According to a report by Moody's Investors Service, most of the global packaged-foods companies are well-placed for earnings growth and expansion as the economy recovers from recession. The report, Packaged-Foods Industry Shifts Priorities, says that the global packaged-foods industry is shifting focus from protecting shareholder value through internal restructuring, cash conservation and organic growth toward enhancing shareholder returns through acquisitions, stock repurchases and cash dividends. Also the internal investment focus and cash conservation that helped packaged-foods companies whether the recession is giving way to external investments and higher cash distributions. The pace of economic recovery will be slow next year and rising commodity prices will mean sluggish organic sales and earnings growth, warns the report. Consequently, many food firms will search for global growth opportunities through acquisitions, but will be cautious about overpaying.  The report picks out Kraft Foods Inc. as a good example of change. “When the recession officially began in December 2007, the company was already in the midst of a major three-year internal restructuring program launched in early 2007 that focused partly on leveraging its existing scale, reframing its core brands, and sharpening its performance culture. In September 2009, the company decided to shift gears and launch a bid for British candy giant Cadbury Plc. The $19 billion deal completed in February 2010 launched Kraft into the candy and gum business and accelerated its expansion in developing markets."

The report, Packaged-Foods Industry Shifts Priorities, is available from Moody's (www.moodys.com).