Accelerating Growth Through Splitting Up Operations

January 2013

Most global packaged food players have been very active in aligning their businesses with key trends, which, in addition to acquisitions and active portfolio development, included some significant corporate restructuring. A number of multinational food and beverages players chose the tool of corporate restructuring in order to achieve their growth and/or profitability objectives. As the newly created entities start trading, advantages and challenges need to be evaluated.

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More challenging global market environment

The operating environment in the global packaged food market is being negatively impacted by a number of factors, such as weak economic growth, unstable commodity prices and fierce competition.

Key growth driving trends in packaged food

Together with the long-term trend of wellness and nutrition, economic and social changes are bringing new driving trends to which companies need to respond, such as snacking, convenience, luxury and value for money.

Strategic responses to align operations with core trends

Companies have been very active at aligning their businesses to key trends through acquisitions and active portfolio development, as well as significant corporate restructuring.

Splitting up operations into independently listed entities

A number of global scale food and beverages players have split operations in order to achieve their growth or profitability objectives.

Advantages of leaner operations are significant

The splitting up of operations has given companies the flexibility to address distinct growth priorities, as well as to concentrate resources on business development in a more targeted manner.

Strong competition the main challenge for the new entities

However, the breaking up of conglomerate-style operations can reduce economies of scale, which could become a significant competitive disadvantage in the intensely competitive market environment.

Impact on the global competitive landscape

As a result of the number of restructurings there are a number of strongly streamlined, single market/category focused global assets in the market.

Potential new wave of M&A in packaged food

Some of these newly created entities could become very attractive acquisition targets for well-performing emerging markets players aiming to step up to the global platform in the package food.

What this report includes

  • Up-to-the minute analysis of the latest trends in the industry
  • New product development, forecasts and other themes
  • Unique graphics and illustrated case studies
  • Most recent brand and company news
  • New insight into the size and shape of the market

Why buy this report

  • Clear, concise powerpoint format makes it easy to digest
  • Leading industry opinion keeps you abreast of latest news and trends
  • Forward-looking outlook on a category, market or issue affecting the industry
  • Latest five year forecasts assess how the market is predicted to develop
  • Understand the competitive environment, the leading players and brands

Introduction

Scope
Key findings

Key Trends in Challenging Market Environment

Fluctuating growth in global packaged food market
Key challenges to growth in the recessionary environment
Key growth driving trends, categories and markets
Macroeconomic factors impacting the health and snacking trends
Positive outlook in snack products categories
Dynamic growth in emerging markets, US holds good potential too

New Wave of Strategic Responses

Intensifying competitive activities in global packaged food
Acquisitions: Game changers in global performance
Higher exposure to emerging markets remains a key objective
Portfolio repositioning in tune with key trends: Healthy snacking
Building scale in categories driven by snacking and wellness
Corporate restructuring becomes a major growth driving tool

Polarised Kraft Portfolio Starts Trading Under Two New Entities

Case study: Slicing off the North American grocery business
Kraft Foods’ portfolio split into two
Lower growth markets/categories spun off as Kraft Foods Group
Mondelez has the more dynamically growing labels
Initial indicators for financial performance
Advantages of the split operations for both entities
Key challenges: Competition and core market maturity
Strategies and opportunities to go forward

Dean Foods Spins Off Whitewave Foods Co

Case study: Dean Foods reorganises its business for profitability
Dean Foods completes its streamlining procedure
Tough operating environment leads to a net loss in 2011
2012 Q3 financial results show the differences in profitability
Sale of Morningstar further narrows Dean Foods’ business focus
Dean Foods’ slower growth branded and unbranded operations
Growth priorities for the more dynamic WhiteWave Co
Dean Foods’ portfolio highly commodified and fragmented
Key objectives in Dean Foods’ streamlined business

Sarah Lee’s Food Arm Restructured Under Hillshire Brands Co

Case study: Sara Lee’s new structure to reverse financial decline
Sara Lee portfolio in new corporate structure
Frequent divestments had the strongest impact on performance
Hillshire Brands reports positive momentum in Q1 2013
Hillshire Brands’ outlined growth strategy
Challenging market environment for the new company
Growth opportunities still exist in the streamlined Hillshire portfolio

Impact on Competitive Landscape

Intense competition in packaged food over 2007-2012
Potential future global scale acquisition targets
Acquisition targets already up for sale

Recommendations

Competing in the fast changing market environment
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