TOKYO -- Japanese trading house Itochu will cultivate Europe's fruit market with its Dole business by investing in a Serbian raspberry processor, seeking opportunities for growth in a region dominated by rival Del Monte Foods.
An Itochu-owned Dole company spent about $12 million to acquire a 49% stake in Belgrade-based Master Fruits, which freezes and packages raspberries and other fruits for sale to retailers, eateries and food producers, primarily in the U.K.
Serbia is a leading global raspberry producer. With Itochu's help, Master Fruits will extend its sales to the rest of Europe, including France and Spain. The Serbian company can process an annual 5,000 tons of raspberries at its own factories. Sales volume in 2016 came to only around 3,000 tons, but the processor will aim for 20,000 tons in 2020 with help from partner factories.
Tokyo-based Itochu acquired Dole's Asian fresh produce and global packaged foods businesses for $1.68 billion in 2013. Itochu's Dole business logs annual sales of about 260 billion yen ($2.38 billion), split evenly between fresh fruits like bananas and processed products such as juices and canned pineapples. The U.S. accounts for more than 80% of these packaged-food sales, followed by Asia with 10%. European sales make up only 5% of the total.
Itochu's Dole arm sees frozen raspberries as an entree into the European market, aiming to follow up with more exports of processed goods such as canned fruit. To this end, it plans to increase its pineapple growing capacity to 1 million tons in the Philippines by the year ending March 2021, up 30% from last fiscal year. The Dole business will acquire more fields on the southern island of Mindanao, while expanding its existing processing facilities. Some 2.1 billion yen will be spent on the pineapple production increase there over four years.
Europe's frozen fruit market totals 1 million tons a year worth some 1.6 billion euros ($1.88 billion), of which raspberries account for 800 million euros, according to private-sector research and other data. Apart from Del Monte, one of the world's biggest fruit companies, the region's market consists mostly of midsize players.
Itochu's Dole business logged a net loss of 16.9 billion yen in the year ended March 2016 as bad weather sliced into banana yields in the Philippines, a main producer. The following year, the business rebounded with a 8.3 billion yen profit. Net profit this fiscal year is forecast to rise 17% to 9.7 billion yen.
Itochu projects record group net profit of 400 billion yen for the current fiscal year, thanks to growing earnings in its food division, which also includes distributor Nippon Access and convenience store operator FamilyMart Uny Holdings.