Cargill may be private, but it's highly visible. The agribusiness giant, the largest private corporation in the US, has operations in about 70 countries. It has five business units -- Agriculture Services (customized farm services and products); Food Ingredients and Applications (food and beverage ingredients, and meat and poultry products); Industrial, Origination and Processing (commodity origination, processing, marketing and distribution); Risk Management and Financial (risk management and financial solutions); and Industrial (salt, steel, and fertilizer). Cargill's customers include food, beverage, industrial, pharmaceutical, and personal care product makers, as well as farmers and food service providers.
Through its handful of business segments, the company offers a plethora of diversified operations and products, including grain, cotton, sugar, petroleum, and financial trading; food processing; futures brokering; health and pharmaceutical products; animal feed and crop protection; and industrial products such as biofuels, oils and lubricants, starches, salt, and fertilizer for crop and livestock farmers.
In 2011 Cargill sold its 64% stake in The Mosaic Co. The sale of its share in one of the world's leading fertilizer producers contributed more than $340 million to Cargill's coffers. (The sale of the shares also allowed Cargilll to keep its private-company status while enabling the Cargill family trust to retrench its holdings.) The timing of the spinoff was fortuitous for Mosaic investors; demand for fertilizer is expected to surge as farmers look to capitalize on strong grain prices. Later that year, Irish food giant Kerry Group acquired Cargill's global flavors business, which downsized its Food Ingredients and Applications division, for $230 million.
Focusing on its grain business, Cargill acquired alcohol producer Royal Nedalco, a subsidiary of Dutch food ingredients cooperative Cosun, in early 2011. Royal Nedalco, formerly a grain customer of Cargill's, makes ethanol and alcohol that is used in spirits, foods, chemicals, pharmaceuticals, and personal care products (including cosmetics, perfumes, and mouthwashes). While Royal Nedalco is Cargill's first venture into alcohol production, the deal also complements Cargill's existing operations -- making use of the company's own raw materials and adding to its range of offerings. Cosun decided to exit alcohol production because it is no longer part of the firm's long-term focus.
Cargill is one of the leading grain producers in the US, and its Excel unit (part of Cargill Meat Solutions) is a top US meatpacker. Cargill is also a global supplier of oils, syrups, flour, and other products used in food processing. The company's more familiar brands include Diamond Crystal (salt), Wilbur (cocoa and chocolate), Honeysuckle White (poultry), Sterling Silver (fresh pork), and Nutrena (dog and cat food). Cargill is also a major US supplier for McDonald's, providing the burger behemoth with eggs, oils, sauces, and beef products.
Cargill's focused on diversifying its products portfolio further and reaching into new geographic markets. Already producing the NatureFresh and Gemini brands of sunflower oil in India, Cargill in 2011 inked a deal to purchase the refined sunflower oil brand Sweekar from Indian consumer goods maker Marico, which has been looking to sell off the brand. Cargill also formed a beef processing and cattle feeding joint venture with Teys Bros. in Australia in fiscal 2012. Teys is the second-largest beef processor and exporter in Australia, and the joint venture processes more than 1 million head of cattle annually.
During fiscal 2011 Cargill also tookover control of Indonesia-based PT Sorini Agro Asia Corporindo, a maker of sorbitol and other starch products (including maltodextrine, maltitol). As part of the purchase, Sorini was made a subsidiary of Cargill, and Sorini president K L Chopra continued to run the unit. Sorini's offerings are used in a range of consumer goods, such as food, beverages, cosmetics, personal care products, and pharmaceuticals. The increased presence of consumer products companies in emerging markets offers vast opportunities for Cargill's ingredients business, as Sorini's offerings are key supplies for food and other packaged goods manufacturers. The Sorini acquisition was fueled by a good year for Cargill, which saw three of its five segments post improved results in 2010 compared to 2009 because of the company's diversity. Its Agriculture Services segment, which comprises some 40 food ingredient and animal protein business units, led the pack, rising significantly in 2010 thanks to a hearty harvest in North America and improved results in global animal nutrition products and services.
