So it’s finally started. For years, experts have been predicting a wave of consolidation in the meat processing industry.
And now, two of the biggest poultry producers have fallen into foreign hands. First, there was Grampian Country Food Group’s acquisition by Dutch giants Vion. Then, last week, Northern Ireland-based Moy Park was taken over by Brazilian red meat specialist Marfrig in a move few had anticipated.
The latter move has sparked fears that more Brazilian players will enter the UK market, undermining British producers with a glut of cheaper South American meat. Concerns are also mounting over the level of international interest in British processors, with experts warning that the industry could lose control of its own destiny if too many big businesses are bought by foreign owners.
So is the future global or are we also going to see more national deals such as 2 Sisters’ acquisition of Lloyd Maunder in January?
There’s no doubt that Brazilian interest has intensified of late, with Marfrig itself purchasing importer and distributor CDB Meats in March and competitors Perdigao, Sadia and JBS-Friboi all rumoured to be in the market for acquisitions.
“Marfrig’s takeover of Moy is an indication of Brazil’s growing wish to expand into the European markets by acquisition,” says Supply Chain Europe analyst Andrew Morgan. “I think we’ll see more of this. It’s part of their trend towards having an increased presence on the international market.”
Within Brazil the major meat players have already begun expanding beyond their traditional markets, with Sadia producing desserts, Perdigao moving into dairy and now Marfrig entering the poultry sector.
Brazil is rapidly becoming a colossus on the global stage. According to its trade promotional body Apex-Brasil, it has been the largest exporter of chicken since 2004, shipping out some $5bn worth of the meat last year or 40% of chicken on the global market.
EU restrictions on Brazilian beef imports may inadvertently have prompted the wave of interest . “There are cash-rich meat companies in Brazil looking to extend their reach,” says a source close to the Brazilian meat industry. “The EU restrictions may have spurred them on to buy companies up if their commercial interests were damaged by the ban.”
Unsurprisingly, the NFU gave a lukewarm welcome to Marfrig’s acquisition, saying it hoped the move was not a Trojan horse that would lead to the influx of cheap Brazilian meat. Moy Park has denied this is the case.
A source close to the company agrees the Brazilians are unlikely to try and use the acquisitions to filter South American meat into Europe through the back door. The Marfrig acquisition was just the latest example of a Brazilian company graduating to the global market, he insists. “Brazil is an economic powerhouse,” he says. “I can see this type of activity continuing beyond the meat industry into food and drink and into other sectors as Brazil begins to flex its muscles internationally.”
And at the moment, Brazil’s meat producers have the UK in their sights. Whether they will be as successful as Marfrig depends on the level of interest from other players on the international stage - Ukranian poultry businesses are already understood to have been eyeing up the UK market. And then there are the UK players themselves to consider. Further consolidation looks inevitable, but the future of the industry could yet remain in UK hands. n