UK: Consumer Products - M&A Insights, Spring 2016

Last Updated: 29 April 2016
Article by Deloitte Consumer Business Group


In this, our latest Consumer Products M&A Insights review, we look back on 2015 as a year of significant European deal activity set against a backdrop of improved consumer confidence together with investors carrying significant accumulated funds to deploy.

From a UK economic perspective, consumer confidence returned with the GfK index in positive territory for the entire year. This was coupled with a return to a positive trend in real growth in earnings over an extended period for the first time since mid-2010. The increase in confidence was mirrored by an increase in 2015 deal activity with 36 large (+€200m) European deals with a combined value of €142.9billion ahead of the 34 deals with a value of €39.7 billion in 2014.

A significant highlight of 2015 was the €95.5 billion megadeal between ABInBev and SABMiller which, representative of many large deals, is likely to trigger further M&A activity amongst its competitors but also, importantly, resulted in follow-on divestments (namely the disposal of its share in the Molson Coors JV, the sale of its European Peroni, Grolsch and Meantime brewing assets, and sale of its 49% stake in China Resources Snow Breweries).

Similarly, the Reynolds Tobacco/Lorillard deal also triggered further activity by Imperial Tobacco and BAT as a direct consequence.

The Food & Beverage sector continues to be active, accounting for over half of major (+€200m) European deal activity, and has proved to be a favourable hunting ground for a number of major overseas investors.

Latin American headquartered companies have been particularly active with Brazil's JBS acquiring UK's Moy Park (meat processing), Brazil's BRF (via its Austrian subsidiary) acquisition of Thailand's Golden Foods for poultry production, Grupo Cuervo's swap of assets with Diageo – Jose Cuervo for Diageo's Old Bushmills whiskey and Alfa SAB's bid for Campofrio (meat processing).

We also saw clear examples of other overseas buyers flexing their financial muscle with Philippines' Monde Nissin delivering a knock out bid for Marlow Foods (Quorn), as did Asahi for SAB Miller's selected European brewery assets.

One of the other themes to emerge is that of ongoing sector consolidation with Nomad Foods reinforcing its position in the frozen food market with its acquisition of both Iglo Group and Findus. Elsewhere JAB Holdings, a major shareholder in DE MasterBlenders, further consolidated its position in the global coffee market with its acquisition of Keurig, having previously acquired some of Mondelez's coffee business.

In terms of the outlook for deal activity for 2016, the picture remains less certain. Our most recent CFO survey indicated that business confidence may be stalling over the sustainability of the global recovery and the impact of uncertainty over the UK's referendum on EU membership amongst other potential economic shocks. These factors have, in turn, appeared to have shifted CFOs to adopt more defensive strategies.

However, there a number of more positive reasons why the momentum in deal activity is likely to continue in 2016:

  • the relative decline in the strength of the Euro and Sterling against other major global currencies;
  • the presence of overseas buyers and private equity investors with significant war chests;
  • the attractive multiples being achieved by sellers at the moment.

On this latter point we would expect major companies to continue to take the opportunity to divest non-core branded assets such as Procter & Gamble's divestment of its international brands to Henkel. Other such current processes include Mondelez's proposed disposal of its Philadelphia branded cream cheese business and Two Sisters' planned divestment of its Fox's biscuits business.

Taking all this into account, 2016 offers the prospect of another active year for M&A in the Consumer Products sector, with continued investor interest, particularly through the Asian and US deal corridors into the European market.

Economic outlook – UK

  • In 2015, the UK economy put in a resilient performance with GDP rising by 2.2%, albeit down on the 2.9% growth recorded in 2014 and with future growth indications tuned downwards to c. 2.1% in the Chancellor's recent budget. While the 2015 performance represents the slowest rate of annual growth for three years, the UK still remains one of the fastest growing of the developed nations.
  • Continuing uncertainty over a potential Brexit, slowing global demand and volatility in financial markets remain a concern for the corporate sector, with the Deloitte CFO Survey showing that both business confidence and risk appetite are trending down.
  • UK consumer confidence, as measured by the UK GfK Consumer Confidence Index, recorded a promising increase in January 2016 recording a level of +4, however this had been pegged back to zero at the end of February 2016. Confidence in personal finance remained strong given the end to a six year squeeze on incomes, low interest rates and inflation having created a benign environment for UK consumers. However, concerns over the general economic situation over the next 12 months have eroded overall confidence levels, nonetheless the UK GfK Major Purchases Index remains positive at +12.
  • Unemployment remains at a ten-year low, falling again in December 2015. Wages continue to rise, albeit at a slower rate of 1.9%, down from the 2015 peak of 3.3%. With inflation at 0.3%, consumers should still feel a positive impact in their pockets. However, questions remain over why the strength of the job market has yet to translate into stronger and more sustained wage growth as well as how the introduction of the National Living Wage in April 2016 will impact on employment prospects for 2016, particularly given our expectation for many businesses to focus on productivity increases.
  • Inflation edged up to 0.3% in January 2016, its highest rate for a year, driven by a lower decline in energy prices than in January 2015. However the consensus view for 2016 is that inflation and interest rates will remain at a low level, which combined with low mortgage rates and intense competition in the grocery market, will continue to take pressure off consumers spending on non-discretionary items.
  • Borrowing costs also remain at a historically low level and through 2015 we saw a rise in unsecured lending and a decline in the savings ratio as consumers appeared happy to increase their personal leverage, borrowing more and saving less.
  • The outlook for 2016 is, on the whole, positive with GDP growth forecast to be at or near the same level as in 2015. However, some clouds remain on the horizon, with uncertainty over the ongoing strength of consumer spending coupled with the slowdown in growth in emerging markets, a potential Brexit and continuing volatility in the financial markets.

The 'UK GfK Consumer Confidence Index' remained positive throughout 2015 (ending at +2 in Dec-15, compared to -4 in Dec-14), the first time it has done so since the start of the Consumer Confidence Barometer in 1974. A strengthening UK job market, continuing levels of low-inflation (with sharp falls in petrol prices) and interest rates have boosted UK consumer confidence about their own personal economic situation and the outlook for the next 12 months. (see figure 1).

Improvements in discretionary income and consumer confidence in short-medium term outlook drove the 'UK GfK Major Purchases Index' from +5 in January 2015 (then a seven-year high) to +7 in December 2015, with the number of shoppers agreeing that "now" is a good time for people to make major purchases such as furniture or electrical goods peaking in June 2015 and August 2015 at +17. (see figure 2).

Improvements in real earnings (adjusted for tax and inflation) continued with average household incomes in the UK back to pre-financial crisis levels. Median household disposable income in the UK rose to £25,700 in the year to Dec-15, up £1,500 from the year before and marginally above the £25,400 pre-recession level, according to the Office for National Statistics figures. The new National Living Wage from April 2016 is expected to deliver a further boost to pay packets; however, its potential impact on employment levels remains uncertain. (see figure 3).

Agri-commodity prices continued to decline in 2015, with the decline in crude oil prices during the second half of 2015 being the most prominent (close to 40% decline since the start of the year). The continuing decline in prices seen in the early part of 2016 is likely to favourably impact consumer spending in 2016. (see figure 4).

To read this Report in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions