The future is bright for mergers and acquisitions (M&A) in the Asian fresh produce sector, according to Patrick Vizzone of National Australia Bank, who kicked off this year’s Asiafruit Congress in Hong Kong today (3 September) with a presentation on investing in Asia.
Vizzone told delegates attending the day-long event that Asia has exhibited strong revenue growth and high profit margins in fresh produce over the last four years, far outpacing the global average, and that this trend looked set to continue.
“Demand for fresh produce continues to remain strong,” Vizzone said. “And recently we’ve seen a number of really remarkable transactions in fresh produce in Asia. 2012 was a banner year in Asia for global food and beverage M&A with a record $53.2bn.”
In India, inbound M&A volumes rose 340 per cent during the first half (H1) of 2013 compared to the prior-year period, he revealed. And China, Asia’s most targeted country recorded a 10 per cent rise in H1 M&A volumes.
Going forward, Vizzone said Asia would drive food global food demand, with fruit and vegetables accounting for most of the increase.
“By 2050 the world population is forecast to grow to 9bn people,” said Vizzone. “Growth in demand for agri-food in Asia is expected to be 2.5 times the rest of the world put together, with China and India leading the way.”
China’s consumption growth will outpace production growth, making it more reliant on the rest of the world, he added.
“As demand outpaces supply, value moves upstream,” said Vizzone. “By 2050 the global fruit and vegetable industry could be worth some US$1.9tn.”
He added that there was a pressing need for scale in the Asian fresh produce industry structure, which presented opportunities for investors.
“Consolidation remains key opportunity and M&A driver,” said Vizzone. “As retail continues to develop along Western lines, so will production chains.”
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