THE WIDENING gap between discounters and upmarket retailers and a heightened focus on provenance following the horsemeat scandal is driving takeovers of British food brands, new research shows.
The number of British heritage and independent brands being snapped up by domestic and overseas buyers is now at the highest level since 2006, according to a report released yesterday by Catalyst Corporate Finance.
The UK grocery market is forecast to grow by 18 per cent over the next five years to £193bn, with investors keen to tap into the fast-growing sector.
The financial advisory firm’s report shows that investors’ desire to exploit the popularity and trust of British brands overseas is also boosting levels of takeover activity in the sector.
For example baby US food giant Hain Celestial bought baby food-maker Ella’s Kitchen earlier this year to accelerate its growth in the US and Europe
Catalyst director Simon Peacock said: “We expect this trend to continue as large UK and overseas buyers are attracted to the strategic opportunities these brands offer and are targeting manufacturers with strong and growing brand equity...and the potential for international growth.”
Catalyst’s report also highlights that demand for quality food following the recent horsemeat scandal has driven interest in heritage and independent food brands.
A polarisation in the grocery market, with discounters Aldi and high-end retailer Waitrose winning record market share, has also put pressure on the middle ground brands, typically owned by large corporate companies.
Meanwhile the competitive grocery market is forcing large companies struggling to innovate to buy smaller creative brands. For example, Coca-Cola bought smoothie-maker Innocent for £100m earlier this year.