Cargill has bulked up its animal nutrition business, largely through acquisitions, too. In late 2011 it acquired animal feed supplier Provimi from private-equity firm Permira. Provimi, valued at €1.5 billion, has operations in more than 25 countries and offers an assortment of premixes, additives, and ingredients. Adding Provimi complements Cargill's animal nutrition division, which boasts expertise in compound feed and agricultural services (such as risk and supply chain management and market insight). Prior to the Provimi deal, Cargill acquired Raggio di Sole Mangimi, an Italy-based livestock feed company catering to professional and rural ranchers in that country. The deal expands Cargill's existing animal nutrition offerings in Italy, where it has done business since 1962; Raggio di Sole Mangimi is being integrated into Cargill's global animal nutrition division, as part of the acquisition.
To ensure that it continues to fare well during the economic downturn, the agribusiness has been making bolt-on purchases in other areas. In early 2011 Cargill acquired Unilever's tomato products business in Brazil for about $348 million. The purchase gave Cargill several market-leading brand names, such as Pomarola, Tarantella, Elefante, Extratomato, and Pomodoro and complements its vegetable and olive oil brands there. As part of the deal, Unilever retained the right to market the brands to the foodservice segment. Cargill expanded its cocoa and chocolate business in Europe in 2011 by acquiring Schwartauer Werke GmbH & Co. KG Kakao Verarbeitung Berlin (also called KVB). The purchase included a pair of plants located in Berlin that produce 75,000 tons of chocolate per year. While Cargill already has German cocoa and chocolate facilities in Klein Schierstedt and Hamburg, the addition of KVB's operations gives Cargill a stronger presence in Germany, the largest chocolate market in Europe. Cargill also has chocolate making facilities elsewhere in Europe, as well as in Africa, Brazil, and the US.
Besides chocolate, Cargill has its hands in other markets that serve up sweets. The company has a partnership with Coca-Cola to produce and market the sweetener Rebiana (marketed under the Truvia brand), which is said to sweeten without adding calories, while at the same time producing a natural flavor. It is made from the South American herb stevia. Coke, of course, wants to put it in its beverages; Cargill sees uses in yogurt, cereal, ice cream, candy, and table-top use. Rebiana received regulatory approval in the US for general use in food and beverages at the end of 2008. Rebiana has yet to receive approval by EU authorities.
In another sweet deal, the company has built its first sugar refinery. Located in Louisiana and with an annual production capacity of 1 million tons, the refinery is part of the company's strategy to expand its sweetener offerings. Although it already trades raw sugar in China, the Netherlands, Switzerland, and the US and operates sugar export terminals in Brazil, the refinery is Cargill's first foray into directly producing the commodity. The operation is a 50-50 joint venture between Cargill and Louisiana agricultural cooperative Sugar Growers and Refiners (SUGAR).
In 2009 Cargill formed a joint venture with SUGAR and Imperial Sugar to construct and operate a million ton-per-day cane-sugar refinery in Gramercy, Louisiana, adjacent to its existing sugar refinery. The venture, called Louisiana Sugar Refining, is 50% owned by each partner. Sugar Growers and Refiners is a cooperative representing eight sugar mills and more than 700 Louisiana sugar growers. The deal marked Cargill's first foray into the processed sugar arena.
Cargill is looking for additional growth opportunities in the world of bio-plastics. The company reclaimed full control of its NatureWorks subsidiary in 2009, acquiring the 50% stake of former joint venture partner Teijin. NatureWorks makes commercial biopolymers, focusing on applications in eco-friendly products. (Teijin, an Osaka, Japan-based plastics maker, disposed of its stake in the joint venture to focus on developing other emerging materials technologies.)
Cargill sold its Brazilian pork and poultry operation Seara Alimentos to one of Brazil's top beef companies, Marfrig, in 2009, saying it made sense for the two companies to combine their operations given the current status of the animal-protein industry in Brazil. (Cargill may have been referring to JBS, Brazil's beef powerhouse, which has been busy of late expanding its operations both geographically and in terms of its product offerings.) Marfrig paid $900 million in cash and debt assumption for Seara.
Cargill reaches into commodities, as well. In Australia Cargill in 2011 acquired the majority of the commodities management business of AWB from owner, Canada's Agrium, for $677 million. The deal followed a failed bid for the commercial fats and oils business of Australia's Goodman Felder in 2009. Cargill offered A$240 million ($220 million) for the business, which would have strengthened its footprint in the Australasian market. The ACCC opposed the purchase, however, and the companies cancelled the deal in 2010.