Mergers and takeover deals could the be key to securing further growth in the region’s food and drink businesses - according a new report.

A study by Grant Thornton East Anglia noted that many of the region’s food and drink producers have reacted well to difficult times by streamlining processes and investing in technology and new product development.

The financial and business advisers said the focus had helped create a stronger sector that is now ripe for merger and acquisition (M&A) activity.

Food and drink manufacturing in the East of England is worth more �7bn a year and accounts for 12pc of the region’s employment.

For the UK as a whole, the Food and Drink Federation (FDF) has set an ambitious growth target of 20pc for the sector by 2020, and to play their part in this, Grant Thornton’s report suggests the region’s firms will need to continue becoming stronger and leaner to push forward.

The research also highlights that M&A markets, both at home and abroad, are the next logical step to achieve this growth.

Richard Proctor, practice leader at Grant Thornton in Norwich, said: “While some food and drink businesses might still be feeling the pressure, many others have reacted to the downturn by tightening their processes. This is reaping benefits as businesses focus on embedding on-going innovation into their organisation to deliver from a lower and more productive cost base.”

Between 2008 and 2009, tough economic conditions forced a steep decline in UK M&A activity in the sector, falling to the lowest point in some time.

However, since then volume has been climbing steadily with the number of deals in 2011 rising by 22 pc on the previous year to reach almost pre-recession levels. This increase has been buoyed by restructuring and consolidation as businesses seek to strip out dead wood and operate in a more efficient way.

The research suggests the trend is set to continue with 82 pc of Private Equity (PE) houses questioned expecting to invest in the sector over the next 12 months and almost half of corporates (46pc) also predicting investment.

“There appears to be real confidence among industry professionals that there will be a plentiful supply of acquisition opportunities over the coming year,” Mr Proctor added. “Perhaps the only caveat is that obtaining these at the right price may yet be difficult as price expectations on the vendors’ part have yet to fall to levels that fully reflect the market realities.

“Speed is of the essence in this rapidly changing M&A landscape. The key to making the most of the opportunities available is to be flexible and act quickly, both to seize these opportunities and to axe things that aren’t working.”

The report said that the third biggest driver of growth was found to be overseas expansion as companies need to diversify their activities abroad and look to both the developed and emerging markets to grow their business, again providing opportunities for M&A activity.

“We believe that although ambitious, the growth targets set by the FDF are achievable,” Mr Proctor said. “As always amongst the changing landscape there will be winners and losers. However, our experience tells us the winners in this region will be the firms that can up their game with a clearly defined strategy, a strong management team and a sensible financial structure.”