Nestle and Cargill lead global food and drink market
The global food and drinks market was worth $3,498bn in 2007, up 3.1% over 2006. The global food and drinks market is anticipated to grow at a CAGR of 3.2% during 2007–10 to reach $3,843bn in 2010. Increasing demand for healthy products coupled with rising disposable incomes in emerging economies is fueling demand for food and drink products. However, the rising price of raw materials such as animal feed, energy, and other commodities such as aluminium used in packaging, will increase the operating costs of players.
‘The Top 10 Food and Drinks Companies: Emerging opportunities, growth strategies and innovation in the leading players’ is a new report published by Business Insights that analyzes the innovation and growth strategies of the top 10 players in the food and drinks industry. This report identifies the product areas that the top 10 players are seeking to develop. It also examines the comparative strengths, weaknesses, opportunities and threats facing the world’s leading food and drinks companies.
Key Findings...
Rising consumption of food and drinks in emerging countries, elevated fuel prices, and climate change have contributed to the rise in raw material prices, which will adversely impact the operating margins of food and drinks companies.
The food and drinks industry is highly fragmented - the top 10 companies account for 12.9% of the global market share, based on 2007 sales.
Consolidation in the food and drinks industry will change its competitive landscape as JBS expected to appear in the top 10 players list in the industry.
Nestlé is the global leader with 2.6% market share in 2007, followed by Cargill with 2.5%.
Use this report to...
• Gain insight into the world’s leading food and drinks companies with this report’s ranking of the top 10 companies, detailing their financial performance and future prospects.
• Identify and target future growth areas from this report’s analysis of acquisitions and divestments made by leading food and drinks companies and their strategies for growth.
• Understand the key trends in the food and drinks market and the impact that they are expected to have on the top 10 players.
• Enhance your product development strategies by examing the leading food and drinks companies’ innovation and NPD strategies and recent product launches.
• Create more effective competitive strategies based on this report’s SWOT analyses of the top food and drinks companies.
Key issues...
Food safety. Rising concerns over the safety of Chinese food products has led its government to draft a five year food safety plan to place new controls on food and drug imports and exports.
Price fixing. Rising raw-material prices and emergence of huge agricultural conglomerates have pushed players to collude and form cartels to co-ordinate pricing for mutual benefit at the expense of buyers.
Growth in Asia Pacific markets. A rising middle class population and an improving macroeconomic environment in the Asian economies of India and China has increased consumption of food and drinks in these countries.
Rising raw material costs. Prices of raw materials such as barley, sorghum, oats, maize (coarse grains) and wheat have been rising sharply due to extensive use of these products in biofuel production, elevated fuel prices and climate change. This has had a negative impact on the operating margins of the food and drinks companies.
Your questions answered...
• What are the drivers and resistors of growth of food and drinks industry?
• Which regions offer the leading food and drinks companies the greatest growth opportunities?
• What are the key trends in the global food and drinks industry?
• Who are the top 20 players in the food and drinks industry?
• What is the market share of each of the global food and drinks leaders by company?
• How do the leading food and drinks companies compare in terms of financial performance and coverage by country and category?
• What are the key strategies of the leading food and drinks companies and how do these strategies drive revenue and market share?
Table of Contents
The Top 10 Food and Drinks Companies
Executive Summary 16
Industry overview 16
Nestlé 17
Cargill 18
Unilever 18
PepsiCo 19
Kraft Foods 19
InBev 20
Mars 20
Coca-Cola 21
Tyson 22
SABMiller 22
Chapter 1 Introduction 24
What is this report about? 24
Methodology 24
Chapter 2 Industry overview 26
Summary 26
Introduction 27
Market overview 27
Market size and growth 27
Positioning and performance of top 10 companies 28
Consolidation in the food and drinks industry 31
Trends 32
Rising prices of raw materials 32
Shift to healthy food 33
