Industry consolidation was prevalent in 2014 as large manufacturers (Tyson merged with Hillshire), distributors (Sysco merged with US Foods) and retailers (Albertsons merged with Safeway) all looked to expedite growth through M&A. While megadeals like the aforementioned were not as common in Q1, there was plenty of activity in the sector. Many strategic players with strong balance sheets will take advantage of that fact coupled with excellent financing rates to keep accelerating top-line sales.
A shift in consumer tastes have resulted in recent plant closures as food manufacturers look to align production with demand. Many food companies in the US are shedding manufacturing operations amid weak demand for cookies and snacks. Post Holdings announced plans in March 2015 to close its PowerBar manufacturing facility in Boise, Idaho and shift production of the products to a third-party provider. Post’s decision reflects the difficult environment in the food and beverage industry, which has struggled as consumers’ tastes have shifted to healthy, fresh food, according to The Wall Street Journal. Post’s announcement comes a month after General Mills announced it will close a Pillsbury refrigerated baked goods plant in New Albany, Indiana, and little more than a year after Kellogg decided to shutter a cookie plant in Charlotte, North Carolina.
Sales of gluten-free products have grown by more than 30 percent annually in each of the last four years, reaching $973 million in 2014 — and that market could grow to $2 billion by 2019, according to a report from industry tracker Packaged Facts.
Posted by Terry Fick.