Sumitomo Corporation Acquires Specialty Fertilizer Distribution Business in France

OREANDA-NEWS. August 31, 2015. Sumitomo Corporation (head office: Chuo-ku, Tokyo; president: Kuniharu Nakamura) has acquired a specialty fertilizer (Note 1) business for the French market (hereinafter, “the Business”) through its subsidiary company, Sumi Agro Europe Ltd. (head office: London, UK; president: Wlodzimierz Wleklik; hereinafter, “SAE”) which holds distribution companies of crop protection products in Europe, and has recently commenced its engagement in the Business.

SAE took over the Business from the Sipcam Oxon Group (head office: Milan, Italy; president: Nadia Gagliardini), with which SAE has capital and business tie-ups. The Business had been previously run by the Sipcam Oxon Group company, Agroqualita France SARL (hereinafter, “Agroqualita”); SAE has Sumi Agro France S.A.S. (hereinafter, “SAF”), an SAE-affiliated distribution company in France, which will absorb and develop the Business.

France ranks eighth in the world in fertilizer consumption (Note 2), and growing interest in safe and secure food products has produced annual growth of 10% in the specialty fertilizer sector. SAF, since its founding in 1996, has primarily expanded its business through the distribution of pheromones and copper fungicide for fruits and vegetables in France. Acquisition of the Business will allow it to extend the product portfolio to specialty fertilizer (e.g., micro-granules including mixtures with crop protection products) for wheat and other grains as well as corn/maize.

The distribution business of specialty fertilizer requires finely-tuned demand creation, promotional activities and selection of distribution channels, all domains in which SAF’s forte of distribution capabilities can be put to good use. Expanding into the specialty fertilizer business is also one of SAE’s European strategies, and this business has already achieved commercial success in Romania and Bulgaria and grown into a core business. Taking on all of the employees of Agroqualita should allow SAF not only to quickly absorb know-how about this business but also to accelerate the SAE Group’s strategy of horizontal expansion into other countries.

As for crop protection, with the global market being US\\$56.7 billion, the European market is US\\$13.9 billion. The French market, Europe’s largest at US\\$2.9 billion, holds a greater than 20% share of the European market (and a 5.1% share of the world market); with the grains market constituting approximately half of the French market (Note 3). Acquisition of the Business will allow SAF to expand its crop protection business as well through the newly acquired distribution channels of grains segment.

Sumitomo Corporation’s crop protection business began in earnest in the 1970s with the export of crop protection products produced by Japanese manufacturers. After adopting a strategy of intensifying its efforts downstream in the value chain, Sumitomo Corporation extended its distribution business to more than 30 countries in the Americas, Europe and elsewhere. Sumitomo Corporation will be accelerating its efforts to construct a distribution organization boasting annual sales in the order of 150 billion yen.

(Note 1) Materials containing elements such as iron and manganese (vital for physiological processes of photosynthesis, respiration etc.) which enhance plant growth and development, different from fertilizers mainly composed of nitrogen, potassium etc.
(Note 2) Based on 2012 consumption (quantity in nutrients) 
(Note 3) All market figures in 2014