Consumer goods firm Proctor & Gamble could be about to shed its remaining food and drinks brands, say analysts.


Last week, the Cincinnati-based consumer goods company revealed its latest restructuring plans with the slashing of nearly 10,000 jobs, and reiterated its intention to focus more narrowly on core brands. What this adds up to, according to market analysts, is the realisation that P&G is simply too big to handle effectively, with too disparate a product range, and that food and beverage businesses may well go to the highest bidder.


P&G admitted during a conference call last week that it had strongly considered selling Pringles crisps and Sunny Delight juice. The popular products were saved however when a US$4bn joint venture was established with Coca-Cola to manage those brands and others.  Company CFO C. C. Daley commented: “We looked at all the options, including outright sale and divestiture. We chose the joint venture with Coke because we thought it would lead to much better growth rates and returns.”


The company insisted its sole motivation is increasing shareholder value. This aside however, “it’s [now] pretty apparent that food and beverage is not a focus,” argues analyst Bill Steele, from Banc of America Securities.


This is most likely because P&G’s core business areas, beauty care, health food, paper, fabric and home care and food and beverage, it is the latter two that produce the lowest returns on assets, explained Steele.


P&G is continuing to explore options with its remaining food and beverage brands, Folgers and Millstone coffee, Crisco oils and Jif peanut butter. Analysts argue that further joint ventures would be welcomed as an alternative to selling off the brands piecemeal, thereby avoiding lower prices and tax complications.


Food industry majors, Sara Lee Corp and ConAgra Foods, might be interested in the brands, but are unlikely to take the whole basket of goods.


Analysts argue that Sara Lee is likely to bid for Folgers, but it is unlikely to believe that the peanut butter or oils businesses will compliment its existing portfolio. In any case, bankers have revealed that P&G has not responded to the interest Sara Lee has so far expressed.


Similarly, ConAgra is ideal to purchase the Crisco oil and Jif peanut butter brands, but because the company’s existing rival brands command the larger market share, it could come up against antitrust issues.


By Clare Harman, just-food.com editorial team.