Opinion from global food and drink experts, Zenith Global
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69 acquisitions in December

January 8th, 2019 | Posted by Richard Hall in Richard Hall - (0 Comments)

2018 ended with 69 food and drink company transactions recorded on the bevblog.net mergers and acquisitions database in December.

Of these, two topped $1,000 million in value:

  • $3,800 million for Unilever to buy GlaxoSmithKline’s health food drinks portfolio
  • $1,000 million for US-based private equity firm Elliott to purchase 2.5% of Pernod Ricard.

Among the 69 total, 14 were in soft drinks, 10 in alcohol, 7 in dairy, 6 in ingredients and 5 in meat.

35 were inside individual countries and 34 international. The United States featured in 37 overall, the United Kingdom in 12, the Netherlands in 6, France in 5 and Canada in 4.

17 were funding rounds, 4 were plant-based and 2 were for online services. Emerging sectors represented included cannabidiol, insects and nootropics.

In 25 years’ time, when people look back on 2018, what will they remember it for ? I believe there are three key changes, which accelerated to such an extent that 2018 will come to be regarded as a defining year.

Plastic

The first is plastic. The entire world developed a consciousness not seen before about plastic. It was triggered in late 2017 by the television programme Blue Planet II, showing birds and fish choking on plastic.

There has been a flurry of activity, with multiple initiatives, but mostly disjointed. Many companies now have targets for 100% recyclability and have introduced a degree of recycled content. Some have gone further, aiming for 100% recycled content. Others are switching from single-use plastic cups and straws. Various governments are looking at legislation. But joined up thinking and action on collection and circular economy recycling is still a long way off across too much of the world.

Plant-based

The second is plant-based moving into the mainstream. Plant-based dairy alternatives have been growing for some time. 2018 was the year that plant-based meat alternatives came into the supermarket and fast food, because its texture and taste had finally become competitive. Flexitarianism is now commonplace and veganism is no longer the niche of extreme behaviour that some tried to dismiss.

Instant delivery

The third is the threat to the high street from online delivery. E-commerce has now been growing strongly for a number of years. But 2018 was the year that high street retailers could no longer cope in both the United Kingdom and United States. It’s true that this was more in non-food then food, but the message is clear. 2018 also saw more voice activated and same day delivery to the extent that it is bound to become more everyday.

Missing out

What didn’t happen in 2018 that might have ? Driverless vehicles and drone delivery are two that will. Blockchain is emerging fast, but bitcoin bit the dust. Cannabis seems high up there for the future. Personalised nutrition is increasingly on the way.

I wonder what 2019 will bring. I hope it brings all of you success and prosperity.

 

Public perceptions of packaging

December 18th, 2018 | Posted by Richard Hall in Richard Hall - (0 Comments)

How extraordinary. We may care more. But we may also misunderstand more.

A survey of 7,000 people across 7 European countries, commissioned by Pro Carton, came up with some remarkable findings.

The first is that people care a lot more about packaging than they did.

  • 68% said being environment friendly has become more important to them and their family over the past 5 years.
  • 74% said media coverage on packaging waste had influenced their purchasing habits.
  • 75% said the environmental impact of packaging affects their purchasing decisions.
  • 77% said they would pay more for packaging with less impact on the environment.
  • 90% want on-pack labelling about packaging’s environmental status.

The second is that substantial, but lower, numbers are more seriously interested in action that would affect them directly.

  • 58% said they would accept a tax to force the adoption of more environment friendly packaging.
  • 52% said they had switched brands or products because of packaging concerns, even though a much higher
  • 81% would prefer the same product in cardboard instead of plastic.

The most challenging, but not altogether surprising, findings were the strength of feeling in favour of cartons compared with all other packaging materials.

I’m sure the answers would have been different if the word ‘tin’ had been replaced by ‘aluminium/steel cans’. The plastic industry must clearly work hard to regain public support.

Asia dominates the latest forecasts on grocery e-commerce expansion worldwide from IGD, the Institute of Grocery Distribution.

China comes out on top, with expected sales of almost $200 billion, nearly 4 times more than today.

