M&A activity for food industry drops

"As the economy took a dip in 2001, so did merger and acquisition activity in the food industry,''​ commented Catherine Pfister, market analyst at the US Food Institute.

Preliminary figures from a recent report by the Food Institute​ tracked 516 mergers and acquisitions in 2001, 125 fewer - or 20 per cent less - than were documented the previous year and the lowest level tracked since 1993. Segments with the sharpest decline include: restaurant and foodservice (down 30 to 61); packaging and equipment suppliers (down 24 to 28); and food processing firms (down 26 to 146).

Among the year's most notable marriages, according to Ms. Pfister, were Suiza Foods with Dean Foods, giving it 30 per cent of the US fluid milk market and Tyson Foods, the world's largest poultry producer, acquiring beef and pork processor IBP. The Food Institute report highlights the fact that Smithfield Foods, a top US pork producer, remained on the prowl for acquisitions throughout 2001, gobbling up an impressive number of companies to include Pinnacle Foods, Moyer Packing, Gorges/Quick-to-Fix Foods, Packerland Holdings, Stadler Country Hams and RMH Foods.

Kraft Foods, which was in the news last year with its highly anticipated IPO in June, remained busy shedding ``non-essential''​ businesses, including its Mexican pasta unit, pasta, biscuit and dairy businesses in Brazil, the Farley and Sathers confectionery businesses and Knox nutritional supplements in the US, while stocking up its cupboard with the It's Pasta Anytime! brand, a Finnish snack company and a coffee roaster and marketer in Morocco.

"Supermarket industry watchers take note: after two years of decline, merger and acquisition activity was on the rise, totalling 27 transactions, three more than in 2000, although the scope of the deals was for the most part smaller than in previous years,'' said Ms. Pfister.​