Gilde invests €100m in Dutch bakery business

Gilde Equity Management has shrugged off this week’s VAT rise in the Netherlands and acquired a bakery company that is heavily reliant on consumer spending.

The Utrecht-based firm has acquired a majority stake in Dutch industrial bakery business Pré Pain & Smithuis using its €200 million Gilde Equity Management Benelux fund II.

Transaction details were undisclosed, but a source familiar with the matter told Private Equity International the deal value was approximately €100 million.

Gilde bought the company from Neon Private Equity [a spin off from Fortis Private Equity], the firm said in a statement. Subsequently, the management team of Pré Pain & Smithuis significantly increased its minority stake. 

Pré Prain & Smithuis is an automated industrial baker, which operates in the international sector of small crusty bake-off bread. The company provides crusty rolls to main retail wholesalers in the Netherlands and also has a client base abroad.

Supermarkets are increasingly competing with bakeries by selling bake-off bread. The market for luxury bread rolls is growing, Daniel Winkelman, investment director at Gilde Equity Management Benelux told Private Equity International. “In the Netherlands, we eat about 60 kilograms of bread per person per year. Consumers are eating less slices of bread and increasingly more luxurious bread rolls and this is exactly the area of the bread market in which Pré Pain operates.”

The investment in a sector heavily reliant on consumer spending comes in the same week as the Dutch government increased VAT from 19 to 21 percent in a bid to tackle the country’s budget deficit. According to Winkelman Pré Prain will be immune to a possible decline in consumer spending. “Consumer spending has two faces in the current economic environment. When it comes to the basics consumers are watching the pennies. However, when it comes to indulgence food purchases, consumers often don’t have clear price awareness, high quality is the leading factor in their choices.”

In addition, the company has been able to grow despite the current economic climate, Gilde said. The demand for their products is currently higher than what they are able to produce, according to Winkelman. “Pré Pain is actively being approached by large retail companies from the UK and Germany to co-develop client specific luxury bread ranges for them on an exclusive basis. This is one of their biggest strengths as supermarkets continuously have to find new products to differentiate themselves from competitors.”

Gilde plans to expand the company’s factory in Oldenzaal. It also seeks to further internationalise the business. “You can’t ship these bread rolls to Japan, but it’s possible to do business within a range of 800-1000 kilometres. The UK, France, Scandinavia can all be markets we could tap into,” Winkelman added.

Gilde is no stranger to the food sector. It previously invested in gingerbread cake business Royal Peijnenburg and bakery business Bakker Bart.