South Korea is anticipated to have the highest online market penetration at 14.2% of overall grocery sales. This is said to be “due to the rising number of smaller households, widespread high speed internet access and high consumer confidence in making online payments.”

Other research by IGD earlier in 2018 would have put India in 7th place with $5.0 billion of online grocery sales by 2022 and Indonesia in 8th place with $4.5 billion.

IGD will be speaking at Zenith Global’s Global Beverage Insights day in London on 16th May 2019.

I reported on Tetra Pak’s e-commerce forecasts in my blog on 18th October.

 

 

47 acquisitions in October

December 11th, 2018 | Posted by Richard Hall in Richard Hall - (0 Comments)

A total of 47 food and drink industry transactions were recorded on the bevblog.net mergers and acquisitions database in October.

4 of these amounted to more than $500 million, with 2 above $1,000 million.

  • $1,840 million for South Korea’s CJ Cheiljedang to buy 80% of Schwan’s frozen food in the United States
  • $1,230 million for France’s Lactalis to purchase the natural cheese business of Kraft Heinz in Canada
  • $880 million for China’s Legend private equity firm to take 94.47% of Australis Seafoods in Chile
  • $550 million for US-based Sazerac to acquire 19 spirits brands from Diageo.

Of the 47, 8 were in alcohol, 4 each in bakery, services and soft drinks, then 3 each in dairy, ingredients and packaging.

28 were within national borders, 15 of these in the United States and 5 in the United Kingdom. 19 were international. 23 countries were involved overall.

22 featured the United States, followed by the United Kingdom on 9, France on 6, with China and Germany on 3 each.

Cyprus now has the worst obesity amongst children in Europe, with Greece, Italy and Spain not far behind, according to new data from the World Health Organisation European Childhood Obesity Surveillance Initiative covering over 300,000 children aged 6 to 9.

 The figures are far higher than for the north west fringe of Europe.

How can this be, one is tempted to ask, when the Mediterranean diet of fruit, vegetables, pasta and olive oil was held out to be an example to all? Indeed, as recently as 2013, the Mediterranean diet was officially recognised by UNESCO as part of humanity’s intangible cultural heritage.

The unfortunate answer was given in uncharacteristically forthright terms by the WHO at last month’s European Congress on Obesity. “The Mediterranean diet for the children in these countries is gone. There is no Mediterranean diet any more. Those who are close to the Mediterranean diet are the Swedish kids. The Mediterranean diet is gone and we need to recover it.”

Two of the biggest issues in my working life around food and drink have been health and sustainability.

The key questions have always been – What are the facts ? And how best to change behaviour ?

But almost every aspect is disputed. Facts may change over time. Policy depends on feasibility.

Right or wrong, the United Kingdom is one of the best countries at taking new initiatives, which are then followed by other nations.

It did this on sugar. It targeted soft drinks, set high and mid-level sugar triggers and gave some time for industry to adjust. Various other countries have since copied this approach.

The same may now happen with plastic. The European Parliament has addressed some aspects of plastic: in seeking to ban certain single-use items by 2021; alongside reducing use of other items; and increasing collection and recycling to 90% by 2025. But this has yet to be formulated as legislation.

It is the UK Government again that is leading the way on taxation. The formula is similar to the one for sugar.

  • It requires a specific behaviour change by industry – the inclusion of 30% recycled content.
  • It allows time for implementation – 1st April 2022, one more year than for sugar.
  • It provides limited other details, preparing for extensive consultation.
  • It regards the measure as just one step on a longer journey.

I was critical of the sugar tax on soft drinks for failing to tackle the wider issue of obesity and obstructing the opportunity for more comprehensive action.

I expect other countries will also copy the 30% rPET target, but all packaging needs scrutiny and people need motivation beyond taxes.

These aren’t the contradiction they sound like, but they are a curious phenomenon.

France may be the most advanced market in the world for click and collect, with several thousand dedicated drive-in collection outlets.

Now French supermarket chains are introducing city centre walk-in collection outlets. The first was opened in 2016.

It seems they are generally quite small at under 200 square metres, offer a good range at attractive prices and receive deliveries from picking centres four times a day.

The latest to be opened, by Auchan in Lille, is said to expect 800 orders a week at an average of 40 euros.

Convenience comes ever closer.