Insight: food and beverage sector trends for 2012

Thursday, November 24, 2011 | Posted by: Grant Thornton
Categories: Thought Leadership | Tags: research, survey, report, growth, M&A, insight, food, sustainability, Trefor Griffith, beverage, drink, regulation, brands, commodity prices, consumer, F&B

Our global food and beverage survey is fresh off the shelves and available for download. Read all about the key issues and opportunities facing the sector, as well as the global trends and how they are affecting individual companies and countries in unique ways…

Download the report
A free copy of Grant Thornton International’s 20-page sector report is available here: Managing Through Uncertainty: Food and beverage industry in transition. It examines global data on the industry — financials, trends, and constraints — and offers perspectives on these issues from Grant Thornton specialists around the world.

Main issues for the F&B sector

1. Productivity improvement and operating-cost reductions: Rising commodity costs – coupled with customer resistance to price increases – make productivity improvements and cost control vital to success.
2. Mergers, acquisitions and divestitures: Food and beverage (F&B) companies are once again looking to grow through acquisition.
3. Regulatory compliance: F&B companies face an increasing complex set of regulations around the world, along with emerging sustainability standards.
4. Innovation and quality: Consumers want innovation, improved quality, and lower prices – a trio of demands that small, midmarket and even larger F&B companies often find difficult to address.

For more information and analysis on all of these points, read the full food and beverage sector report.

The F&B forecast
Trefor Griffith, Head of Food and Beverage for Grant Thornton UK, said:

“Most producers in this sector will be battling to protect margins. Focusing on cost savings and productivity gains must be a priority. But producers can only absorb so much in the way of increased costs. The levy looks set to be breached. Food and beverage producers are now looking to push higher commodity prices up the chain where ultimately the cost will be borne by the consumer.

“Many food and beverage producers are also looking at mergers and acquisitions in a sector that is ripe for consolidation. Our research found that one in five businesses are looking at M&A opportunities, something that is also borne out in conversations we are having with clients. A period of consolidation is inevitable. It will help deliver scale for greater efficiencies, and give businesses additional clout and flexibility in price negotiations with big retailers.”

On the plus side, optimism within the sector is increasing: emerging consumer trends offer new revenue and profit opportunities, and a large balance of F&B companies anticipate revenue growth and improved profits over the next year.

With increasing consumer demand from global emerging markets, there is also an export opportunity for UK food and drinks businesses – although they will face major competition from other developed countries also wishing to export more.

How will your organisation respond to these new challenges and opportunities?

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