US food and drinks manufacturers will increasingly look to M&A to grow their business, a study published by KPMG said today (26 July).

“Industry executives are telling us that they will step up merger and acquisition activity and that they have the cash to do so,” said Patrick Dolan, national line of business leader for consumer markets at KPMG.

“They will drive revenue, while dealing with pricing pressures, by focusing on retaining and adding new customers.”

Some 62% of executives surveyed said their businesses had “significant cash on hand” for acqusitions or expansion.

In the survey, 67% said it was likely their company would be involved in a merger or acquisition – as a buyer or seller – in the next two years.

Over half – 58% – said their companies would increase spending on capital projects in the next year. Half of those respondents predicted a hike of 6% or more in spending on acquistions, new products or services, facility expansion and IT.

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However, KPMG said the executives recognised there were hurdles to growth in the year ahead, with 54% pointing to “pricing pressures” as their “most significant growth barrier”. Some 40% cited volatile commodity prices.

The survey was conducted in June with 100 senior executives in the US food and drink sector.