Food & Beverage Industry Snapshot: Milk does a market good
In the first half of 2010, the food and beverage industry performance mirrored that of the overall U.S. economy. Because the industry depends heavily on consumer behavior, recent activities have spurred an uptick in performance. Restaurants have managed to lure consumers out of their homes with discounts and special menu items, and the demand for healthy eating picked up steam. Congress also took action to reduce childhood obesity, and several states adopted a sin tax on sweet drinks in an effort to limit consumption and promote healthier living.
Compared with the first half of 2009, this year has seen an increase in announced M&A transactions (136 vs. 110), and further increases in activity are expected as the credit markets continue to loosen. Despite the overall economic improvements, however, many companies have been forced into bankruptcy or even liquidation. At face value, this appears undesirable, but the move often positions companies to emerge stronger than before.
The dairy sector is showing significant signs of improvement over last year. While low prices hurt farmers and caused producers to lose substantial equity, the worst appears to be over.
The Corporate Finance practice of Grant Thornton LLP monitors the key factors affecting the food and beverage industry and focuses on the trends in specific sectors. Their experience with M&A transactions spans several hundred food and beverage industry clients, ranging from global conglomerates to middle-market companies in all sectors of the industry.
