Big players get a taste for SE Asian food companies
Bloomberg in Singapore and Sydney
An unprecedented wave of deals for Southeast Asian food and drink companies has traders betting the next targets will include chocolatier Petra Foods and instant-coffee and cracker maker Viz Branz.
Buyers from Coca-Cola Femsa SAB to Heineken announced a record US$10.4 billion of food and beverage purchases in the region last year, according to data.
The acquisitions are likely to continue as rising incomes in Southeast Asia, where more than a quarter of the population is under 15, create brand-conscious grocery shoppers willing to spend more money, said consultant Frost & Sullivan.
Most of the region's 650 million people will be middle class by 2020, and spending on food and beverages may climb at least 75 per cent by then from 2000 levels, according to Accenture. Petra, a US$2 billion Singapore-based company that dominates Indonesia's chocolate market, might appeal to overseas rivals, DBS said.
Viz Branz, a US$200 million maker of instant coffee and cuttlefish-flavoured rice crackers, is likely to be bought by its second-largest shareholder, according to Oversea-Chinese Banking Corp.
"There's clearly a lot of interest in consumer M&A" in Southeast Asia, said Vincent Fernando, an analyst at Religare Capital Markets. "Any established company can acquire branded products and pump it through its distribution network. That's what makes such an acquisition appealing."
Consumer spending on food and beverages in Southeast Asia will jump to about US$350 billion in 2020 from less than US$200 billion in 2000, accord- ing to a 2011 analysis by Accenture.
Food and drink spending surpasses every other category, including housing and transport.
The number of households in the region with annual disposable income of between US$5,000 and US$10,000 - designated as the lower-earning end of middle class - will more than double to more than 50 million, with households in Singapore, Malaysia and Thailand wielding the most spending power, the data shows.