Food industry is 2012 investment and expansion ready

The German food industry is in spite of the financial and debt crisis quite optimistic 2012. While the industry can not expect improvements in their sometimes difficult earnings situation, but in the light of an expected stable domestic demand and further growth in the export business, the local food producers are for expansion and investment ready, as Dr. Otto A. Strecker, member of the AFC Consulting Group in Bonn, on the occasion of this year's entrepreneurs tags Food Retail Association Germany (HDE) and the Federal Association of the German Food industry (BVE) on 19. and 20. Notes March 2012 in Cologne. The Entrepreneur Day is this year under the motto "create value".

dr In his assessment, Strecker bases his assessment on the statements of the managing directors or owners of around 150 representatively selected companies from the top 1000 in the German food industry, which are surveyed every year by the consulting firm specializing in the agricultural and food industry about their investment plans.

In the eyes of investors

Due to its comparatively stable growth prospects, especially abroad, the AFC board sees the German food industry as an increasing focus of interest from financial investors. As the consulting experts of the AFC explain in their new specialist book, “Creating values ​​for the food value chain”, the imminent need for consolidation in the food industry offers good opportunities for financially strong investors to acquire additional companies as part of “buy and build” strategies. In certain market segments, it may be possible to advance to become one of the top players in the sub-sector, even through smaller acquisitions in this area. The AFC authors explain that goodwill can arise from the leading market position alone, which pays off accordingly when the company stake is resold.

Since the food sector also offers room for considerable organic growth fantasies, not least because many German food manufacturers have learned to hold their own in foreign markets and to open up some excellent earning opportunities there, investors should, according to the AFC, see the industry more and more frequently in the future discover as an investment focus. The experts also see interest in takeovers and acquisitions from within the food industry growing in the future.

This also becomes clear when the industry is asked about its willingness to invest: According to the results of the AFC study, 40 percent of the companies surveyed are planning to carry out acquisition or expansion investments in the next 24 months. Larger and larger companies in particular are therefore very willing to invest. 500 percent of companies with more than 67 employees say they are very willing to make such investments. At least 250 percent of medium-sized companies with between 500 and 44 employees want to invest accordingly. In comparison, the smaller companies with up to 100 employees appear to be rather reserved with 29 percent agreeing to investments, but they also make an effort not only to maintain their business but also to grow organically. Overall, according to the AFC study, a particularly large number of investments in takeovers in the food industry can be expected this year.

expertise needed

According to the experience of the AFC consultants, so that such actions ultimately lead to success, a large number of important industry-specific challenges must be taken into account. "For a long time now, auditors and lawyers alone have not been able to assess the specific opportunities and risks of such transactions solely on the basis of financial indicators and existing contracts," says Dr. stretcher. Due to the complex network within the food value chain, the dependence on raw material markets and sensitive success factors such as food safety and quality management, it is usually necessary for the investor to seek advice from industry experts. "Anyone who wants to create value in the food industry, secure it and increase it in the long term, must conduct the initiation process for takeovers and acquisitions with much greater professionalism today than twenty years ago," says the AFC board member.

The expertise of the AFC experts is also increasingly involved in corresponding projects to initiate or secure investments. They not only support interested companies, but also municipalities, authorities or other organizations. The AFC also successfully supports federal states in their efforts to attract companies from the agricultural and food industry, both in an advisory capacity and operationally.

The new AFC reference book “Creating values ​​for the food value chain” with articles on investments, mergers & acquisitions, risk and crisis management and sustainability in the food industry, among other things, is available from:

AFC Consulting Group
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53129 Bonn Germany

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Source: Bonn [ AFC Consulting ]