FOOD AND BEVERAGE M&A OVERVIEW

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１．FOOD AND BEVERAGE M&A OVERVIEW :
– GENERAL M&A IN EUROPE HAS BEEN RISING FOR THREE YEARS AND IT SEES NO END IN SIGHT. BUSINESSES SEEKING GROWTH ARE INCREASINGLY LOOKING AT ACQUISITIONS AS A MEANS TO ACCELERATE THEIR PENETRATION IN NEW MARKETS, WITH MANY LOOKING AT EXPORT MARKETS TO COUNTERACT SLOWER GROWTH IN DOMESTIC MARKETS.
– FOCUS ON HEALTH AND CONVENIENCE PRODUCTS WITH A PREMIUM BEING PAID FOR UK BASED BRANDS.
– NUMBER OF DEALS STABLE WITH VALUATIONS HIGH AND INCREASING: TRADING AND TRANSACTION MULTIPLES ARE INCREASING. THE ALCOHOLIC DRINKS SECTOR CONTINUES TO BE A PROLIFIC AREA OF M&A ACTIVITY IN EUROPE. KEY DRIVER OF M&A IS OF COURSE THE POTENTIAL TO IMPROVE PROFITABILITY BY DRIVING OUT COSTS AND IT IS CLEAR THAT FOR THE RIGHT OPPORTUNITY SIGNIFICANT PROFIT MULTIPLES ARE BEING PAID.
– ALTHOUGH THE NUMBER OF TRANSACTIONS DECLINED SLIGHTLY IN 2017, THE TOTAL NUMBER OF TRANSACTIONS IS STILL SIGNIFICANTLY ABOVE PREVIOUS YEAR LEVELS. WE EXPECT 2018 AND 2019 TO BE EVEN MORE ACTIVE.
– THE CROSS-BORDER DEAL PERCENTAGE REMAINS CONSTANT AT CIRCA 35%. STRATEGIC BUYERS WERE STILL PREDOMINANT. THE FINANCIAL BUYER PERCENTAGE WAS CONSTANT AT 14%.
– ON A EUROPEAN LEVEL, FRANCE IS THE MOST ACTIVE BUYER, HOWEVER PREDOMINANTLY ON A DOMESTIC LEVEL. OTHER ACTIVE FOREIGN EUROPEAN BUYERS ARE FROM THE UNITED KINGDOM, GERMANY, SPAIN, NETHERLANDS, RUSSIA, UNITED STATES, SWITZERLAND AND DENMARK.
– THE SECTOR IN GENERAL IS GROWING AND REMAINS HEAVILY COMPETITIVE. FURTHER CONSOLIDATION IS EXPECTED, AS COMPANIES AIM TO BENEFIT FROM ECONOMIES OF SCALE.

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２．GLOBAL FOOD AND BEVERAGE M&A LANDSCAPE:
– FOOD AND BEVERAGE INDUSTRY IS PREDOMINATELY DRIVEN BY STRATEGIC BUYERS (INCLUDING COMPANIES PRIMARILY OWNED BY PRIVATE EQUITY INVESTORS) WITH STRATEGIC TRANSACTIONS REPRESENTING 92% OF TOTAL DEAL FLOW OVER THE LTM.
– WITH CONSUMERS LOOKING LESS AT BRAND NAMES AND FOCUSING MORE ON NATURAL AND ORGANIC GOODS, LARGE COMPANIES ARE LOOKING TO REMAIN COMPETITIVE THROUGH ACQUISITIONS.
– THE DEMAND FOR LOCALLY SOURCED AND ORGANIC FOODS HAS YET TO SLOW DOWN, LEADING TO THE RISE OF SMALLER BRAND NAMES IN THE INDUSTRY. THE ONGOING INDUSTRY CONSOLIDATION WILL LIKELY CONTINUE AS LARGE ESTABLISHED COMPANIES LOOK TO GAIN RECOGNITION FROM LOCAL BRAND NAMES AND NATURAL/ORGANIC FOOD.
– MORE TRADITIONAL COMPANIES WILL TAP INTO THE LATEST CONSUMER TRENDS, SUCH NATURAL AND FRESH, BY MEANS OF STRATEGIC ACQUISITIONS.

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３．DRINKS SECTOR:
– THE AUCTION OF BRITISH FAMILY-RUN CIDER COMPANY ASPALL CYDER CONCLUDED WITH US GROUP MOLSON COORS SECURING THE ACQUISITION FOR £40 MILLION. LONDON-BASED BREWER FULLER’S STRENGTHENED ITS POSITION IN THE CRAFT BEER MARKET BY ACQUIRING DARK STAR BREWING COMPANY. THE ACQUISITION WILL CREATE OPPORTUNITIES FOR DARK STAR TO BREW MORE ONE-OFF SMALL BATCH BEERS HAND-IN-HAND WITH EXPLORING THE EXPORT MARKET AND EXPANDED BOTTLE AND CAN FORMATS.
– DIAGEO ACQUIRED BELSAZAR GMBH, A PREMIUM APERITIF FROM GERMANY’S BLACK FOREST. THE ACQUISITION MARKS THE FIRST COMPANY TO BE ACQUIRED BY DIAGEO THROUGH DISTILL VENTURES. THE ACQUISITION OF BELSAZAR BOLSTERS DIAGEO’S PRESENCE IN THE APERITIF SECTOR, WHICH IS DEEMED AN AREA OF FUTURE GROWTH AS DEMAND FOR LOWER ABV COCKTAILS AND LONG DRINKS ARE ON THE RISE.
– HALEWOOD ACQUIRED SPICED RUM BRAND DEAD MAN’S FINGERS, AND SPANISH GROUP DIEGO ZAMORA WHICH ACQUIRED A 45% STAKE IN REFORMED SPIRITS COMPANY LTD, OWNER OF MARTIN MILLER’S GIN. THE ACQUISITION OF MARTIN MILLER’S GIN STRENGTHENS THE ZAMORA GROUP’S PORTFOLIO, ENHANCING ITS PRESENCE IN THE BOOMING SUPER-PREMIUM GIN CATEGORY.
– ACQUISITION OF THE CRAFT BREWER CAMDEN TOWN BREWERY BY AB INBEV FOR £85M AND THE INVESTMENT BY JACK DANIELS INTO THE IRISH WHISKEY MARKET WITH THE PURCHASE OF SLANE CASTLE.
– PRIVATE EQUITY BUYERS WERE AGAIN A COMMON PRESENCE WITHIN THE SECTOR AS CALEDONIA INVESTMENTS COMPLETED THE ACQUISITION OF JERSEY BASED BREWERY THE LIBERATION GROUP FOR £118M. CALEDONIA WILL PROVIDE AN ADDITIONAL £40 MILLION OF FUNDING FOR INVESTMENT IN ITS EXISTING ESTATE AND FURTHER ACQUISITIONS.
– IRISH OWNED PRIME ACTIVE CAPITAL ACQUIRED BRITISH CONSUMER DRINKS MAKER C7 BRANDS FOR AN UNDISCLOSED FEE. IT IS BELIEVED THAT AN ENLARGED PRIME ACTIVE GROUP WILL BE USED AS AN INVESTMENT VEHICLE TO ACQUIRE BRAND ASSETS WITHIN THE BEVERAGE SECTOR.
– SOFT DRINK BRAND ROCKS WAS ACQUIRED BY SHS WHICH IS COMPLEMENTARY TO SHS’S EXISTING SOFT DRINKS PORTFOLIO.