By: Dean Best
Dean Best's views on the industry's hot issues.
The US food industry is going through a period of significant change and the major names have struggled to come up with the answers to meet new consumer habits. There have already been signs some are turning to M&A - think of the sales of Bolthouse, of Annie's and even Krave jerky last month - and the Kraft/Heinz mega-merger suggests deal-making could accelerate.
At the Consumer Analyst Group of Europe conference in London, Danone's recently-appointed CEO Emmanuel Faber gave a presentation to the investors and analysts in the audience that gave a sense of seriousness, of realism at the French food giant.
It was a bumper week of 2014 financial results, particularly from the US, but a flurry of announcements - including some surprise admissions - from across the pond on Thursday perhaps best served to underline the challenges facing mainstream food manufacturers in the country.
More General Mills plants look set to shut as the US food giant wrestles with falling domestic sales. The closures will help profitability but the company will likely have to turn again to M&A to get its top line growing again.
Unilever's move to internally spin off its spreads unit was seen by many company and industry watchers as a pre-cursor to a sale. However, an imminent sale in unlikely, with the business under-pressure and a paucity of suitors standing buy.
Tough trading conditions in the UK can make it difficult for food companies to find the time and resources to build a presence overseas. However, Dean Best argues it is that market landscape that makes it imperative more companies look to exports for growth.
The private-equity owners of Hostess Brands are, according to reports, mulling a sale, just a year after buying the US snacks business. There is speculation Apollo Global Management and C. Dean Metropoulos are planning for to sell Hostess early next year. However, that looks unlikely.
Shares in Dairy Crest shot up today (6 November) after the UK dairy group announced a deal to sell its most problematic and under-pressure division - liquid milk. However, it may just be the City was not just reacting to the exit (dependent of course on competition officials approving the transaction) of Dairy Crest from a sector struggling to make money but the fact there could be takeover interest in the leaner company.
Yildiz Holding today (3 November) announced it had won the race to buy UK-based biscuit maker United Biscuits. In doing so, the privately-owned Turkish food group has moved once more to buy a major Western food brand.
The imminent sale of Chiquita Brands International, the US produce giant, shows how different investment horizons can manifest on a company's share roster - and decide a business's future.
Chiquita Brands International still appears set on its proposed merger with Fyffes – and the US produce giant is, at the moment, right to do so.
Emmi's move to sell Italian yoghurt business Trentinalatte, announced this morning (6 October), was the latest example of the challenges facing companies doing business in the country's dairy sector.
Tesco's dealings with suppliers appear to be at the centre of the latest problem to emerge at the UK's largest retailer. And it is an issue that has left many industry watchers left shaking their heads in bewilderment today (22 September).
General Mills' move for Annie's has further fuelled the belief US natural and organic food companies, including Hain Celestial and WhiteWave Foods, could become takeover targets for mainstream groups searching for growth. But the price General Mills has agreed to pay for Annie's also underlines such deals would likely be expensive.
Looking at Danone's share price yesterday, one is left with the impression there is an expectation of changes at the French food group now Frank Riboud is to step down as CEO. However, those expecting wholesale change at Danone should perhaps not be so hasty. The executive moves at the top of the yoghurt maker suggest Riboud will still be central to the company's overall strategy.
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