Putting Globalization and Concentration in the Agri-food Sector into Context

Current Agriculture, Food & Resource Issues

□ Domestic                  □International

Figure 7 Mergers and acquisitions involving EU retailers (billions of US$)

Source: Gurdjian, P. et al. 2000. Bagging Europe’s Groceries. McKinsey Quarterly 2:68-75.

average of 11 in 1998. In the United States, the CR4 increased from 17 percent in 1987 to
27 percent in 1998 (Calvin et al., 2001). In both the United States and abroad much of the
growth was achieved through acquisition, and every indication is that the trend toward
global retailers will continue. European retailers are also heavily involved in expanding
their operations globally, as illustrated in figure 7. However, economies of scale and cost
savings tend to be more difficult for these retailers to capture in international than in
domestic acquisitions (Gurdjian et al., 2000).

The trend toward global organizations was reflected in the mergers and acquisitions in
Canada during the period 1996-2000 (figure 6). The nature of that activity is becoming
more international, with foreign companies entering the Canadian market and more
Canadian companies purchasing foreign firms. In food processing, the percentage of
Canadian/Canadian transactions declined from 68 percent in 1996 to 41 percent in 2000,
while Canadian acquisitions of foreign targets increased from 18 percent to 38 percent in
the same period.

The Canadian-based transactions over the 1996-2000 period were further categorized
by the nature of the acquired Canadian asset into:

1. acquisitions of private Canadian companies;

2. acquisitions of public Canadian companies; and

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