Global overview of food and drink sector – key issues

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Mills & Reeve brought a plethora of global law firms together in London this June under the banner of the State Capital Group, an affiliation of law firms from around the world. The specific issues affecting food producers and companies globally was discussed in an exclusive sector specific meeting. Mills & Reeve represented the UK and views ranged from Australia/ New Zealand, Asia, Singapore, to across the Americas and Canada through to Russia, Europe and Ireland.

Mills & Reeve brought a plethora of global law firms together in London this June under the banner of the State Capital Group, an affiliation of law firms from around the world. The specific issues affecting food producers and companies globally was discussed in an exclusive sector specific meeting. Mills & Reeve represented the UK and views ranged from Australia/ New Zealand, Asia, Singapore, to across the Americas and Canada through to Russia, Europe and Ireland.

Migration and workers

Around the different countries the same topic arose of migration and availability of workers. The food sector is heavily reliant on low paid workers; with clampdowns on immigration happening globally availability of workers as a resource is an issue that is affecting countries from Trumps’ America, through to Australia, Europe, as well as “Brexit UK”.

Cutbacks in migration mean that companies will need to look at both: 

  • Structuring the business in order to ensure vital manpower resources are preserved; ie looking at training, opportunities, location and wages. 
  • Automation and AI /working “smarter” - where technology can replace traditional people resources.

Marketing & Preservation of IP

The second main issue that linked all countries was marketing and more specifically the protection of a food business’ trademarks, get-up, labelling and branding as well as use of voluntary claims. An extensive amount of commercial value can be tied up in a brands’ marketing.

This may therefore be vulnerable to copycats and similar start up products, regulatory changes and enforcement action.

There has been a move towards a more individualised approach to marketing of food products to establish a relationship with the consumer. Rising interest in specific locations of production as well as country of origin labelling, welfare, unusual and innovative ingredients and an emphasis on ways of production, including claims on specific aspects of these such as “naturalness” and “traditional”. There is therefore far greater emphasis on the soft sell part of a product as being intrinsic to its’ value.

The influence of the retailer, although still dominant and substantial, has receded in recent years with online offerings and the platform for a direct appeal to the consumer via social media increasing. The ability of a food company to be agile and responsive in its’ marketing is therefore even more crucial.

Investment

Overall consideration of investment in the food sector on a worldwide scale was provided by head of food, Trefor Griffiths of Grant Thornton. A positive picture was painted for M&A activity; whereby there is a surplus of liquidity still within private equity and the food sector is seen as an ideal “buy and build” platform for other investments.

Summary

There is continued investment interest in the food sector at a time when increased resources and smarter responses are needed. We are seeing the economies of scale and the need for investment in technology and systems at the same time as innovative and responsive marketing is key. Commodity prices remain overall historically low but fluctuations in the market and currencies alongside sensitivity of trade tariff discussions, plus global supply chains that can be more easily disrupted, can mean opportunity.

A time of flux and innovation then for the food industry where it is important to ensure your food company is looking to, investing in and protecting itself for the future.

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