Survey indicates further consolidation in the food industry

 
June 25, 2014

In light of recent intentions by Tyson to acquire Hillshire Brands, a new survey conducted by just-food.com indicates that half of international food industry executives expect even more M&A activity this year.

According to a release from just-food.com, the Tyson/Hillshire story “highlights the appetite of food companies to use M&A as a means to grow.”

In just-food's annual Confidence Survey of the global food sector, 50 percent said they expected more M&A opportunities for their business in 2014 – up from the 36 percent who saw more chance for acquisitions in 2013.

"In markets where volume sales have been and still under pressure, and with interest rates remaining low, it is to be expected boardrooms will increasingly run the rule over potential acquisitions," Managing Editor Dean Best said in a news release. "Buying other businesses will be looked at as a way to boost the top line. However, the food industry is fragmented compared to other consumer products sectors and the consolidation in the industry from deal making could also create savings to provide value for shareholders."

Best adds that the battle for Hillshire specifically indicates companies offering protein-based products could become attractive takeover targets.

"With sales stagnant and consumer habits fast evolving, food manufacturers are frantically looking for ways to grow. Consumer demand for protein is rising sharply and could put meat and dairy companies in the frame as companies study acquisition targets," he said.


Topics: Equipment & Supplies , Trends / Statistics


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