More than 60 percent of large U.S. food and beverage companies are sitting on boatloads of cash, and they plan on putting it to use despite widespread worries that a full economic recovery is still two years away.
A third of the companies surveyed by KPMG LLP plan to use cash reserves to buy up other companies, according to a survey of 101 food and beverage executives by the audit, tax and advisory firm scheduled to be released Tuesday.
Cash-rich Coca-Cola Co. raised eyebrows last week when it announced it didn't repurchase its own shares for most of the second quarter as it considered "strategic alternatives." That term is often used to refer to acquisitions of brands or smaller companies, although the Atlanta-based company did not disclose details. Speculation quickly turned to Arizona iced tea, which is widely rumored to be for sale.
Job-seekers, take note: 46 percent of the executives say they'll add employees next year, but 36 percent say job numbers won't return to pre-recession levels for at least another two and a half years. Nearly one in five bosses say the head count will never return to pre-recession levels.
Only 8 percent of executives plan to expand their workforce by 6 percent or more. With employees more productive these days, executives generally don't think it prudent to add many new ones.
"They've basically learned to live with less labor," said Patrick Dolan, KPMG's U.S. sector leader for food, drink and consumer goods. "A lot of companies have lived through downsizings."
KPMG did not disclose its sources, but said its interviews covered privately held and publicly traded companies with revenue ranging from $100 million to $10 billion and above.
Separately, consulting firm AlixPartners said in a report that this year's number of mergers or acquisitions in the restaurant industry has already passed 2008's total. Midtown-based private equity firm Roark Capital Group purchased Arby's in one of the most recent deals.
Both sellers and buyers are becoming more realistic, said Adam Werner, head of AlixPartners' North American restaurant and food service practice. "You've got more of a realization of what things are actually worth," he said.
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