The latest economic view from PricewaterhouseCoopers' Macroeconomics unit is that a slowdown is more likely in the UK than an outright recession. Consumer spending is forecast to grow by 3.75% for 2001 as a whole, before dropping to 2.75% in 2002, although clearly there are significant downside risks if, for example, there are further terrorist attacks. Already, we in the M&A world are experiencing some changes in attitudes. Some venture capitalists and debt providers are more risk averse, prices are being renegotiated (as was the case with WT Foods at the end of September) and the entire transaction process is taking longer than usual. Those deals that do not have a strong strategic or cross-border rationale behind them have a more limited chance of being completed. The beverages sector has proved itself particularly resilient, and the last few months have seen a flurry of deal activity in both soft and alcoholic drinks segments. Allied Domecq has been among the most prolific, taking control of Bodegas y Bebidas (a Spanish wine producer), Kuemmerling (German spirits), Buena Vista Winery (Californian wine), two Argentinean wine producers and the Montana wine business in New Zealand. Cadbury-Schweppes has agreed to purchase Pernod-Ricard's soft drinks business, which includes Orangina (the number two brand in France), and has also picked up La Casera, which is the third largest soft drink manufacturer in Spain. Closer to home, the Kerry Group's highest profile deal was the acquisition of Golden Vale, but it has also added Platter Foods (desserts and chilled salads), Voyager Foods' sauces and flavoured butters division, and several other ingredients/flavours businesses. Hibernia followed up its La Bohème deal with the purchase of Sara Lee's UK bakery business, while other UK deals of note included Cranswick buying Continental Fine Foods and Richmond taking over Nestlé's UK ice cream business. Major deals in the food and drink sector tend to produce a subsequent flow of smaller disposals as portfolios are cleaned up, and a good example of this has been Greencore since it took control of Hazelwood Foods in January. The sale of five companies (a Dutch frozen meat snack business, three fish processing companies and a Dutch waffle manufacturer) in October 2001 took the proceeds from its disposal programme close to 100m euros. The last six months have also seen a number of corporate failures, with Snackhouse, Tinsley and Devon Desserts prominent among them. It seems almost inevitable that there will be further casualties in the food and drink sector over the next six months, especially among those suppliers who do not have significant market share in a particular category, those who rely on one major customer or those who lack the ability to develop innovative products. l Neil Sutton is head of consumer products, PricewaterhouseCoopers Corporate Finance {{FEATURES }}