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Strategy Briefing

Packaged Food: Quarterly Statement Q1 2017

26 pages, Mar 2017

US$1,325

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The risk of recession in the US, albeit low, is heightened by political uncertainty since the 2016 presidential election, with the packaged food sales forecasts in North America and Mexico downgraded. A no-deal Brexit is a key risk for packaged food in the UK and Europe, while in China, a hard landing scenario remains possible, despite the stronger economic forecast for 2017. Mergers and acquisitions may help companies to sustain growth in an uncertain environment.

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Overview

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Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.

Risk of US recession due to uncertain trade policies to affect NAFTA countries

Despite an upwards revision to the 2017 GDP forecast in the US, packaged food sales are seeing a downgrade, linked to the greater uncertainty brought about by the outcome of the 2016 presidential election and its potential implications for the US economy, which could see a severe recession scenario, albeit a low probability one. This also poses risks for packaged food sales in NAFTA countries, with Mexico being the most vulnerable.

No-deal Brexit risk has heightened uncertainty for the UK, and may also undermine EU growth

In Europe, the main factor driving uncertainty is linked to the potential impact of Brexit, with a no-deal Brexit being a significant risk to packaged food, with major repercussions in the UK, but also across the EU, though to a lesser extent. Categories driven by impulse consumption and premiumisation are likely to be the most impacted, with consumers expected to switch to cheaper variants.

Hard landing risk in China still significant, and could see the packaged food growth engine come to a halt

While China’s economic growth forecast has been slightly upgraded for 2017, the risk of a China hard landing remains a significant threat to packaged food sales growth, with baby food and dairy likely to cease being major growth engines under this scenario, while less mature categories, such as breakfast cereals and ready meals, could be strongly hit by a switch towards substitute products.

Kraft Heinz’s merger bid for Unilever highlights the appetite for large deals in packaged food

In a context of low growth and high uncertainty, the appetite for mergers and acquisitions to sustain growth may pick up among packaged food giants in 2017. As the US stock exchanges have seen robust performances, US players are likely to be most active, as Kraft Heinz’s merger bid for Unilever suggests. With Kraft Heinz likely to seek other mega-deals in 2017, other key packaged food players will remain in the spotlight as the next potential targets.

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Introduction

Scope

Executive summary

GDP forecasts: Revisions over the last quarter

Key findings

Forecast Update

US downturn scenario: Uncertainty to strongly affect NAFTA

No-deal Brexit: U ncertainty hits key categories’ prospects in the EU

China downgrade risk: Premium-positioned categories the hardest hit

Macro-economic scenarios show the need to prepare for uncertainty

Industry Developments: Cast Study

Case study: What next for Kraft Heinz after the Unilever bid?

Main strategic goals behind M&A deals subservient to cost-cutting

Financial results encourage the company to seek M&A deals in 2017

Not all key packaged food rivals among most likely takeover targets

K ey US-based potential takeover targets also mired by low growth

Unilever bid showed complementarity. Next move driven by cost cuts?

Campbell: Synergy potential in soup, but geographic reach an issue

General Mills: Some complementarity and cost-cutting opportunities

Kellogg: Geographic reach the main rationale for a bid

Uncertainty validates bids based less on growth than on cost-cutting

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Megatrends

Strategy Briefing

Packaged Food: Quarterly Statement Q1 2017

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Risk of US recession due to uncertain trade policies to affect NAFTA countries

No-deal Brexit risk has heightened uncertainty for the UK, and may also undermine EU growth

Hard landing risk in China still significant, and could see the packaged food growth engine come to a halt

Kraft Heinz’s merger bid for Unilever highlights the appetite for large deals in packaged food

Want to find out more about this report?

Table of Contents

Introduction

Scope

Executive summary

GDP forecasts: Revisions over the last quarter

Key findings

Forecast Update

US downturn scenario: Uncertainty to strongly affect NAFTA

No-deal Brexit: U ncertainty hits key categories’ prospects in the EU

China downgrade risk: Premium-positioned categories the hardest hit

Macro-economic scenarios show the need to prepare for uncertainty

Industry Developments: Cast Study

Case study: What next for Kraft Heinz after the Unilever bid?

Main strategic goals behind M&A deals subservient to cost-cutting

Financial results encourage the company to seek M&A deals in 2017

Not all key packaged food rivals among most likely takeover targets

K ey US-based potential takeover targets also mired by low growth

Unilever bid showed complementarity. Next move driven by cost cuts?

Campbell: Synergy potential in soup, but geographic reach an issue

General Mills: Some complementarity and cost-cutting opportunities

Kellogg: Geographic reach the main rationale for a bid

Uncertainty validates bids based less on growth than on cost-cutting

About our Industry Forecast Models

About Euromonitor International’s Industry Forecast Model

Soft drivers and the Industry Forecast Model

Key applications for Industry Forecast Models

Why buy this report?

Want to find out more about this report?

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