The food sector includes branded, private label and food service manufacturers.
Increasingly, retailers will gain more power in placing branded products on valuable shelf space and will compete in large categories with their own house brands. Food service companies will continue to consolidate to take advantage of scale economies in logistics, transport and procurement.
Key & Company believes several emerging trends will direct investments in food companies, as follows:
- Strong brands will increasingly be concentrated in large consumer packaged food companies.
- Growth will be found in those companies that supply retail channels with high quality private label, fresh and prepared foods while simultaneously reducing in-store labor costs.
- Consumers will have increased interest in natural and organic foods.
- Functional foods will increasingly be used to deliver nutritional supplements and vitamins and drugs to an aging populace.
- Large branded food companies will consolidate into multinational firms serving mass markets thus giving rise to a growing number of smaller specialized firms serving niche markets.
- Restaurant and food service menus will offer more and more products that offer health and nutrition benefits.