City snapshot: OC&C 150 illustrates pre-crisis recovery for big food businesses

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The UK’s 150 biggest suppliers bounced back to the industry’s highest growth rate for three years ahead of the cost-of-living crisis earlier this year.

The OC&C/Grocer Top 150 report points to an industry exiting 2021 in comparatively good health as categories such as soft drinks and prepared meals posted strong recoveries from the pandemic.

Revenue growth across the UK’s largest food and drink players jumped from 1.1% to 4.1% last year, well ahead of inflation at the time.

Every major category ended 2021 at a higher level than it enjoyed pre-Covid in 2019, including an overall 30.9% rise in meat, fish and poultry, 13.5% in dairy, 23.4% for prepared meals and soft drinks up 13.6%.

A return to growth for own label also helped the top 150, with sales up 6.8% compared with 2.8% for branded last year.

Margins at the top 150 as the industry headed into a wave of inflation, spiking energy costs and interest rates, weakening sterling and plummeting consumer confidence was also at the highest level since 2017. Aggregate operating margins increased by 0.3 percentage points to 6.2% last year – closing back in on the long-term average of 6.4%.

OC&C partner Nilpesh Patel said: “2022 and 2023 bring with it new challenges with unprecedented inflation and the associated cost-of-living crisis – players who are thoughtful in their moves stand to gain competitive advantage and step-change their share position.

“Further waves of inflation will mean next year will continue to be a challenge for the industry. The industry has shown its ability to adapt over the past three years and this adaptation will be crucial for success through the inflationary cycle.”

Hilton Food Group, which leaped six places to number two in 2020, registered the biggest growth in the top ten players to maintain its spot. Sales increased 21.3% to £3.3bn as it continued an acquisition spree with €90m deal for smoked salmon producer Foppen.

Coca-Cola Europacific Partners remained in fifth, up 14.4% to £2.3bn, while Nestlé UK returned to the top ten, with sales up 13.5% to £1.9bn.

Unilever fell five places in the rankings, dropping out of the top 10 in the process, as it exited its tea business.

The biggest risers were Monaghan Mushrooms (34), Signature Flatbreads (22), Nichols (17), Flamingo Produce (15), Albert Bartlett (14), Fevertree (12), Grahams (12), General Mills (11), SH Pratt (11), Dr Oetker (11) and CPF Group (9).

Read the full coverage at thegrocer.co.uk now.

Morning update

The FTSE 100 opened 0.3% higher to 7,397.32pts after yesterday’s rally in the US.

Early risers included B&M European Value Retail, back up 6.3% to 379.7p after yesterday’s fall, Domino’s Pizza Group, up 5.6% to 271p, and Ocado Group, up 5.5% to 752.2p.

Fallers so far included Science in Sport, down 6.7% to 14p, British American Tobacco, down 2.9% to 3,219.5p, Imperial Brands, down 2.8% to 2,035p, and Tate & Lyle, down 2.4% to 720.4p.

Yesterday in the City

The FTSE 100 rallied yesterday afternoon on news from the US that inflation has taken a dip. London’s blue-chip index increased 1.2% to 7,384.80pts and markets in the US also soared.

The main movers were stocks in the US, particularly tech firms that have taken a battering recently. Beyond Meat jumped 19% in early trading, while Amazon was also up by high double digits.

B&M was one of the day’s biggest fallers despite an upbeat outlook for the Christmas season as investors focused on drops in sales and margins at the UK side of the business in the first half. The stock slumped 5% to 356.1p.

WH Smith enjoyed a 5% rise to 1,346p after it reinstated its dividend as returning to the black on a recovery of the travel division.

Tate & Lyle was also among the risers, climbing 3.5% to 739.2p following a strong showing in the first half.

Domino’s Pizza Group jumped 5.2% to 256.8pas the business revealed it had entered an agreement with Just Eat following a successful trial with the takeaway delivery app.

After a good start, GSK spin-off Haleon ended the day down by 1.8% to 281p despite upgrading its full-year expectations in a Q3 update.