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European Business News – Week ending April 8, 2011

 Breaking News
  • Younger British Consumers Turn Over a New Leaf on Tea New research from Mintel reveals that as many as 37% of British consumers aged 25-34 have drunk 5-6 different types of tea at home or in the workplace over the past month*, compared to just 3% of those aged 55+. Furthermore, Brits aged 25-34 are the most likely to drink every variety of tea tracked by [...]...
  • Irish Consumer Confidence Hits New High Consumer confidence in Ireland has hit its highest level since the recession and is now the fourth most confident country in Europe, according to the latest Nielsen Global Survey of Consumer Confidence and Spending Intentions. The Republic of Ireland’s Consumer Confidence Index score – which measures attitudes each quarter on topics including personal finances and job prospects [...]...
  • Fifth Acquisition For Frutarom in 2017 Frutarom Industries, one of the world’s 10 largest companies in the field of flavours and natural specialty fine ingredients, continues its momentum of acquisitions and the implementation of its rapid and profitable growth strategy by agreeing to purchase of 100% of the shares of the UK company Flavours and Essences (UK) Ltd (F&E) for approximately [...]...
  • Market-leading Food Contact Conference, Plastics & Paper in Contact with Food – 4-7 December, Berlin Over 200 experts from across the food contact industry will come together in Berlin, Germany from 4–7 December 2017 to attend Smithers Pira’s Plastics & Paper in Contact with Foodstuffs (P&P) –http://www.food-contact.com/plastics-paper. With the European Commission having recently published EU regulation 752/2017 amending EU Regulation 10/2011 on plastic materials and articles intended for food contact, all [...]...
  • Croxsons’ Stunning Black Bottle For 6 O’Clock Gin’s Limited Edition Debut Leading glass packaging company Croxsons has supplied Bristol based distiller, 6 O’Clock Gin, with a stunning black bottle for their first limited edition gin product – the Brunel Edition. Since Bramley & Gage’s partnership with Croxsons for the re-launch of their 6 O’Clock gin, the Brunel Edition is the first limited edition gin for 6 O’Clock [...]...
  • Carlsberg Group Remains on Course Carlsberg Group has announced organic and reported net revenue growth of 2% to DKr31.77 billion (€4.27 billion) for the first half of 2017 although group beer volumes fell organically by 3%, chiefly due to a decline in Russia. Operating profit was up 15% organically, with all three regions – Western Europe, Eastern Europe and Asia [...]...

European Business News – Week ending April 8, 2011

April 11
08:01 2011

The biggest news story of the week was Diamond Foods’ $2.35 billion (Eur1.6b) takeover of Pringles to triple in scale and become the second largest savoury snacks manufacturer in the world, behind PepsiCo. The move means that Diamond Foods has completed deals worth $3 billion since last year and has been transformed from being a US-based business into a global player with revenues of $2.4 billion. Pringles is available in more than 140 countries and has production operations in the US, Europe and Asia. Last year, Diamond Foods acquired the Kettle Foods businesses in both the US and the UK from private equity group Lion Capital for $615 million in cash.

Diamond Foods is also now one of the top five players within the Eur12 billion savoury snacks market in Western Europe, and the Pringles deal accelerates industry consolidation with the top ten manufacturers, headed by PepsiCo, controlling more than two-thirds of the market. Further concentration of ownership is expected as United Biscuits, the British and international biscuits and snacks manufacturer, is up for auction and is likely to be broken up when it is eventually sold off by private equity firms Blackstone Group and PAI Partners.

The Pringles acquisition also provides Diamond Foods with access to key growth markets around the world, including Asia, Latin America and Central Europe. International sales will account for approximately 49% of the enlarged group’s turnover.

Massive Growth in Private Label

The severity of the current economic recession is likely to have long-term consequences for food manufacturers. In the past, consumers have turned to private/own label products during times of austerity, only to return to branded products when the economic climate improved. However, recovery this time will be different.

Rabobank predicts that private/own label food products will double their global market share from a current level of 25% to 50% by 2025 because of greater consolidation by retailers, increased consumer acceptance of private label after recession and further expansion by the hard discount sector. A-brands will continue to be important for retailers in establishing price levels for different categories and in providing consumers with choice and familiarity. Smaller secondary brand (B-brand) producers will be squeezed from both sides and will have to strategically reposition to survive.

B-brands suppliers will either have to invest in quality and target the premium market, or specialise in private label, according to Rabobank. Consolidation among private label specialists is consequently inevitable as they strive to achieve the necessary economies of scale to compete effectively.

Chocolate and Scotch Whisky

The economic gloom is obviously driving some consumers to indulgence and comfort eating and drinking. According to Barry Callebaut, the global chocolate market grew by 3.6% in the last six months to the end of February. Scotch whisky export sales remained buoyant throughout 2010 with global shipments rising by 10% to reach £3.45 billion, reflecting continued premiumisation across the industry, as sales value increased despite a marginal decrease in volume. Eight of the top ten markets grew in value, with a strong performance in the US (+19%), which remained Scotch’s largest export market by value. The ‘BRIC’ markets continued to develop, with exports growing to Brazil (+12%), China (+24%), India (+46%) and Russia (+61%).

The Scotch whisky industry has been investing heavily for growth in recent years. Distillers, including the major players such as Diageo, John Dewar (Bacardi), Glenmorangie and Edrington, have spent in the region of £600 million during the past two years in extending production capacity – including distilling, bottling and warehousing.

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