Maya Donceva, senior industry analyst for food ingredients at Rabobank International, holds that as financing has become easier to secure, there could be a rake of takeovers of the small and medium enterprise (SME) speciality players in the sector over the next 12 months.
She told BakeryandSnacks.com that as management teams in companies involved in the bakery ingredients sector start to focus on setting up structures that make their businesses more resilient to volatility, SME bakery speciality suppliers in Belgium, Germany and central and eastern European countries, in particular, could become acquisition targets.
“A lot of these smaller players such as Sonneveld and Unifine represent an attractive takeover proposition for the larger supplier companies in that they have global production and R&D facilities as well as a wide distribution network and an interesting product portfolio,” said Donceva.
However, she said that currently there is no indication of these SMEs being open or available to any acqusition offers.
Donceva maintains that consolidation for firms like family owned companies such as Sonneveld can offer opportunities to tap into faster growing niches and markets, to widen portfolios to spread risk, to team up with stronger partners, and to reduce production costs.
And, according to the market analyst, bakery manufacturers can gain from suppliers having these bigger economies of scale from acquisition due to the fact that the synergy savings will likely lead to lower costs of ingredients and will also result in more investment in innovation.
And Donceva said that bakery ingredient manufacturers generally rode out the peak of the recession well despite a decline in volumes and the reduction in overall margins.
She remains somewhat cautious though about short term recovery in the bakery sector, a statement that echoes the comments from CSM chief executive Gerard Hoetmer last week.
“Our bakery supplies activities are still facing a challenging market climate, although we have seen the declining volume trend levelling out,” he reported as first quarter CSM results for the year showed a decline in volumes by 1.2 per cent on Q1 2009.
Hoetmer said that there were no immediate signs that markets are definitely picking up but that the company remained focused “on maintaining our margins and on managing our cost base and continue our efforts to stimulate growth through innovation.”
And CSM, which supplies ingredients to semi-finished and frozen, almost-ready and ready-made products to artisan and industrial bakeries, stated that due to the continuing volatile economic climate in the main markets that it operates in, it still lacks the visibility to clearly forecast the development of sales volume over the next three quarters.