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.


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