Opinion

Last updated: 19th May 2010

With the economic downturn likely to continue through a big part of 2009, home cooking, casual and simple meals and recession-proof dining are some of buzzwords in this year’s culinary world. The Daily Telegraph is printing recipe ideas to help its readers make the most of their leftovers. Traditional recipes and ‘necessary luxuries’ like chocolate, wines and baking are expected to make people feel a bit safer in this turbulent and stormy period.
These ideas are also being echoed at boardroom level and in the latest M&A deals. Asda CEO Andy Bond has reported a 40 per cent increase in sales of cooking ingredients, alongside a similar drop in the sale of certain ready meals. Cadburys first quarter results show chocolate up seven percent due to their standard dairy milk brand rather than the premium niche Green and Blacks. And in a period where private equity buyouts are at their lowest in the first quarter of 2009 for thirteen years, a £24m buyout of a sauces business, TSC, takes up most of the second page of Companies and Markets in the FT.
So what does this mean for consumers, owners of businesses and investors? Will consumers continue to spend on traditional foods and spend time in the kitchen rather than buying their usual convenience food? Will the next flurry of food deals involve a ‘Good Life’ styled Tom and Barbara management team? Will the financing community resemble their neighbours the middle-class Jerry and Margot, who cannot bear the realities of this return to prudence and self-sufficiency? The reality is that food businesses can be a resilient sector in the current recession. A return to a ‘Good Life’ self-sufficiency may be an extreme but the growth in food ingredients and basic food pleasures is a trend that is probably here for a little while longer.

Simon Peacock
Principal
Catalyst Corporate Finance