By: Dean Best
Dean Best's views on the industry's hot issues.
Unilever announced the fruits of its business review - convened after the company brushed off interest from Kraft Heinz - yesterday (6 April). The Knorr and Magnum maker set out a measured plan, which included the wise decision to leave the spreads business. But could bolder action be on the horizon in the longer term? Dean Best reports.
The UK has triggered Article 50 of the European Union’s Lisbon Treaty, so formally firing the starting gun on its departure from the 28-member bloc. Brexit is the most important political and economic event in the UK for a generation and has divided the country. A majority of the UK’s food sector wanted to stay in the EU and have significant concerns about the post-Brexit future. However, increasingly, businesses are acquiring a pragmatic view about the future – with some real anxieties remaining but a recognition opportunities could be seized – a stance heard last week at the IFE trade show in London. Dean Best reports.
This week's profit warning from Premier Foods plc dismayed the market with analysts expressing concern about the UK group's ability to pass on Brexit-linked cost increases, the performance of its brands and its promotional strategy.
Danone surprised the market on Monday (19 December) with a warning on its full-year sales. In more positive news, the French giant also said it expects its comparable operating margins to "be above target" but analysts were concerned about the early results of the relaunch of Activia, with the company citing the brand as a factor in its lower forecast for organic sales growth in 2016.
The speculation linking Kraft Heinz to a possible bid for Mondelez International is casting just-food's mind back seven years and giving it a wry smile at the thought of a company reunited.
Hain Celestial has grown rapidly to become one of the largest companies in perhaps the most attractive segments of the US food sector. However, there appears to have been a recognition that broadening the experience of the natural and organic group's senior management team is what the company needs.
There will be more requests on retailers to move on price. Not every supplier will be successful. And for those that are not, it may serve as a push to, ultimately, look for scale or for a buyer. Another round of consolidation in the sector is likely.
Mars has moved to take full control of Wrigley, buying the minority stake held in the chewing gum maker by Warren Buffett. The deal could create a stronger competitor, particularly in the US, but there are some more strategic questions for Mars to answer, while the transaction can only add to Buffett's firepower should he wish to make more acquisitions in the food industry, writes Dean Best.
There is hope the embattled UK turkey processor can be revitalised under the stewardship of Ranjit Singh Boparan, the UK businessman with extensive interests in poultry. However, there are questions about what will happen to the pensions of Bernard Matthews' staff, while the company's commercial performance is in need of improvement.
Shares in Hain Celestial nose-dived yesterday (16 August) as Wall Street responded to a surprise announcement on Monday late afternoon US time from the Earth's Best baby food maker - and it was an announcement that capped an unsettling year for the business.
Kellogg has this week made its first acquisition in the US for over four years, snapping up fledgling snack bar maker Pure Organic. The deal is similar to those made by a number of Kellogg's US packaged food peers in recent months as some of the big names in the industry try to adapt to changing consumer trends in the country. Dean Best reflects on the move.
Just a week after dropping its interest in Premier Foods, McCormick & Co. announced the acquisition of Australian chilled herbs firm Botanical Food Co. When the US herbs and spices giant's interest in Premier emerged, McCormick said it had a "pipeline" of targets and industry watchers expect the company to continue to look to M&A for growth.
Irwin Simon, the founder, president and CEO of Hain Celestial, often comes across as one of the more forthright chief executives in the US food industry, with a firm belief in his company and its prospects. With Hain Celestial's domestic business facing challenges and investor scrutiny intensifying, Simon this week set out how the company will improve its performance in the US and why he believes the group can thrive amid increasing competition - but there were signs he acknowledges the need to adapt to meet the challenge.
A striking transaction has been announced in the private-equity world, with US buy-out house Catterton to join forces with the investment arm of luxury goods group LVMH - and right along the consumer-facing parts of the food sector companies will be watching closely.
Just three years after PepsiCo and Muller launched their bid to capture part of the US yoghurt market, the companies have thrown in the towel. Dean Best believes the companies did not create distinct enough products to succeed in a competitive category.
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