Morningstar | Kerry's First Quarter Confirms Growth Trajectory; Guidance Reaffirmed
From its humble beginnings as an Irish dairy co-operative, Kerry Group has transformed into a global taste and nutrition powerhouse catering to the food, beverage, and food-service markets. Our wide economic moat rating is supported by intangible assets and switching costs resulting from the company’s wide range of ingredient solutions offered and strong service component that supports clients throughout the whole product development cycle (ideation, concept creation, product development in the lab, plant level manufacturing, and launch), contributing to partnershiplike client relationships.The company’s business model is unique in that its offering is proactive--Kerry works alongside the client to identify market opportunities that can be successfully delivered--as opposed to reactive in the case of its flavour and fragrance peers, which employ a more transactional approach that focuses on using their vast research and development resources to deliver customized flavour solutions.Those holistic partnerships with a variety of clients from different end-use markets and regions end up yielding invaluable market and consumer insights, which enhance Kerry’s consulting offering, a virtuous cycle we believe is at the heart of the company's considerable competitive advantages. With two thirds of its sales coming from local and regional food and beverage customers and almost one fifth sourced from the food-service market, we think Kerry offers unique exposure to the most dynamic segments of the global food and beverage industry.The taste and nutrition unit accounts for 88% of the group's profits and 81% of sales and is Kerry’s main growth engine. The global food ingredient and flavour market is estimated at around $70 billion in sales, growing at a 2%-3% rate, and is fragmented. The 10 largest players account for only 43% of the industry’s sales, with Kerry being the largest with around 8% market share. Kerry’s other segment is a relatively undifferentiated consumer product business, with recent contract losses highlighting the unit's lack of competitive advantages.Kerry Group is an international food corporation. Co. is engaged in ingredients and flavor technologies serving the food, beverage and pharmaceutical industries and is also a consumer foods processor and supplier in selected European Union (EU) markets. Co. has two operating segments: Ingredients & Flavors, and Consumer Foods. The Ingredients & Flavors operating segment is engaged in manufactures and distributes application specific ingredients and flavors spanning a number of technology platforms; and Consumer Foods segment is engaged in manufactures and supplies added value brands and customer branded foods primarily to the Irish and U.K. markets.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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