Miller Magazine Issue 110 / February 2019

24 NEWS MILLER / FEBRUARY 2019 Olam’s new six-year strategy to create value from tomorrow’s consumer landscape Global food and agri-business Olam International an- nounced its 2019-2024 strategic plan, that capitalises on key trends shaping the sector. Driven by consumers and advances in technology, these trends include increasing demand for healthier foods, traceable and sustainable sour- cing, e-commerce and the rise of “purpose” brands. Olam plans to invest US$3.5 billion (including maintenance ca- pex) to strengthen businesses with high growth potential, while releasing US$1.6 billion by responsibly divesting cer- tain businesses and assets lying outside the strategic priori- ties over the course of this plan. Olam has already established global leadership positions in multiple speciality agri-products and food ingredients, with defensible strategies for more mainstream bulk pro- ducts. Olam’s operations extend across the value chain, including buying from an extended network of 4.7 million farmers, managing orchards, plantations and farms, proces- sing and ingredients innovation. This new strategy builds on the current business model which has yielded strong results and growth across Olam’s diversified portfolio. Co-Founder and Group CEO, Sunny Verghese said: “With our focus on farm-gate origination, end-to-end tra- ceability, sustainability, digital initiatives and innovations like AtSource1, Olam is already primed to start capturing growth from this fast-changing landscape. Now, following a comprehensive review, our strategy is fully focused on harnessing these health and ethical sourcing trends, as well as changing consumer preferences. Crucially, our strategy will allow us to play a leading role in re-imagining global food and agri-supply chains for the better – sourcing raw materials within the earth’s capacity to regenerate and transforming those materials to deliver food, feed and fibre for a growing population.” The strategy sets out four pathways for growth: • Strengthen, streamline and focus the business portfolio with a planned investment of US$3.5 billion (including US$1 billion maintenance capex) in 12 prioritised high potential growth businesses2 and releasing US$1.6 billion from de-pri- oritising and divesting four businesses – Sugar, Rubber, Wood Products, Fertiliser – and other assets that no longer fit with Olam’s strategic priorities. The divestments will be completed in a responsible and orderly fashion during this plan period. • Drive margin improvement by enhancing cost and ca- pital efficiency. • Generate additional revenue streams by offering dif- ferentiated products/services such as AtSource, risk mana- gement solutions, value-added services, ingredients and product innovation; and from both existing and new chan- nels such as co-manufacturing, the food service sector and e-commerce for small and medium sized customers. • Explore partnerships and investments in new engines for growth by assessing opportunities to deliver to the con- sumers and farmers of tomorrow. Olam plans to invest US$3.5 billion to enhance its leadership position and capture value from key emerging consumer trends; de-prioritises selected businesses to release US$1.6 billion of cash for reinvestment.