The food industry started 2013 with unwelcome headlines as Irish food inspectors announced they had found traces of horsemeat in frozen beefburgers stocked by UK supermarkets including Tesco, Iceland and Lidl.
Nor was this an isolated scandal.
Salmonella in eggs in 1988, BSE in the 90’s, the foot and mouth outbreak of 2001 in which ten million animals were slaughtered1 – these and other crises are perhaps indicative of an industry under extreme pressure to provide large amounts of food at the lowest possible cost.
Such pressure can only be exacerbated in a recessionary environment which limits consumer spending at the very time when rising commodity and energy costs and adverse weather patterns are conspiring to create “massive”2 food price inflation.
Along with price, food safety must now be at the front of consumers’ minds.
Indeed, as Deloitte indicate, it was already a noticeable priority before 2013 as manufacturers responded to previous scandals with actions including requesting that suppliers become audited through accredited certification programs as well as improving their recall processes by establishing electronic communication with retailers3.
Establishing the safety of food is fundamental if the industry is to capitalise on more positive trends such as the continuing consumer preference for products with health and wellness connotations – a trend which stimulates line extensions and brand innovation as well as driving deals such as Starbuck’s acquisition of juice maker Evolution Fresh at the end of 20114.
Deal-making itself looks set to intensify as a feature within this sector.
Warren Buffet’s and Jorge Paulo Lemann’s $28 billion takeover of Heinz in February 2013 follows the latter’s creation of the world’s biggest, most efficient brewer, AB InBev, through mergers and acquisitions with Belgium’s Interbrew and America’s Anheuser-Busch5.
The Heinz deal may have been one of the biggest in the history of the food industry – but Buffet’s declaration that “I’m ready for another elephant”6 suggests it may not be the last of its kind in 2013.