Trendwatch: analysing the food sector

M&A activity in the UK’s food sector has been brisk over the past year, particularly in the mid-market, as companies scrambled to cater for new and changing consumer tastes. Vicky Meek analyses the industry, including a section on the effects of Brexit

The UK food sector is among the most dynamic in the country’s economy. Together, food and drink comprise the largest manufacturing industry in the UK – bigger than automotive and aerospace combined – contributing more than £31.1bn to the economy according to the Food and Drink Federation.

Yet, despite its scale the industry appears to be bucking the global trend across other sectors of ever-larger M&A deals. In 2019 to the end of November, there were 160 deals involving UK food businesses, valued at a total of $5bn. It’s a 37% decrease in value over the same period compared to 2018, but there has been a 19% increase in volume, according to Refinitiv data.

The market in 2019 also contrasts sharply with activity a few years ago when food megadeals were all the rage. In the first 11 months of 2015, there were 110 deals worth a total of $163.5bn. Transactions included China’s Bright Food’s £1.2bn acquisition of Weetabix and Nomad’s £1.9bn purchase of frozen food giant Iglo.

The figures for 2019 clearly show a move towards smaller, more mid-market deals among food groups as the industry attempted to capture shifting consumer tastes. These included an increased focus on healthier, more convenient foods, snacking and – the current megatrend – meatless products.

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