Global Agrifood Report

Agrifood-Global-Report

What to watch ?

 

  • Potential impact of weather phenomenon La Niña on agricultural commodities prices
  • Global trade improvement across the sector due to a falling number of protectionist measures
  • Pick-up in M&A activity throughout 2018 driven by lackluster sales growth of packaged foods

agrifood id card

Fragmentation
Fragmentation-2 
Internationalization
Internationalisation-3 
Capital Intensity
Capital-intensity-2 
Profitability
Profitability-2 

 

The outlook remains positive, however prices of food commodities are to be watched

Second best sector in terms of sector risk after Pharmaceuticals, Agrifood is expected to stay in good shape overall in 2018. However there are some risks associated with the upstream part of the value chain (farmers and growers): La Niña, a weather phenomenon consisting in cooling of some parts of the Pacific Ocean, is likely to lead to rising prices of food commodities such as sugar, coffee, rubber, rapeseed and corn. In 2017, the global food commodities index, FAO Food Price Index, increased by +8% y/y, while during the last occurrence of La Niña in 2010 it rose much more (+22% y/y).

 

The M&A activity in the sector was down by volume (-32% y/y), yet a volume growth can be expected as the equity market correction in the beginning of 2018 made valuations cheaper, while balance sheets of the key companies remain strong with large cash balances. The year 2018 has already had a good head start after Nestle’s announcement of the sale of its US confectionary business to Italy’s Ferrero for about $2.8 billion. The Swiss group is changing its strategy to become more focused on the wellness and health category of products, which is a reflection of trend shaping the whole industry. In the context of an overall lackluster sales growth, this category of products continues to show a double-digit growth on some of the major markets.

 


KEY PLAYERS

Country

Role

Sector Risk

UNITED-STATES #1 Exporter
#1 Importer
#2 Producer
Dot-Risk-Low
CHINA #1 Producer
#2 Importer
Dot-Risk-medium
GERMANY #3 Exporter
#3 Importer
Dot-Risk-Medium

Strengths

  • Strong long-term prospects resulting from population growth
  • Sound financial structure with little indebtedness, high liquidity, and solid free cash flow

Weaknesses

  • Sector performance impacted by weather shocks that are difficult to predict  
  • Declining rates of yield growth for some food commodities
  • Farmers suffering globally from weak crop prices

agrifood Subsectors insights

Agriculture: Regulation. Increasing pressure is put on farmers to track the origin of all food commodities used in the production process. This additional cost will eventually be passed to consumers

 

 

Food Industry: Organic food is the fastest growing product category. Its rising importance is emphasized by Amazon’s acquisition of Whole Foods in 2017

Global Sector Report

picto-aeronautics
Aeronautics
picto-agrifood
Agrifood
picto-automotive
Automotive
picto-chemicals
Chemicals
picto-construction
Construction
picto-energy
Energy
picto-household-equipment
Household Equipment
picto-information-communication-technologies
Information & Communication Technologies
picto-machinery
Machinery & Equipment
picto-metal
Metal
picto-paper
Paper
picto-pharmaceuticals
Pharmaceuticals
picto-retail
Retail
picto-textile
Textile
picto-transportation
Transportation
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