Tönnies squeezes Westfleisch out from Tummel

by Editor fleischwirtschaft.com
Friday, March 18, 2011

Assuming the German Federal Cartel Office gives its consent, the Tönnies group will become the majority shareholder in Heinz Tummel GmbH & Co. KG in Schöppingen (in the Borken district of North Rhine-Westphalia) with effect from 1 January (backdated).

This would represent yet another strategic victory for Germany's largest pig, and Europe's foremost sow, slaughterhouse. It is not merely that Tummel occupies a key market niche as the last distributor of pork sides; the entry of Tönnies would also oust Westfleisch as Tummel's long-standing partner in the sow meat sector.

Tönnies' declared aim in making this move is to add pork sides to its range of products - a market segment which the Rheda-Wiedenbrück-based company has not itself been able to service to date.

The acquisition of Heinz Tummel GmbH, headquartered in the Münsterland region, sees the market leader joining forces with Germany's eighth largest slaughterer. Up to 30,000 pigs are slaughtered in Schöppingen each week by roughly 150 employees. The slaughter figures for Tummel have remained unchanged over the last two years whereas the sector as a whole has made significant gains. Slaughtering over 14 million pigs each year and exporting over 50 percent of its output, Tönnies is the undisputed market leader.

Pork sides - a lucrative niche

Pork side distributor Tummel services an attractive niche market, albeit with up to 80 percent of its produce destined for the national market. Industry insiders doubt whether this specialisation is the main reason for the planned transaction. Rather, the deal would see Tönnies extend its European market leadership in sow meat ahead of the number two in the sector. For over ten years Westfleisch has leased the sow cutting operation at Tummel. The contracts expire in mid-2012 and a new partner needs to be found.

The sow meat market is highly concentrated both here in Germany - where the market is dominated by five slaughterers - and also elsewhere. Tönnies alone slaughters between 12,000 and 14,000 of the roughly 22,000 sows hung up each week in Germany, making it the undisputed market leader ahead of Westfleisch.

Industry observers interpret Tönnies' acquisition of Tummel as a further round in the price war over sows which ignited last summer. The German Pig Farmers' Interest Group (ISN) is warning of a possible monopoly in the slaughter sow market.
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