Food & Drink Round-up Q313: Core Views
The third quarter of 2013 did not have a marquee event of the same magnitude as the first-quarter purchase of Heinz by Warren Buffett's Berkshire Hathaway fund and Brazil's 3G Capital for US$28bn. From a core views perspective, it has very much been business as usual , with notable developments including the ongoing improvement in consumer sentiment in the United States ( notwithstanding the fiscal impasse ) and parts of Western Europe such as the UK. Emerging markets have largely been a mixed bag : W eakened confidence in India, China and Brazil has affected different elements of the food and drink industry , and the threat of the US tapering its quantitative easing programme has led to downward pressure on many emerging market currencies, which has made sales in these markets less valuable to major multinationals.
The run-up in commodity prices on the back of the US's worst drought in about 50 years was among the most important themes seen in 2012. However, the prices of key grains have since fallen sharply, and based on the S&P GSCI Grains index are back to where they were in mid-to-late 2010. This, of course, has been very good for the global food processing industry. Ultimately, what food companies really want is stability, which makes it easier to pursue effective hedging where necessary.
Food Safety Concerns Will Increasingly Affect Consumption
|Prices Now Expected To Find A Base|
|S&P GSCI Grains Index Spot|