Behind its resilient image, the food industry has also been disrupted, on both a daily basis and at a deeper level, with significant upsets to its value chain. However, even in this difficult situation, the key players in this sector have performed admirably, mobilising themselves to continue manufacturing and securing the supply of retail outlets. Of course, many companies have been affected, but the situation is very unequal: some companies are going through deep crises (the restaurant and catering industry...) but on the other hand, the lockdown has been a boon to others, allowing them to prosper.
The crisis has shone a light on the strategic nature of this sector and the necessity of reinforcing the autonomy of our food supply system in a world economy which is being called upon to reshape itself. In this environment, the position of the capital investor is more important than ever to protect and reinforce this sector, allowing industry players to grab acquisition or investment opportunities. The nutrition transition, the green transition, innovation and vectors of the new dynamic for the food industry are all challenges which must be be faced, but these consumer trends are also growth levers which need to be rapidly addressed.
Will the Covid-19 crisis change everything in this sector ? No, we do not think so. But the rhythm of disruptions (economic, societal and environmental) will accelerate. The field of possibilities is huge and this multi-faceted crisis will be advantageous to the boldest ones, allowing them to grasp new opportunities for growth and value creation. Anticipation, prevention, operational control and competitiveness are the keys to success.
At Credit Mutuel Equity, we have been strongly committed to the food processing industry for many years, because alongside all the men and women leading these companies and all the teams who work with them, we find :
- a capacity to innovate and reply to consumer needs (snacking, local, natural foods...) in a segmented approach as opposed to a single model for everyone,
- regular and solid growth, often at a moderate rate but sometimes with niche acceleration (such as in the nutrition, organic, health sectors...)
- a very dense industry which relies on a network of companies, which signifies real market depth, across a wide range of trades (food production, distribution, equipment, packaging, catering...)
- adjusting supply and behaviour to the internationalisation of cultures, primarily the digitalisation of customer relations,
- the generating of regular cash flows, relying on a growing population base, and an increase in the dynamic of food product consumption.
Therefore if the public health crisis has an impact on and accelerates these ongoing changes, we hope more than ever to accompany SMEs and middle market companies in their adaptation.
Through our food industry sector (CES Agro consulting centre), launched in 2017, we have been able to observe the rise in power of these underlying trends and the transformations they bring about in the SME and middle MME models of this sector. This transformation is a source of uncertainty and necessitates total mobilisation, strong reactivity and rapid execution. It means using education in order to give meaning to actions within the company. It also means taking difficult decisions, sometimes leaving one’s comfort zone, exploring new territories, taking the lead rather than submitting to change which is imposed on us.
Being a long term partner alongside these directors means supporting them and accompanying them in implementing change, and putting at their disposal the financial and human resources to sustain and secure their companies in the face of the current challenges.
Jérôme Geney et Frédéric Plas Crédit Mutuel Equity