Functional food and drinks 33
Organic foods 35
Expansion into Asian markets 36
India 36
China 37
Chapter 3 Nestlé 41
Summary 41
Company overview 42
Recent financial performance 42
Performance by business segments 44
Growth strategies 44
Aligning product portfolio towards healthier nutrition 44
Growth in emerging markets 45
Acquisitions and divestments 45
Innovation and NPD 47
SWOT analysis 50
Strengths 50
Global leader in infant nutrition 50
Strong R&D platform 51
Strong brand portfolio 51
Weaknesses 52
Product recall 52
Complex supply chain in India. 52
Opportunities 52
Extending foodservice to out of home customers 52
Growing bottled water market in Turkey 53
Expansion in Russia 53
Premiumization 54
Threats 54
Rising milk prices 54
Growing consumption of private label products 54
Chapter 4 Cargill 57
Summary 57
Company overview 58
Recent financial performance 58
Growth strategies 60
Focus on Asian markets 60
Focus on innovation 60
Acquisitions and divestments 60
Innovation and NPD 62
SWOT analysis 64
Strengths 64
Strong brand offerings in meat food category 64
Backward integration 65
Weaknesses 65
Weak performance in beef business 65
Operating as a private company 65
Opportunities 65
New product launches in the functional food category 65
Investment in innovation 66
Joint venture with Coca-Cola 66
Threats 66
Rising commodity prices 66
Chapter 5 Unilever 69
Summary 69
Company overview 70
Recent financial performance 71
Performance by business segments 72
Growth strategies 73
Attaining operational efficiency through restructuring 73
Focusing resources on high growth areas 74
Acquisitions and divestments 74
Innovation and NPD 75
SWOT analysis 78
Strengths 78
Strong portfolio of brands 78
Strong R&D platform 79
Global scale and reach 79
Weaknesses 79
Declining cash from operations 79
Opportunities 80
Growth in developed and emerging markets 80
Extending partnership with PepsiCo 80
Agreement with Starbucks 80
Threats 81
Rising commodity prices 81
Competition from private label 81
Chapter 6 PepsiCo 83
Summary 83
Company overview 84
Recent financial performance 84
Performance by business segments 85
Growth strategies 86
Transforming its beverage portfolio 86
Growth through partnerships 86
Acquisitions and divestments 87
Innovation and NPD 88
SWOT analysis 90
Strengths 91
Strong brand portfolio 91
Larger product range 91
Strong liquidity position 91
Weaknesses 91
Dependence on North American operations 91
Rising debt burden 92
Opportunities 92
Focus on healthy offerings 92
Expanding presence in emerging markets 93
Threats 93
Intense competition 93
Decline in demand for carbonated drinks in the US market 94
Chapter 7 Kraft Foods 97
Summary 97
Company overview 98
Recent financial performance 98
Performance by business segments 100
Growth strategies 100
Restructuring program 100
Reframing food product categories 101
Aligning product portfolio to consumer trends across markets 101
Shift to direct sales model in developed markets 101
Re-engineer cost structure 101
Acquisitions and divestments 102
Innovation and NPD 103
SWOT analysis 107
Strengths 107
Strong brand portfolio 107
Significant international presence 108
Weaknesses 108
Declining profitability 108
Rising debt obligations 108
Opportunities 109
Agreement with Probi 109
Investment in coffee business 109
Acquisition of Groupe Danone 110
Threats 110
Private Label 110
Legal proceedings 110
Chapter 8 InBev 113
Summary 113
Company overview 114
Recent financial performance 114
Performance by business segments 116
Growth strategies 116
Attain operational efficiency through cost management 116
Investing in capabilities development 117
Acquisitions and divestments 117
Innovation and NPD 118
SWOT analysis 120
Strengths 120
Strong brand portfolio 120
Geographically diversified operations 121
Improved financial performance 121
Weaknesses 122
Weak performance in Western Europe 122
Opportunities 122
Expansion in emerging markets 122
Acquisition of Anheuser-Busch 123
Threats 123
Rising raw material costs 123
Competition from wine 123
Chapter 9 Mars 125
Summary 125
Company overview 126
Recent financial performance 126
Performance by business segments 126
Growth strategies 127
Focus on Eastern Europe emerging markets 127
Acquisitions and divestments 127
Innovation and NPD 128
SWOT analysis 131
Strengths 131
Strong presence in the confectionery industry 131
Larger product portfolio than competitors 132
Weaknesses 132
Negative publicity 132
Opportunities 133
Shift towards healthy and nutritious snack food in Europe 133
Wrigley’s acquisition boosting presence in China 133
Investment in Uncle Ben’s plant 133
Threats 134
Growth of private label confectionery brands in the US 134
