Lamb Weston is set to acquire the remaining stake in its frozen potato products joint venture in Argentina with Sociedad Comercial del Plata. This move will allow the US-based supplier of French fries and frozen snacks to fully integrate its operations in the region.
Originally entering the joint venture, Lamb Weston Alimentos Modernos, in 2019 with an equal 50% stake, the company has increased its interest to 90% by 2022. The current transaction involves buying out the Argentinian holding company for an undisclosed amount.
Known as Lamb Weston Modern Foods, this entity produces the Rapipap brand of frozen potato products and caters to various private-label clients. The Munro facility, located in the Greater Buenos Aires area, serves the local market and exports to Brazil, Uruguay, Paraguay, and Bolivia.
There will be no immediate changes to operational structures or existing contracts in Argentina, and all employees will remain with the company. Marc Schroeder, the president of Lamb Weston’s international business division, stated, “This acquisition allows Lamb Weston to fully align its commercial strategy in Argentina and invest more in the local market.”
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Moreover, the Munro plant remains the only factory that Lamb Weston owns in Latin America, according to their 2023 annual report. However, a second facility is set to begin operations in Mar del Plata later this year, an expansion that was announced in 2022 in partnership with another joint venture.
In the previous year, Lamb Weston made headlines by purchasing the remaining 50% share of a joint venture in Europe, acquiring Lamb Weston-Meijer from Dutch group Meijer Frozen Foods, which had been established in 1994.
While expanding its global presence, Lamb Weston is also navigating challenges in North America, where it faces a supply and demand mismatch. This discrepancy has led to an inventory write-down charge of $71 million, affecting the company’s second-quarter profits for fiscal 2024. Consequently, Lamb Weston adjusted its profit targets downwards and initiated a restructuring plan in response to “soft” demand.
The company announced it would permanently close its manufacturing facility in Connell, Washington, resulting in significant job losses. Alongside this closure, Lamb Weston aims to cut about 4% of its global workforce and temporarily reduce production across several lines in North America.
President and CEO Tom Watson explained, “To drive operational and cost efficiencies, we are taking actions that include the permanent closure of an older, higher-cost processing facility and the temporary curtailment of certain production lines and schedules in our manufacturing network. Together, we expect these actions will help us better manage our factory utilization rates and ease some of the current supply-demand imbalance in North America.”
As Lamb Weston continues to adapt to the evolving landscape of food and drink consumer trends, its focus remains on delivering high-quality products and services while ensuring stability and growth within the organization.
