FDBusiness.com

M&A Deals Amongst the World’s Largest Consumer Goods Businesses Reached a 15-year High in 2017

 Breaking News
  • Glanbia Cheese Joint Venture to Build New €130 Million Mozzarella Cheese Facility Glanbia Cheese, the joint venture business between Glanbia plc and Leprino Foods, plans to build a new, world-class mozzarella cheese manufacturing facility in Portlaoise, County Laois, Ireland. A site for the new facility has been identified at the recently established Togher National Industrial Estate in Portlaoise. A total of €130 million will be invested in [...]...
  • PepsiCo Reveals the 10 Finalists Joining its 2018 Nutrition Greenhouse Programme PepsiCo has announced the 10 entrepreneurs that will form the second class of its health and wellness incubator in Europe. First launched in 2017 to support the next generation of food and beverage entrepreneurs, the PepsiCo Nutrition Greenhouse programme offers each of the 10 participating companies a €20,000 grant, and access to PepsiCo mentors and experts to take [...]...
  • PureCircle Increases Capacity to Supply Reb M PureCircle, the world’s leading producer and innovator of stevia sweeteners, has announced that its recent advances in expanding capacity now enable it to supply significantly more Reb M to global beverage and food companies. Using beverage sweetening as an equivalized example, PureCircle can now supply enough Reb M to sweeten about 500 million cases of zero-calorie [...]...
  • Introducing the Propack Synchronized Staging Transfer Model PSST/120 Propack has announced a new, economical, safe product delivery system that uses stepper servo technology to receive randomly presented products from baggers, pouchers and flow wrappers to synchronise product delivery to high-speed cartoning machines. With a maximum packing rate of 120 packs per minute (PPM) to 80 twin PPM (depending on product size), the PSST/120 [...]...
  • Bel to Produce Mini Babybel at its First Canadian Factory Bel Group, a world leader in branded cheese and a major player in the healthy snack market, plans to build its first Canadian plant in Sorel-Tracy, Quebec. The facility, which is scheduled to begin commercial production in early 2020, will be fully dedicated to producing Mini Babybel® cheese. These dairy snacks encased in small and [...]...

M&A Deals Amongst the World’s Largest Consumer Goods Businesses Reached a 15-year High in 2017

M&A Deals Amongst the World’s Largest Consumer Goods Businesses Reached a 15-year High in 2017
July 12
10:10 2018

The number of mergers and acquisition deals among the top 50 consumer goods giants reached a 15-year high in 2017 – a 45% increase from the previous year. This is according to OC&C Strategy Consultants’ annual Global 50 report which, in collaboration with the Grocer, examines the financial performance of the world’s largest consumer goods companies.

The rise in M&A comes as big FMCG companies respond to the challenges they face in driving growth, as well as pressure from activist investors to increase margins. Some of the biggest deals included British American Tobacco’s acquisition of Reynolds American, contributing to US$61 billion in value, and Reckitt Benckiser Group’s US$18 billion purchase of infant formula maker Mead Johnson and Company.

As a result of these deals, there has been a dramatic recovery in revenue growth across the sector, from 0.5% in 2016 – 5.7% in 2017 – reaching the highest level since 2011.

Will Hayllar, Partner at OC&C Strategy Consultants.

Will Hayllar, Partner and Head of Consumer Goods at OC&C Strategy Consultants, says: “Whilst the underlying challenges the Global 50 face to restore organic growth and satisfy activist investors seeking margin improvement have not gone away, this years’ report shows that the Global 50 are actively addressing those challenges and using M&A as a key tool to do so.”

Whilst revenue growth has drastically improved, the Global 50 are still experiencing a slower than industry average organic growth rate, highlighting the need for M&A to adapt their portfolios and access growth.

Consumer demand for sustainable packaging

There is also a rising tide of both consumers and industry stakeholders driving the agenda of packaging sustainability. During 2017, Google saw a 23% increase in global searches for sustainable packaging. Interest in the UK has grown over the past year, partially triggered by Blue Planet II.

Examples of the Global 50 responding to these pressures include, Nestlé joining forces with Danone and chemicals start-up Origin Materials to create a 100% bio-based PET plastic bottle. Tesco has also made the commitment to ban all non-recyclable plastic by 2019, whilst Iceland has also set itself the target to eliminate plastic packaging from its own label products by 2023.

More importantly, some of the Global 50 are exploiting this trend to seek new growth opportunities with increasingly environmentally minded millennial and Generation Z consumers, for example, PepsiCo’s launch of Drinkfinity.

An investment in innovation, acquisitions and venture funding

Beyond the typical M&A routes, the Global 50 have increasingly been investing in innovation, both via acquisitions and venture funding, in response to changing consumer behaviour and the potential of new digital technologies. This is illustrated by:

  • Investment in plant-based meat alternatives: Beyond Meat and Sweet Earth have both produced the technology required to create products that look, smell and taste like meat equivalents. For meat producer Tyson Foods, which invested in Beyond Meat in 2017, this looks like a smart hedge in a world of ever more environmentally conscious consumers.
  • Greater focus on D2C businesses: Both Unilever and Nestle have been investing in smaller meal subscription services such as Sun Basket, Freshly and Gousto. Whilst these companies may have product USPs, a large part of the appeal is the convenience these brands can afford consumers owing to their tech platforms. For brand owners they provide valuable rapid data on consumers’ changing meal preferences.

Will Hayllar continues: “The investment in emergent businesses that are well positioned to address the changing needs of consumers is a key part of major FMCG players hunt for growth. We’ve seen that this hunt doesn’t stop with new brands, as investment is also going into partnerships with digital technology businesses that can help equip brand owners with new tools to drive growth. All of this highlights the importance of addressing one of the central questions facing FMCG management teams today, how to nurture and grow small propositions to scale without losing the distinctiveness that made them appealing in the first place.”

OC&C and The Grocer’s Global 50 Top 10 2017

  1. Nestle AG
  2. Procter & Gamble
  3. PepsiCo
  4. Unilever
  5. AB InBev
  6. JBS
  7. Tyson foods
  8. Coca-Cola company
  9. L’Oreal
  10. Philip Morris International

About Author

mike

mike

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • September 5, 2018Int'l Food Products and Processing Technologies Exhibition (WorldFood Istanbul)
  • September 15, 2018iba
  • September 25, 2018PPMA Show 2018
  • September 27, 2018Int'l Fruit Show (eurofruit)
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber





Subscribe Here



Advertisements