Top Food and Beverage Companies for 2006: It's been a tough year

Energy, raw materials and employee benefits costs have weighed heavily on the food group, making for a lackluster 2005; things aren’t improving this year.

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ACQUISITIONS CONTINUE TO DECLINE

Mergers and acquisitions in the food processing industry declined in 2005 for the second year in a row to the lowest number since 2000, according to figures from the Food Institute, Elmwood Park, N.J.(see table below).

Food processors closed 94 deals, the most in the Food Institute’s broader “food industry,” which includes everything from agricultural cooperatives to retailers. But the number is a far cry from the 168 mergers announced in 2000, the busiest year in the institute’s annual report “Food Business Mergers & Acquisitions 2005.” Another 21 deals were announced but not completed.

In the first half of 2006, the food processing segment picked up the pace slightly, closing 49 deals with 13 more pending. The Food Institute has been tracking mergers and acquisitions for 25 years.

Within the food processing segment in 2005, the two busiest categories showed increases. Multi-product companies were the busiest with 33 deals, up from 20 in 2004. Brewers, distillers and wineries also showed an increase, to 13, the most this category has experienced in the six-year history of this current report. Bakers, previously a quiet category, also recorded an increase (to nine transactions).

The categories of confectioners, dairy, fruits & vegetables, meat and “other” all decreased by about half.

Some of the bigger food processing deals included:

    • Canada’s Molson Brewery and Adolph Coors Co. merged to form the world’s No. 5 brewer, with sales of about $6 billion.


    • Wm. Wrigley Jr. Co. purchased certain confectionery assets of Kraft Foods Global Inc. for $1.46 billion, giving it ownership of brands such as Altoids, Life Savers, Creme Savers and Sugus and various regional and local brands and additional production capabilities.


    • Chiquita Brands International acquired pioneer packaged salad maker Fresh Express from Performance Food Group, which was expected to increase Chiquita’s consolidated annual revenues by about $1 billion.


    • H.J. Heinz Co. completed its acquisition of the HP Foods Group from Groupe Danone S.A. for approximately $820 million in cash. Heinz got the Lea & Perrins brand plus other HP sauces and a license to market the Amoy Asian sauces brands in Europe.


    • PepsiCo paid $750 million for General Mills Inc.’s 40.5 percent stake in the Snack Ventures Europe joint venture, giving PepsiCo control over Europe’s largest snack food company, which already markets Doritos, Fritos and Ruffles. PepsiCo later also bought Stacy’s Pita Co.


  • Pilgrim’s Pride bought the last 15 million shares of its own common stock still held by ConAgra for $482.4 million.

The food processing number was in line with the aggregate numbers of the Food Institute’s broader food industry and most of the categories. Overall, 323 mergers and acquisitions closed in 2005, down 8 percent from the previous year and the fifth straight year of overall decline.

“[Overall] activity may have declined compared to previous years, but there were a number of significant transactions in several categories,” says Danielle Breuel, research and education director at the Food Institute.

The 166-page report can be purchased from the Food Institute web site (www.foodinstitute.com) or by calling 201-791-5570 ext. 16.

Top 100 - Mergers & Acquisitions in 2005

To access the table (a 2-page PDF) that lists our Top 100 companies and compares their 2005 and 2004 sales and income figures, click the Download Now button below.


Read about the Top 100. Access processor profiles ranked 1-25 here. Access processor profiles ranked 26-50 here. Access processor profiles 51-100 here.
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