Blog: Chris Brook-CarterWe'd like to wish you a great 2011, but fear it may not be that simple

Chris Brook-Carter | 5 January 2011

Welcome back from a long Christmas and New Year break. As always at this time of year, the media is awash with predictions about the 12 months ahead. Who are we to buck against this time-honoured trend. So each of the just-food team has gazed into our proverbial office crystal doughnut and given his or her top tip of the year. Maybe it's something to do with the holiday hangover, but it's looking a tough year ahead...

  • Little in the way of economic recovery: It would be nice to report on the potential for growth, but sorry, we just don't see it yet. Dangerously high deficits and the fiscal stimulus pedal to the floor, but still no signs that industrial output is recovering. The threat of a double-dip recession has receded but it's far from gone.
  • PE to take back seat to industry buyers: Despite a continuing lack of credit, some momentum will return to the M&A wheel. Rather than being driven by private equity, however, we will see a return to the old-fashioned trade deal, as business logic, rather than short term financial gain, shapes strategies
  • Continued globalisation of retail: The internationalisation of food retail continued in 2010, albeit at a much slower level than in previous years. With financing easier to come by this year, and with deal valuations improving, there is likely to be more activity as buyers and sellers find conditions more favourable. Retailers, particularly in Europe, face mature markets at home and overseas expansion is certain to be a key way to expand.
  • US retail scene will consolidate: A&P going to the wall, speculation of possible private-equity interest in Supervalu Inc and the failed attempt to buy Casey's last year could be seen as a precursor to events this year. There remains uncertainty about how the US grocery sector will fare during 2011, amid still-high unemployment and weak consumer confidence, but what is becoming increasingly clear is that the landscape is overly fragmented.
  • Fears will grow that the East is overheating: A recession, which we may or may not be coming out of, began to be seen as purely a Western phenomenon by the end of the year. Growth in the economies of the East remained stubbornly strong. International businesses, quite rightly, diverted investment that way and results from the emerging economies underpinned many of 2010's success stories. But, fears remain that all is not well. Vietnam, pundits believe, has problems with its banking system, which may have a widespread impact in the region. Worse still, China and India are over-heating, with a serious potential for stagflation. The food industry will play a pivotal part in any crisis, as rising prices bring pressure on governments to cool growth.



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