Senior executives at food and beverage companies face many critical and strategic questions in 2015. Here, L.E.K. Consulting shares its views on the current state of the industry, as well as the biggest challenges and opportunities facing food and beverage companies.
What is the Current State of the U.S. Food and Beverage Industry?
Amidst an improving economy, consumer optimism and bullish expectations for growth, there is a fight for consumer dollars in food and beverage. While food in aggregate is a slow growth game, millions of dollars are pouring into food and beverage from unlikely sources including Silicon Valley venture capitalists, and well-heeled private equity and international companies targeting the U.S. market. The net result is an intensive competitive environment where growth is at a premium.
Several brands took 2014 by storm, making it the year of the “hot brand.” Many deals were hatched for brands that have captured share and are growing quickly. From large brands like Chobani and Annie’s to smaller brands such as Noosa and Tate’s Bakery, these deals represent the tip of the iceberg in what is expected to be an unprecedented wave of food deals.
Consolidation was a common theme of 2014, affecting every part of the food value chain: from ingredients (ADM/Wild), manufacturers (Hillshire/Tyson), and distributors (US Foods/Sysco) to food retailers (Safeway/Albertson), M&A activity permeated the food and beverage industry. This trend promises to continue this year as companies with well-shored balance sheets, riding mostly favorable commodity trends, work to position themselves for growth and profitability.
Download the full Executive Insights' "State of the Industry" report to read more about the current state of the industry and burning issues that senior executives are facing: Full Report.