Chapter 10 Coca-Cola 137
Summary 137
Company overview 138
Recent financial performance 138
Performance by business segments 140
Growth strategies 140
Gaining leadership in sparkling beverages 140
Expanding still beverages portfolio 141
Focus on innovation 141
Acquisitions and divestments 141
Innovation and NPD 142
Innovation in packaging: 143
Innovation in formulation: 144
SWOT analysis 146
Strengths 146
Strong growth in unit case volume 146
Large scale of operations 147
Weaknesses 147
Declining performance in North America 147
Less diversified product portfolio 147
Opportunities 148
Extending geographic presence of products 148
Expansion in Chinese beverage market 148
Threats 148
Dependence on bottling partners 148
Chapter 11 Tyson 151
Summary 151
Company overview 152
Recent financial performance 152
Performance by business segments 153
Growth strategies 154
Focus on creating innovative and value-added products 154
Maximize margins through operational efficiency 154
Build multinational enterprise 155
Acquisitions and divestments 155
Innovation and NPD 157
SWOT analysis 159
Strengths 159
Significant market share in the US 159
Strong R&D platform 160
Weaknesses 160
Legal proceedings 160
Weak international presence 160
Opportunities 161
Commercializing poultry litter and animal by-products 161
Expanding poultry operations in international markets 161
Threats 161
Rising costs of feed grains 161
Slowdown in the US poultry industry 162
Chapter 12 SABMiller 165
Summary 165
Company overview 166
Recent financial performance 166
Performance by business segments 167
Growth strategies 168
Developing strong, relevant brand portfolios in the local market 168
Attaining operational efficiency 169
Acquisitions and divestments 170
Innovation and NPD 171
SWOT analysis 173
Strengths 173
Significant market share across geographies 173
Depth in product portfolio 174
Weaknesses 174
Declining performance in South Africa 174
Weaker presence in markets outside North America 175
Opportunities 175
Expansion in emerging markets 175
Joint venture with Molson Coors Brewing 176
Threats 176
Consolidation in the beer industry 176
Chapter 13 11–20 companies 179
Groupe Danone 179
Company overview 179
Recent financial performance 179
Innovation and NPD 180
Heineken 182
Company overview 182
Recent financial performance 182
Innovation and NPD 184
JBS 185
Company overview 185
Recent financial performance 186
Innovation and NPD 186
Kirin Brewery 187
Company overview 187
Recent financial performance 187
Innovation and NPD 189
Diageo 190
Company overview 190
Recent financial performance 190
Innovation and NPD 191
Associated British Foods (ABF) 193
Company overview 193
Recent financial performance 193
Innovation and NPD 195
Groupe Lactalis 196
Company overview 196
Recent financial performance 196
Innovation and NPD 196
Asahi Breweries 197
Company overview 197
Recent financial performance 197
Innovation and NPD 199
General Mills 201
Company overview 201
Recent financial performance 201
Innovation and NPD 202
Sara Lee 204
Company overview 204
Recent financial performance 204
Innovation and NPD 205
Chapter 14 Appendix 209
Glossary 209
Index 211
List of Figures
Figure 2.1: Global food and drinks market size ($bn), 2006-10 28
Figure 2.2: Top 10 food and drinks companies market share, 2007 29
Figure 2.3: Top 10 food and drinks companies growth, 2007 30
Figure 3.4: Nestlé financial performance ($m), 2003–07 43
Figure 3.5: Nestlé’s recent product launches, by category, 2005–08 48
Figure 3.6: Nestlé’s innovative product launches, 2008 49
Figure 3.7: Nestlé SWOT analysis 50
Figure 4.8: Cargill financial performance ($m), 2004-08 59
Figure 4.9: Cargill’s recent product launches, by category, 2005–08 63
Figure 4.10: Simply Done Ready-to-Cook Turkey 63
Figure 4.11: Cargill SWOT analysis 64
Figure 5.12: Unilever financial performance ($m), 2004–07 72
Figure 5.13 Unilever’s recent product launches, by category, 2005–08 76
Figure 5.14 Unilever’s innovative product launches, 2008 77
Figure 5.15: Unilever SWOT analysis 78
Figure 6.16: PepsiCo financial performance ($m), 2003–07 85
Figure 6.17: PepsiCo’s recent product launches, by category, 2005–08 89
Figure 6.18: PepsiCo’s innovative product launches, 2008 90
Figure 6.19: PepsiCo SWOT analysis 90
Figure 7.20: Kraft Foods financial performance ($m), 2003–07 99
Figure 7.21: Kraft Foods’ recent product launches, by category, 2005-08 104
Figure 7.22: Kraft Foods’ innovative product launches, 2008 106
Figure 7.23: Kraft Foods SWOT analysis 107
Figure 8.24: InBev financial performance ($m), 2003–07 115
Figure 8.25: InBev’s innovative product launches, 2008 119
Figure 8.26: InBev SWOT analysis 120
