European Food Giants Stand Strong in Shaky Times

In recession-hit parts of Europe and in the U.S., where the economic recovery looks to be weaker than expected, investors are seeking the safety of European food giants.

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Shares of Nestlé, Unilever and Danone have seen strong interest in recent months, as they are likely to outperform the market in tough times.

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These food behemoths have two advantages, analysts say. First, they have relatively high exposure to emerging markets. Second, prices are falling for commodities like the milk, wheat and sugar they use to make their food and drinks.

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The pressures facing Europe appear unlikely to spill into emerging markets like Indonesia, where more consumers are buying branded food products for the first time. "To call Nestlé, Danone, and Unilever members of the European food group is a bit of a misnomer these days," said Andrew Wood, an analyst at Bernstein. "Only about 30{845d44a2f09c0018d802e19e78941a85dc2180e4ed7410cee0b34e8cb134ecea} of their sales are in Europe now. They are truly global players with a majority of their sales in emerging markets." The Wall Street Journal – Read more…