Opinion

Last updated: 16th Aug 2010

In 2009 we carried out a food and drink sector review which highlighted the importance of M&A in the sector.

In the Netherlands we saw how the importance of the private label products to the local Dutch market has influenced the level of acquisition activity. In order to streamline and reduce costs from their supply chain, many supermarkets are now asking their approved suppliers to expand the range and products they supply. This is especially true in time of economic uncertainty.

This pressure has acted as a trigger for bolt-on M&A transactions to expand the food and drink manufacturers' product portfolios. We continue to see a lot of private label sector activity in the drinks and meat markets and also dairy. There has been consolidation here because manufacturers recognise the need to have greater bargaining power with the retailers. There is much less evidence of consolidation amongst brands as they already have a specific position in the markets targeting the end-consumer.

Our expectation is that whilst many manufacturers anticipate growth in the next couple of years, a lot of the pressures from the supermarkets will remain as they continue to expand their private label offerings which will in turn result in further consolidation.

Jan Willem Jonkman
Managing Partner
BlueMind Corporate Finance