In one scoop, Unilever gulps 2 food companies FROM slurp to squeeze. Both deals look sweet. But there is more to these deals than synergies. Global food companies yearn for growth. Their margins grow thinner and their sales slow as retailers consolidate and own-label products take more share.
New products are one of the few ways left to raise prices and expand markets.
Unfortunately, food companies are poor innovators. A recent survey found they earned just 21 per cent of their sales from new products, compared with 32 per cent for consumer packaged-goods companies and 38 per cent across all industries. Another survey found that of the 15,000 new food and drink products launched globally in 1999, less than six per cent were truly innovative. The result is food giants are gobbling small, innovative brands, especially in America where valuations are depressed. Both are in two hot new markets ethical foods and functional foods.