Lantmännen has signed an agreement with Tate & Lyle for the acquisition of an oat ingredients manufacturing facility production facility in Sweden. The Swedish-headquartered cooperative is acquiring an oat mill with a capacity of 55,000 tons in Kimstad outside Norrköping. The acquisition, which was concluded for an undisclosed sum and will be finalized on March 29, 2019, gives Lantmännen opportunities to expand its oats capacity and invest in additional processing of oats, as it looks to increase its focus on specialty ingredients. 

The sale includes the manufacturing plant in Kimstad, Sweden, and the oat ingredient portfolio, which includes PromOat Beta Glucan Soluble Fiber, PrOatein Oat Protein and Avenacare Oat Beta Glucan.

Magnus Kagevik, Head of the Energy Sector at Lantmännen confirmed to FoodIngredientsFirst that this will be the fourth oat mill under the company’s banner, with current facilities currently operating in Norway, Sweden and Denmark. While he could not comment on the company’s current capacity within oats, the additional factory will mean a significant increase. 

He noted that the company will plan some investment in this factory going forward as well the addition of further products to a line that includes PromOat (oat beta glucan) and PrOATein (oat protein). These two well-established B2B brand names are unlikely to be impacted by the integration, Kagevik said. 

The moves comes as Lantmännen undergoes somewhat of an evolution, from a commodity player to looking more towards value-added ingredients – a similar strategy to that employed by Tate & Lyle in recent decades. 

“We are very big in basic products like flour, wheat starch and native starch. But we are looking to see how we can bring those products up the value chain,” says Kagevik. One of the ways to achieve this will be through acquiring a company that is already producing oat protein and beta glucan. 

“But this is an area that we are also looking to for other grain, so it really fits within our strategy to expand further into the ingredients space. We hope to be successful and both grow volumes and add products within this space,” he notes.

The facility, which has around 35 employees, is currently producing oat protein, beta glucan and oat flour. The manufacturing processes at the facility have many similarities with production at Lantmännen Reppe and once the acquisition has been completed, it will become part of the Energy Sector at Lantmännen.

Lantmännen is an agricultural cooperative and Northern Europe’s leader in agriculture, machinery, bioenergy and food products. Owned by 25,000 Swedish farmers, the company has 10,000 employees, operations in more than 20 countries and has an annual turnover of SEK 45 billion (US$4.8 billion). 

Oat is a key crop for Swedish agriculture and Lantmännen’s members. There is a big global interest in oat, a crop that offers several important health benefits, and demand for oat products is increasing sharply. This additional oats capacity will enable Lantmännen to meet the growing demand from customers in the Nordic food industry.

For Kagevik, the acquisition fits very well within its strategy and the initial response has been overwhelmingly positive, he notes.

“Our board is also very supportive in this acquisition, because they think it is important for our owners. We are owned by 25,000 farmers across Sweden. The feedback that I have received so far has been positive in how we are developing the oat part of our business,” he notes.

On November 8, 2018, Tate and Lyle PLC announced that it was conducting a strategic review to determine the future of its oats ingredients business as it no longer believed it fits well with the mainstream food categories which it now focuses on. The sale is the outcome of this strategic review. It comes less than six years after Tate & Lyle took over the facility following the acquisition of Biovelop, a Swedish manufacturer of oat beta glucan in May 2013.

Lantmännen has signed an agreement with Tate & Lyle for the acquisition of an oat ingredients manufacturing facility production facility in Sweden.A Tate & Lyle spokesperson confirmed to FoodIngredientsFirst: “We do not feel the oat ingredients business fits well with the mainstream food categories that we now focus on: beverages, dairy, soups, sauces & dressings.”

“We will continue to explore other non-oat fiber and proteins as they fit with our portfolio of health and wellness ingredients, alongside solutions that help our customers to develop foods and beverages with great taste and texture, fewer calories and less sugar,” they note.

Despite the timing of the transaction on March 29 [the initially communicated date for the UKs exit from the EU prior to the extension], the spokesperson stressed that the decision was unrelated to Brexit, with Kagevik also noting that this was coincidental. 

For Lantmännen, oats are a strategic investment area, with further development of its oats business forming a key part of the company’s “Field to Fork 2030” strategy. “We are already strongly positioned in oats and this acquisition gives Lantmännen access to a modern mill that complements our existing production capacity within oats and creates a unique opportunity to develop and manufacture ingredients based on oats as the raw material,” says Per Olof Nyman, CEO and Group President of Lantmännen. 

The company notes that thanks to their high quality, oats from the Nordic countries have gained a strong standing in the world. Lantmännen is the Nordic leader in oats with three oatmeal mills in Sweden, Denmark and Norway, and is taking a long-term approach to investments in processing, research and innovation within oats. 

Lantmännen markets food and ingredients based on oats to the food industry and is a driving force in research and innovation to develop future oat products. Lantmännen pursues research both internally and via partners such as ScanOats in Lund and the partly owned Swedish biotech company CropTailor.

Oats are enjoying a renaissance, thriving on both their heart health benefits and gluten-free potential. Earlier this month FoodIngredientsFirst reported on how Raisio had entered into an agreement to form a strategic alliance with Italian company Dr. Schär AG, a global food company specializing in gluten-free foods.

The March 2019 issue of The World of Food Ingredients also features a detailed article on the role for oats with a gluten-free strategy. It notes how in the EU, oats were officially accepted as a gluten-free grain in 2009. Gluten-free oats are also endorsed by the Association of European Coeliac Societies (AOECS Gluten Free Standard). According to the regulations, the statement “gluten-free” may only be made when neither the oat raw material nor the final product contains no more than 20mg/kg of gluten (Commission Implementing Regulation (EU) No 828/2014).