Food & Beverage Sector Comment – October 2008


Much has been made of the financial crisis and how it is causing an economic downturn. Food producers will be bracing themselves for demands from the big 4 retailers to cut prices in an effort to stop consumers turning to the deep discounters such as Lidl and Aldi.

But despite this, there are some bright spots in the food sector to lighten the gloom. Associated British Food announced that underlying annual profits from its Grocery Division have risen 27% – Chief Executive George Weston attributed this at least partially to the company’s ability to push through price increases. And last week Nestlé launched a new premium chocolate range – this may seem like bad timing but the company believes that increasing consumer awareness of ethically sourced and single origin chocolate will fuel growth in the market despite a recession.

Deals completed in the UK

Hill Station, the Cwmbran-based ice cream manufacturer, has been bought out of administration by turnaround specialist David Lavelle and Acuity Capital. Hill Station produces own-label ice cream, along with the Loseley and Granelli brands, which it acquired through takeovers.

The Norwegian Dairy Cooperative TINE BA has acquired Ilchester Cheese for an undisclosed sum. Ilchester Cheese is a leading producer of blended cheese in the UK market. TINE is Norway’s largest producer, distributor and exporter of dairy products. In the UK its brands include Jarlsberg, Ski Queen, and Snøfrisk. Ilchester’s sales, market and distribution platform made it attractive to TINE, which is pursuing an international growth strategy.

R Capital, a specialist private investment business providing growth and turnaround funding, has taken a majority stake in Freshfayre, the Leeds-based food distributor serving the foodservice, retail and education sectors.

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