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Acquisitions, mergers rise in food sector

By Geoff Percival

A 32% rise in the value of merger and acquisition activity in the Irish food and beverage sector, to €726m, was recorded in 2012.

A large volume of deals between Irish and US firms drove the increase — with the likes of Glanbia and drinks giant, C&C spending a near €300m, combined, on acquisitions there; while US groups such as Hain Celestial — acquiring Cully & Sully — and Beam did likewise here.

The overall update on food sector &merger and acquisition activity is outlined in a new industry tracker by professional services giant, Grant Thornton, which also shows the food and drink sector, here, contributed €9bn in exports last year — comfortably outperforming Britain’s output.

However, the firm noted that Irish food companies must continue to invest in maintaining what it called “a robust and safe supply chain”, in order to protect the industry’s reputation; noting the recent example of horse DNA being found in frozen beef products.

“The level of deal activity shows the food sector had a very strong year, but the recent ‘horsegate’ controversy is a cause for concern. The reputation of Irish produce has its foundation in high standards of regulation and food safety, and our natural green environment.

“It is vital that the industry collaborates to create a resilient supply chain that can minimise costs, whilst ensuring Irish produce maintains its international standing,” said Ciara Jackson, head of food at Grant Thornton Ireland.

While acquisition activity increased between US and Irish firms last year, Grant Thornton sees Asia as a growing market for potential deals.

Irish food and beverage exports to Asia grew by 25% last year and the region is being targeted for further expansion during 2013, by Bord Bia.

Ms Jackson said: “Cash- rich Asian companies are potential investors in Irish food businesses whose operations may be thriving, but where balance sheets are stretched by ill-judged property investments made in the boom.”

Grant Thornton added that nearly 90% of corporate investors now view new product development as being the main driver for growth for food firms.

This, the report said, makes research and development & investment a priority for Irish food companies. It said that Kerry Group’s €100m investment in a new R&D campus will “enhance Ireland’s reputation as an innovator in the sector”. 



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