As 2010 is at our doorsteps, I like to share my expectations for coming year for food industry. 2009 was a year of global crisis, we have observed serious shifts in consumer behaviors. I believe in 2010 the effects of these shifts will continue. The most prominent  change was the shift for cheaper alternative brands. This shift helped to prosper the private label market in 2009. I think the private label market will keep growing in 2010 since several researches' findings (most of which was cited in my previous postings) point that the changes in consumer behavior is mostly permanent and of course the quality and innovation in private label  support this. As consequence of consumer behavior changes, the share of discounters in retail market also started to increase in 2009 and I think there is no reason to expect a change in this trend in 2010. These two  major facts will force the branded food manufacturers to develop more innovative products and also enforce them to be more strongly present in discounters (see Wrigley presence in Aldi).

The other important expectation I have for 2010 is about mergers and acqusitions. We have spent last couple of months of 2009 with all discussions and news about Kraft-Cadbury deal. This is also a signal that we may expect more M&A news in our industry. Infact a recent study conducted by The Boston Consulting Group (BCG) and UBS Investment Bank among European companies reveals that the confidence returns to M&A markets in Europe, one in five companies will consider an M&A project in 2010 according to this research (read here). Mostly these projects will be horizontal for  consolidations. As Kraft-Cadbury deal indicates we can expect serious consolidation moves in confectionery industry in 2010. It wil not be limited to Kraft and Cadbury. It will trigger further deals from other major players like Nestlé, Mars. Those strong but relatively small players like Haribo, Perfetti Van Melle, Ferrero, Leaf will either try to increase their size by acqusitions or will be a subject of an acqusition in next 3 years. In many food categories we can expect strong local players in acqusion radar of the multinational players. Especially in developing countries this expectation is higher since multinationals are looking ways to compansate the loses they are having in mature markets due to consumer attitute shifts, by increasing thyeir presence in other markets and easiest and fastest way of doing this is to acquire local players of these markets.

A lot of prophecy? I don't think so but let me have your comments as well...

Have a nice and exiciting 2010!