Figure 9.27: Mars’s recent product launches, by category, 2005–08 129
Figure 9.28: Mars’s innovative product launches, 2008 130
Figure 9.29: Mars SWOT analysis 131
Figure 10.30: Coca-Cola financial performance ($m), 2003–07 139
Figure 10.31: Coca-Cola’s recent product launches, by category, 2005–08 143
Figure 10.32: Coca-Cola’s innovative product launches, 2008 145
Figure 10.33: Coca-Cola SWOT analysis 146
Figure 11.34: Tyson financial performance ($m), 2003–07 153
Figure 11.35: Tyson’s recent product launches, by category, 2005–08 158
Figure 11.36: Tyson’s innovative product launches, 2008 158
Figure 11.37: Tyson SWOT analysis 159
Figure 12.38: SABMiller financial performance ($m), 2004–08 167
Figure 12.39: SABMiller’s innovative product launches, 2007 172
Figure 12.40: SABMiller SWOT analysis 173
Figure 13.41: Groupe Danone financial performance ($m), 2003–07 180
Figure 13.42: Groupe Danone’s innovative product launches, 2008 181
Figure 13.43: Heineken financial performance ($m), 2004–07 183
Figure 13.44: Heineken’s innovative product launches, 2008 184
Figure 13.45: Kirin Brewery financial performance ($m), 2003–07 188
Figure 13.46: Kirin Brewery’s innovative product launches, 2008 189
Figure 13.47: Diageo financial performance ($m), 2005–08 191
Figure 13.48: Diageo’s innovative product launches, 2008 192
Figure 13.49: ABF financial performance ($m), 2003–07 194
Figure 13.50: Asahi financial performance ($m), 2003–07 198
Figure 13.51: Asahi’s innovative product launches, 2008 200
Figure 13.52: General Mills financial performance ($m), 2004–08 202
Figure 13.53: General Mills’ innovative product launches, 2008 203
Figure 13.54: Sara Lee financial performance ($m), 2004–08 205
Figure 13.55: Sara Lee innovative product launches, 2008 206
List of Tables
Table 2.1: Global food and drinks market size ($bn), 2006-10 28
Table 2.2: Top 10 food and drinks companies turnover ($m), 2003–07 29
Table 2.3: Major M&A deals 2007–08 31
Table 3.4: Nestlé snapshot 41
Table 3.5: Nestlé financial performance ($m), 2003–07 43
Table 3.6: Nestlé business segment performance ($m), 2007 44
Table 3.7: Nestlé’s key brands 47
Table 4.8: Cargill snapshot 57
Table 4.9: Cargill financial performance ($m), 2004–08 59
Table 4.10: Cargill’s key brands 62
Table 5.11: Unilever snapshot 69
Table 5.12: Unilever financial performance ($m), 2004–07 71
Table 5.13: Unilever business segment performance ($m), 2007 73
Table 5.14: Unilever’s key brands 75
Table 6.15: PepsiCo snapshot 83
Table 6.16: PepsiCo financial performance ($m), 2003–07 85
Table 6.17: PepsiCo business segment performance ($m), 2007 86
Table 6.18: PepsiCo’s key brands 88
Table 7.19: Kraft Foods snapshot 97
Table 7.20: Kraft Foods financial performance ($m), 2003–07 99
Table 7.21: Kraft Foods business segment performance ($m), 2007 100
Table 7.22: Kraft Foods’ key brands 103
Table 8.23: InBev snapshot 113
Table 8.24: InBev financial performance ($m), 2003–07 115
Table 8.25: InBev business segment performance ($m), 2007 116
Table 8.26: InBev’s key brands 118
Table 9.27: Mars snapshot 125
Table 9.28: Mars business segment performance ($m), 2007 126
Table 9.29: Mars’s key brands 128
Table 10.30: Coca-Cola snapshot 137
Table 10.31: Coca-Cola financial performance ($m), 2003–07 139
Table 10.32: Coca-Cola business segment performance ($m), 2007 140
Table 10.33: Coca-Cola’s key brands 142
Table 11.34: Tyson snapshot 151
Table 11.35: Tyson financial performance ($m), 2003–07 152
Table 11.36: Tyson business segment performance ($m), 2007 153
Table 11.37: Tyson’s key brands 157
Table 12.38: SABMiller snapshot 165
Table 12.39: SABMiller financial performance ($m), 2004–08 167
Table 12.40: SABMiller business segment performance ($m), 2008 168
Table 12.41: SABMiller’s key brands 171
Table 13.42: Groupe Danone snapshot 179
Table 13.43: Groupe Danone financial performance ($m), 2003–07 180
Table 13.44: Heineken snapshot 182
Table 13.45: Heineken financial performance ($m), 2004–07 183
Table 13.46: JBS snapshot 185
Table 13.47: JBS financial performance ($m), 2006–07 186
Table 13.48: Kirin Brewery snapshot 187
Table 13.49: Kirin Brewery financial performance ($m), 2003–07 188
Table 13.50: Diageo snapshot 190
Table 13.51: Diageo financial performance ($m), 2005–08 191
Table 13.52: ABF snapshot 193
Table 13.53: ABF financial performance ($m), 2003–07 194
Table 13.54: Groupe Lactalis snapshot 196
Table 13.55: Asahi snapshot 197
Table 13.56: Asahi financial performance ($m), 2003–07 198
Table 13.57: General Mills snapshot 201
Table 13.58: General Mills financial performance ($m), 2004–08 202
Table 13.59: Sara Lee snapshot 204
Table 13.60: Sara Lee financial performance ($m), 2004–08 205