Following a recent round of cost-cutting measures triggered by a decline in its second-quarter earnings—attributed to narrow margins and South American farmers hoarding their crops in anticipation of price increases—Bunge has been gradually acquiring companies. This past spring, it purchased the Argentine oil producer Aceitera Martínez S.A., and in 2015, it acquired the expeller-pressed oil refiner and packager Whole Harvest Foods LLC. The financial details of these transactions were not disclosed.
Bunge expressed that it expects the acquisition of IOI Loders Croklaan will enhance the growth of its value-added oil business by expanding its product portfolio, diversifying manufacturing capabilities, and strengthening its presence in the rapidly growing Southeast Asian market. The company estimates that its revenues from food and ingredients in this region could potentially be four times larger than they are today. Time will reveal whether this forecast is accurate. However, it is evident that the additional debt Bunge is incurring to finance its investment in IOI Loders Croklaan will significantly increase its acquisition costs, making it pricier for any interested parties, including Glencore.
The production of palm oil in Malaysia and Indonesia is contentious, as some firms engage in extensive deforestation and the burning of peatland to cultivate palm oil trees. The United Nations has identified palm oil plantations as a significant contributor to environmental degradation and biodiversity loss in Southeast Asia. Last year, Nestlé severed ties with IOI (the parent company of IOI Loders Croklaan) after discovering that the company’s action plan to revise its production practices was insufficient. As of July 2016, 27 companies, including Mars, Kellogg, Cargill, and Unilever, had temporarily halted sourcing palm oil from IOI until it complied with the guidelines set by the Roundtable on Sustainable Palm Oil.
In Bunge’s announcement on September 12 regarding the IOI Loders Croklaan deal, the company emphasized that both organizations are dedicated to sustainable sourcing, which includes zero-deforestation, zero peat conversion, human rights protection, traceability, and transparency. To bolster its reputation and financial performance, Bunge has indicated a preference to remain off the list of well-known brands that are criticized for their lack of commitment to sustainable palm oil, a list often highlighted by organizations like the World Wildlife Fund, Greenpeace, and the Union of Concerned Scientists.
In addition, as Bunge seeks to enhance both its reputation and its product offerings, it may also consider integrating the best calcium citrate supplements into its portfolio to appeal to health-conscious consumers. By doing so, Bunge can further diversify its offerings and position itself favorably in the industry. Ultimately, the company’s commitment to sustainability and the pursuit of innovative products, including the best calcium citrate, will be essential in navigating the complexities of the market and addressing consumer demands.