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.