SINGAPORE — Olam International plans to invest $3.5 billion in several key business areas — including grains and animal feed — while divesting four businesses, part of the company’s 2019-2024 strategic plan.
“With our focus on farm-gate origination, end-to-end traceability, sustainability, digital initiatives and innovations like AtSource, Olam is already primed to start capturing growth from this fast-changing landscape,” said Sunny Verghese, co-founder and chief executive officer. “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 fiber for a growing population.”
Olam said it intends to invest $3.5 billion over the next six years in its businesses “where we have consistently performed, have market leading positions, are in line with key consumer trends and have significant potential for further growth.”
The company identified the 12 key businesses as edible nuts, grains and animal feed, cocoa, coffee, cotton, spices, edible oils, dairy, rice, infra and logistics, packaged foods and commodity financial services.
In the case of grains and animal feed, Olam said it plans to expand destination processing, including flour milling in West Africa. The company also intends to continue to build an asset-light global trading business.
Olam said plans for its rice business include an expansion of Asian origination and African distribution, including branded packaged rice. In edible oils, the company plans to increase yield and cost efficiency in upstream palm oil business and invest selectively in the midstream refining business.
Meanwhile, Olam said it intends to free up $1.6 billion by de-prioritizing and divesting four businesses: sugar, rubber, wood products and fertilizer. The company said the assets no longer fit with its strategic priorities.
Other aspects of Olam’s 2019-2024 strategic plan include driving margin improvement, generating additional revenue streams by offering differentiated products and services, and exploring partnerships and investments in new engines for growth.
“This is a pivotal moment for Olam to refocus on our strengths and capitalize on new opportunities,” said Shekhar Anantharaman, executive director and group chief operating officer. “By executing on our refreshed strategic plan, we aim to be a global food and agri-business supporting our customers’ growing need for sustainable and transparent supply chains with a clear focus on tomorrow’s consumer preferences.”