The Food Industry

The food industry is one of the largest and most fundamentally important industries in the world representing in the aggregate $3.5 trillion in revenues in the U.S. alone. The industry represents a major portion, approximately 20%, of the economy and includes an abundance of public and privately held companies in which to invest.

It encompasses five sectors including food inputs, which comprise companies that produce products used in the food industry such as food ingredients, food equipment, crop nutrients, food packaging, agribusinesses and other food and beverage related businesses, food manufacturing, food distribution, food retailing and food service. It includes over 100 distinct, but interrelated segments, many of which are larger than $25 billion in size. There are more than 50,000 food companies in the U.S. alone.

The food industry is generally one of the most defensive, stable areas of the economy, characterized by solid long term demand and growth prospects. It includes an abundance of well established businesses, many of which are recession resistant with solid recurring free cash flows and low “downside” risk.

Despite providing low “downside” risk to investors - the food industry, significantly, also provides for major “upside”. With more than 300 food mergers and acquisitions each year for the last five years in the U.S. alone, the need for synergistic acquisitions, divestiture of non-core businesses, and improved margins provides an abundance of opportunities to facilitate value enhancing strategic transactions and operating strategies to increase shareholder value

The food industry today is undergoing significant change. Many food companies are in need of transformation and have significant unrealized potential.