Food industry execs intend to increase M&A activity, survey finds
The poll of industry executives from audit, tax and advisory firm KPMG found that of the 100 senior US food and beverage industry executives surveyed, 67 percent said it was likely their company would be involved in M&A activity in the next two years, whether as a buyer or a seller. According to figures from corporate finance experts at Deloitte, M&A activity rebounded in 2010, with 786 deals in the US consumer products sector, compared to 582 in 2009, and KPMG says the upswing is set to continue.
Patrick Dolan, KPMG LLP national line of business leader, consumer markets and US sector leader, food, drink and consumer goods, said: "Industry executives are telling us that they will step up merger and acquisition activity and that they have the cash to do so. They will drive revenue, while dealing with pricing pressures, by focusing on retaining and adding new customers."
In addition, 62 percent of executives surveyed said their companies had “significant cash on hand” for strategic acquisitions and expanding into new markets.
In terms of challenges to growth, KPMG found that most executives (54 percent) said pricing pressures were the greatest barrier to growth, with 40 percent citing volatile commodity and input prices
Dolan said: "Consumer leaders are facing continued pressure to improve working capital and optimize supply chains. But while they focus on improving operational processes and related technology and drive further cost reduction initiatives, organic growth will be the greatest focus for management in the next year."
The KPMG food and beverage industry survey was conducted in June 2011, and includes responses from some of the most senior executives in the industry, 25 percent of whom represent US companies with annual revenues of more than $10bn, 33 percent of $1bnto $10bn, and 42 percent with annual revenues of $100m to $1bn.
According to Deloitte figures, the top 10 publicly quoted food and drink companies in the US are sitting on $30.1bn in cash.
