Fitch Ratings says in a new report that improving consumer confidence and disposable income should benefit the European packaged food sector, but not enough to merit any meaningful positive rating action.
In the "Western European Food and Agribusiness 1H15 Dashboard" Fitch says lower fuel costs and lower commodity prices will feed into increased consumer spending power, and with a strengthening pound relative to the euro and developing markets currencies, UK consumers stand to be the main beneficiary in Europe. This report does not, however, discuss the secular changes in consumers' shopping behaviour nor the share of the adjustment in consumer prices across retailers and food processors.
Fitch says improving consumer spending, together with falling agricultural commodity prices, will have mixed impact on the food and agribusiness sector. Branded packaged food manufacturers, especially those with a global reach, strong pricing power and ability to protect profit margin stand to benefit the most.
