Blog: Katy AskewFood sector consolidation a drop in the ocean

Katy Askew | 19 July 2013

We all know that the food sector is highly fragmented. It is a phrase thrown around all the time. And, as a publication that attempts to cover the major developments in this crowded industry, just-food writers can attest to this fact first hand.

But I was quite surprised by some research that crossed my desk this morning (19 July). According to Bernstein, the top 12 largest food and soft-drink companies account for just 18.3% of global sales.

Let me put this in context: Unilever accounts for a greater proportion of global home care sales (with an 18.9% share of the market) than all the major food companies combined. As the largest food company, Nestle holds a comparatively piddly 4.3% share, followed by PepsiCo with 2.9% of the market. The 12 biggest purveyors of household products account for over 60% of global sales and the 12 largest personal care and beauty companies account for more than 50% of total sales.

Compared to other FMCG sectors, why is the food industry so fragmented?

There are relatively low barriers to entry and historically a plethora of different firms have operated in the arena, meaning that while a degree of specialist skill is required these skills are comparatively accessible. The taste preferences of consumers is likely to play a role too. There is no need for global standardisation. In fact, it is a disadvantage, because tastes differ so widely from region-to-region or even person-to-person. There is also a really strong need for trust - and familiar local firms are often most trusted by consumers.

Are we likely to see consolidation step up? It is possible. We have, for example, seen a spate of M&A in the organic baby food sector as larger firms from Campbell Soup Co. to Danone have snapped up challenger brands. But frankly, this activity is but a drop in the ocean. Certainly, I doubt that we will see a player with a comparable market share to Unilever in household care emerge in the food sector any time soon.


BLOG

What does Gen Z want from brands? IRI presents its view

Industry watchers IRI has published the findings of two studies in the US they claim can give an insight into the shopping patterns of those aged 21 and under - Gen Z....

BLOG

The identity of the buyer of Tyson's Kettle business emerges

In February, we reported Tyson Foods had sold its Kettle business, one of a series of non-protein disposals at the US meat giant. But the company would not disclose the buyer. This week, the new owner...

BLOG

Leading French grocers eye buying "alliance" - and suppliers aren't happy

Buying partnerships between France's food retailers have been a feature of the country's grocery landscape for a number of years but this week came news of a potentially significant new tie-up - and s...

BLOG

just-food off for Easter

A point of admin: just-food is closed tomorrow (Good Friday) and on Easter Monday. It promises to be a wet public holiday here in the UK but we'll likely console ourselves in chocolate....



Forgot your password?