IAWS adds the final ingredient

There was one obvious gap in IAWS's route to market for its specialist bread division - a string franchise in food service (restaurants and catering to the uninitiated). That has now been filled by the recent acquisition of Delice de France, the British group, that complements IAWS's own Cuisine de France operation like a glove.

Davy's John O'Reilly hasn't formally increased his earnings forecast for IAWS to reflect the Delice de France acquisition, but says that it can add between 6 and 10 per cent to his current July 2000 earnings forecast of 25.9 cents per share.

That suggests that the addition of Delice alone may bring earnings to 27.5p-28.5p in 1999-2000.

The addition of Delice means that IAWS has now covered the three routes to market for its speciality breads - independent retailer, multiple retailer and food service. In addition, Cuisine's expertise in retail distribution will complement Delice's small presence in this particular route to market, while Delice's food service expertise can accelerate Cuisine's development plans in this area, says the Davy analyst.

The addition of Delice means that consumer foods will now represent more than 30 per cent of IAWS's business, and this has a positive impact on its ratings. Consumer foods, especially high-growth consumer foods like IAWS's speciality bread business, attract higher ratings than profitable but less exciting businesses like fertiliser, flour and fish meal. So the higher proportion of consumer foods, the higher the rating is the logic.