Food producer divisions widen

SMALL food producers are being prevented from expanding by a crosswind of the global downturn, commodity-cost volatility and lower consumer demand, according to an expert Rabobank analyst.

Michael Landymore, global sector strategist at Rabobank’s Food Research and Advisory Group, and a leading expert on European food trends, said the mix of these factors is creating a two-tier food system in which major manufacturers get bigger while small-to-medium producers are left with little room to expand.

Mr Landymore said: “Global branded companies are getting stronger, outclassing much of the local brand and private label trade in terms of pricing power and economic returns. The gap [between major and small-to-medium manufacturers] shows no sign of closing anytime soon as retailers in many sectors can continue to exploit overcapacity amongst the ‘second tier’ to drive down pricing.

Set to speak at tomorrow’s Checkout Conference, in association with Rabobank, at the Four Seasons Hotel, Dublin, Mr Landymore said “second tier” producers are being driven more towards consolidation.

Mr Landymore also believes that, while consolidation is inevitable for many companies, it may take place in a “distressed” and “disordered” manner, “with knock-on consequences for what’s on the shelves.”

On the one hand, consolidation, such as in the case of Valeo Foods or Boyne Valley’s takeover of the Premier Foods Irish products stable, can lead to mid-sized brands being rescued; on the other, products consumers may buy regularly could disappear from the shelves.

Michael Landymore will join speakers including Michael Carey (chairman of Bord Bia), Miriam Hughes (managing director, DDFH&B), Jim Power (economist, Friends First), Frank Gleeson (chairman, Retail Ireland), and speakers from across the retail and FMCG industries at tomorrow’s conference.