Food manufacturing and supply multinational companies (MNCs) are far less likely to establish subsidiaries in western Europe than the average MNC, according to analysis of GlobalData’s exclusively compiled subsidiary database.
Companies establish subsidiaries for a variety of reasons: they can allow them to expand into profitable new markets; to increase revenue; and to diversify their holdings to better manage risk. As a vital component of a company’s expansion plans, the establishment of a subsidiary can offer insight into investment trends, with our database showing these investment patterns on a wider, sector level.
Investment Monitor’s MNC subsidiary database contains information for 2,188 of the world’s leading companies by revenue. Of these MNCs, 44 are in the food manufacturing and supply industry, representing 2% of the overall companies.
These food manufacturing and supply companies are less likely than average to establish subsidiaries in western Europe (28.2% versus 36.8%) and are more likely to establish them in Asia-Pacific (26.4% versus 21.4%).
Overall, the 44 food manufacturing and supply MNCs in our database operate 4,606 subsidiaries. This comes to an average of 104.7 subsidiaries per company, compared with an average of 99 for the entire database of 2,188 companies.
It should be noted, however, that the number of subsidiaries is by no means evenly distributed within the sector. The most common number of subsidiaries for an MNC in the sector (the mode) is 44, while the median comes in at 49.5, indicating that the simple average is skewed heavily by the bigger parent companies.
Where has PepsiCo established its subsidiaries?
US-based PepsiCo has the largest number of subsidiaries among food manufacturing and supply sector MNCs within our database with 550. This means it ranks in 66th place across our entire database when measured by the total number of subsidiaries.
PepsiCo’s subsidiaries are distributed across the world, with 29.8% of the total located in North America, the highest of any region. Some 157 of the company’s subsidiaries are located in its home country of the US, while the Netherlands is the second most popular destination with 35.
After PepsiCo, Unilever has the second-largest number of subsidiaries with 550, while Nestlé is third with 345. UK-based consumer goods group Reckitt Benckiser has 419 subsidiaries but is a business largely focused outside food – and increasingly so when considering the recent deal to sell its infant formula assets in China.
Overall, 1,418 of the subsidiaries owned by the food manufacturing and supply MNCs in the database were located in the same country as the parent company was headquartered. This meant MNCs in the sector were less likely than average to have a preference for domestic subsidiaries at 30.8%, with the figure for the entire database standing at 45.7%.
GlobalData has compiled a list of top MNCs based on revenue. Any top companies that did not have a subsidiary were removed from the list. The latest company annual reports (2019 and 2020, where available) and websites were analysed for a total of 2,188 companies. For a subsidiary to be included, the parent company had to have a majority ownership/control in the subsidiary. Affiliates, associates, joint operations and joint ventures were included as long as the ownership criteria were met. Subsidiary information was captured at a country level. Country names were standardised. In total, 216,898 subsidiaries were captured.
This article originally appeared in Just Food.