly smallholders and tenants cultivating less than four hectares of land, and seldom collaborate into functioning groups and cooperatives. 

As a result of this lack of organisation there are little or no economise of scale. This, along with a lack of financing and training resources, and a rigid supply chain, leads farmers to be dependent on middle men, the companies said in a statement.

The main goal of the partnership, which also features chemical major BASF and GIZ, a development agency, is to increase farmers’ incomes and self-sufficiency by improving the productivity of their farms. 

This will be achieved through training in Good Agricultural Practices (GAP), intercropping and enhanced farm management skills, and the strengthening of farmer groups​,” they said, adding that some 3,000 smallholders in the Philippines and 300 in Indonesia will benefit from the programme. 

Of these, around 800 farmers will receive additional training on the Sustainable Agriculture Network standards before they can apply apply for Rainforest Alliance certification. The partnership also plans to establish a chain of custody for certified material to help increase transparency along the supply chain.

Cargill, which owns and operates copra-buying stations and crushing plants, will provide training and set up the structures for certification. The crude and refined oil produced by Cargill will then be further processed by BASF and P&G for home, personal care and nutrition ingredients. 

As well as steering the project and managing it on the ground, GIZ will provide expertise in capacity building and implementing GAP and sustainability standards.

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