Plenty of familiar brands have changed hands in the past six months as the larger groups continue to focus on their strengths and sell off non-core divisions.
Nestlé's ambient business (including Crosse & Blackwell, Branston and Sarson's) has gone to Hicks, Muse, Tate & Furst, Novartis has sold Ovaltine and other brands to ABF, while Uniq has divested both its yogurts (Shape) and spreads (St Ivel, Utterly Butterly) businesses to concentrate on chilled convenience foods. Others have not been so fortunate: Albert Fisher went into receivership in May and has subsequently been sold off piecemeal to the likes of Fresh Del Monte, Macrae and Young's Bluecrest.
One noteworthy development this year was the birth of hybrid investment vehicles such as SAATCHiNVEST, created by the founding partners of M&C Saatchi, and Langholm, an equity fund backed by Unilever and Whitbread. What differentiates these vehicles is that they bring something else to the party as well as equity investment. In the case of SAATCHiNVEST, it is their marketing skills, and the first recipients will be the Complan and Casilan brands via a joint venture with Heinz.
What about prospects for 2003? Initial Public Offering (IPO) activity remains thin on the ground, with no sign of the likes of RHM or United Biscuits coming to market just yet. Conversely, Brake Bros and S Daniels have both left the stock market this year, while others have seen their share prices tumble in a difficult environment.
If investors decide to rotate out of defensive food stocks into higher-growth areas, then other companies may decide that they might be better off as private, rather than publicly quoted, companies. One note of caution: many of the most suitable public-to-private (PTP) transactions have already happened, so this is unlikely to be a major contributor to M&A activity in 2003.
One other prediction: so far the big branded food groups have had limited involvement in the chilled foods sector (with the exception of dairy), even though it is one of the fastest growing parts of the market. Consumers are used to seeing own label products in this area and there have been relatively few attempts to develop brands in this field.
Unilever's development of the Rocket ready meal kiosks in offices and railway stations is an example of the big boys dipping their toes into this sector. Combined with the increasing importance of scale (witness the number of bankruptcies among smaller chilled suppliers), perhaps 2003 will be the year that this translates into substantial M&A activity.
n Neil Sutton is head of consumer products, PricewaterhouseCoopers Corporate Finance