Richardson International, Canada’s largest grain company and major canola crusher, is purchasing Wesson, the United States’ largest vegetable oil brand, from Conagra.
It’s a big deal for Richardson and Canadian canola growers, Jean-Marc Ruest, Richardson International’s senior vice-president corporate affairs and general counsel, wrote in an email Dec. 19.
“Very beneficial, in our opinion, to have a Canadian company like Richardson, who has a very significant investment and interest in Canadian canola, owning the leading U.S. canola oil brand,” he wrote. “We are obviously motivated in growing the canola oil business and the popularity of canola oil in the U.S. market thereby increasing the demand and use of Canadian canola.”
Richardson, Canada’s largest canola handler with about 30 per cent of the market, owns two of Western Canada’s 11 canola-crushing plants.
Richardson packages canola oil in Lethbridge, Alta., and Oakville, Ont., with a combined capacity of 130,000 tonnes a year.
Richardson’s canola oil brands are Canola Harvest and Crystal. Richardson also packages canola oil for private labels.
Wesson has 11.5 per cent of the U.S. canola oil market, with almost all of it coming from Canada.
“It’s (canola) an industry we are heavily invested in and even more so now,” Ruest said in an interview Dec. 18. “All we want is good things for the industry. We see a lot of future in it and how we position ourselves and how we spend our energy and dollars are reflected through these types of things.”
The purchase is expected to be completed during the first quarter of 2019.
Neither Richardson nor Conagra released the sale price, but Reuters reported in 2017 Ohio-based jam maker J.M. Smucker Co. was prepared to buy Wesson for US$285 million (C$384.6 million).
U.S. antitrust regulators objected, claiming the transaction would result in less vegetable oil competition and higher prices for consumers because Smucker, owner of Crisco, is also in the vegetable oil business.
Conagra and Smucker abandoned the deal rather than fight the government’s objections in court.
The Wesson purchase will add considerably to Richardson’s canola oil business, Ruest said. Wesson has a 280,000-square-foot facility in Memphis, Tennessee, whose 123 employees package 170,000 tonnes of oil a year, he said. That will double Richardson’s canola oil packaging capacity.
With plans to invest in the Memphis facility, Richardson is committed to a continued U.S. presence for marketing, manufacturing and distribution of Wesson products, it said in a news release.
“I think it’s giving us critical mass in that packaged oil business,” Ruest said. “That’s an area we want to expand in. The opportunity to buy recognized brands in the products that we’ve developed an expertise in manufacturing is a unique one that we couldn’t pass up.”
Almost all of the canola oil Wesson packages comes from Canada, but mainly from suppliers other than Richardson. Richardson, which produces 1.6 million tonnes of canola oil a year combined at its plants in Lethbridge, Alta., and Yorkton, Sask., will be supplying more of Wesson’s canola oil.
“I think it will be a combination of both (Richardson and others),” Ruest said. “I think it will depend on any given time what the economics and what the efficiencies look like. But at first glimpse we just acquired a pretty significant customer.”
The purchase is good for Wesson employees too, Ruest said. The Memphis plant’s future was uncertain after the Smucker sale fell through, he said.
“Its location actually allows us to expand our reach and to more efficiently be able to supply product to markets that we can’t effectively service from Canada,” Ruest said.
“From the people perspective the other thing that is positive is the job creation here in Winnipeg (where Richardson is headquartered)… ” he said. “We expect we’re going to have to hire somewhere between 40 and 50 people to run that business whether it be in the sales and marketing departments or the extra people we need for accounting, HR (human resources). Those elements of running that side of the business are significant and it’s definitely a positive for Winnipeg and Canada.”
Wesson is a good fit for Richardson, which has been in the grain business since 1857, as it expands into the food business, Richardson International president and CEO Curt Vossen said in a news release.
“Our recent $30-million investment to build an innovation centre (in downtown Winnipeg) focused on product development will provide a modern platform for testing solutions and exploring new ideas, creating the perfect match to develop truly innovative products to meet and exceed consumer expectations,” Vossen said.
The centre will house Richardson’s food development team, product development suites, analytical laboratory and a culinary test and demonstration kitchen. One hundred employees are expected to work there, but the building will accommodate double that.
Richardson is also a leading global oat miller with four mills in North America and one in the United Kingdom.