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Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Food/Beverage’ Category

M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Sep 19, 2018

The report below gives a good overview of the third quarter M&A activity in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q2 2018 included 70 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions closed in May when Lassonde Industries, Inc. acquired Old Orchard Brands, LLC for US$158.9 million in cash, contingent payout and other payment. Under the terms of the agreement, Lassonde Industries paid US$146 million in cash and an additional US$10 million over next two years subject to specified financial milestones. The transaction is in line with Lassonde Industries’ growth strategy and improves its manufacturing footprint in the Midwestern United States. Founded in 1985, Old Orchard Brands, is located in Sparta, Michigan and processes and bottles fruit juices, frozen juice concentrates and nonalcoholic drink mixers.

The recent acquisition of Body Armor by Coca Cola is a continued example of the growth in the specialty beverage sector. This has been particularly evident in the tea sector.

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M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Jun 15, 2018

The second quarter M&A below provides you a good overview on activities in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q1 2018 included 38 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in January when Highlander Partners LP acquired Chicago Custom Foods LLC, trading as Kernel Season’s from VMG Equity Partners LLC for an undisclosed amount in cash. The transaction was funded by Regions Bank and Norwest Mezzanine Partners. The acquisition allows Highlander Partners to expand its investment portfolio and enables it to focus on food companies and the CPG sector in general. Founded in 2000, Chicago Custom Foods LLC is located in Elk Grove Village, Illinois and provides popcorn seasonings and other snack products.

The cost of food in the United States increased 1.40 percent in April of 2018 over the same month in 2017.

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M&A Quarterly News In The Food and Beverage Industry Sector

By Terry Fick | Mar 28, 2018

The first quarter M&A below provides you a good overview on activities in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector sector for Q4 2017 included 72 closed deals, according to data published by industry data tracker FactSet. One of the notable transactions of the quarter was announced in October when Ferrero SpA acquired Ferrara Candy Co, Inc., a portfolio company of Catterton Management Co LLC, for a.. Read more »


M&A Quarterly News In The Food & Beverage Industry Sector

By Terry Fick | Nov 06, 2017

The fourth quarter M&A below provides you a good overview on activities in the Food and Beverage Industry SectorM&A activity for North American based target companies in the Food and Beverage sector for Q3 2017 included 49 closed deals, according to data published by industry data tracker FactSet.

Consolidation continues in the sector as McCormick & Co, Inc. acquired the business and assets of the food division of Reckitt Benckiser Group Plc for US$4.2 billion in cash. The deal includes a 100% stake in The French’s Food Co LLC, The French’s Food Co, Inc., The RT French’s Food Co Ltd and Tiger’s Milk LLC. The acquisition strengthens McCormick & Co.’s market position. According to reports, Kraft Heinz Co and other American private equity firms were interested in acquiring the business.

With the rise in popularity of organic foods, one sub-sector that continues to grow is the gluten-free sector, which is on a strong upward trajectory.

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M&A News In The Food and Beverage Industry

By Terry Fick | Sep 19, 2017

The 3rd Quarter M&A report below provides you a good overview on activities in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q2 2017 included 37 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $89 million.

One of the largest deals of the quarter closed in April when Tyson Foods, Inc. acquired  AdvancePierre Foods Holdings, Inc. for US$3.2 billion in cash, via tender offer. Based in Cincinnati, Ohio, AdvancePierre Foods Holdings produces and supplies sandwich products for foodservice and retail customers, schools, and convenience channels. The merger complements and expands existing business.

Farm and wholesale food prices continue to remain low, which is beneficial to consumers but limiting to retail profits.

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M&A News From the Food & Beverage Industry

By Terry Fick | Feb 23, 2017

food & beverageOn the public markets the Food & Beverage sector kept pace with the rest of the market experiencing a hefty post-election bounce. Conagra Brands, Inc. (NYSE: CAG) had a topsy turvy quarter taking a precipitous drop in November from $48/share to $34/share, but finished the year on an uptick at $39.14/share.

Faced with slowing sales in grocery stores and discount clubs, snack food manufacturers are looking to grow revenue online. E-commerce has become one of the fastest-growing avenues for purchases of ready-to-eat snacks as major food companies continue to increase their investments in the channel, according to NPD Group. Mondelez International recently launched a holiday-themed website to sell tins of Oreos directly to consumers, marking the first time the company is overseeing its own supply chain and shipping logistics, Bloomberg News reports. The snack food giant established a dedicated e-commerce team in 2016 and hopes to reach $1 billion in online revenue by 2020. The company will occasionally offer special limited-time promotions through its own website, but most of its products will ultimately be sold through third-party online retailers like Amazon. Some manufacturers have leveraged social media buzz to sell rare and premium varieties of snack foods that are unavailable in most brick-and-mortar outlets. Typical online snack food purchasers are households with incomes of $75,000 and above.

Industry Indicators

  • The consumer price index for food, an indicator of food product values, fell 0.2% in December 2016 compared to the same month in 2015.
  • US nondurable goods manufacturers’ shipments of food products, an indicator of demand for food manufacturing, rose 0.4% year-to-date in November 2016 compared to the same period in 2015.
  • US retail sales for food and beverage stores, a potential measure of food demand, increased 2.4% during 2016 compared to 2015.

Posted by Terry Fick.


Read the Entire Food & Beverage 1st Quarter Newsletter Here


M&A Trends in the Food & Beverage Industry

By Terry Fick | Nov 10, 2016

M&A Trends | Food & Beverage IndustryOne of the largest food & beverage deals of the quarter was announced in July when French dairy company Danone SA agreed to buy U.S. organic-foods producer WhiteWave Foods Co. for $10.4 billion. The move is an example of M&A Trends in the Food & Beverage Industry large food companies paying strong multiples to get a footprint in organic product lines.

Food producers may have to spend more for in-house testing to determine whether their products contain GMOs as a result of a new federal labeling law. A new law requiring the USDA to develop a nationwide standard for labeling foods containing genetically modified organisms (GMOs) is expected to result in higher costs for food manufacturers. The law, approved in summer 2016, will require companies to disclose GMOs through text labels, symbols, or digital codes (such as QR codes). The USDA has been given two years to finalize the rules. The USDA is also tasked with determining the amounts of GMO substances present in foods necessary to prompt labeling, according to Food Safety News. The law’s supporters, which include many large food companies, trade groups, and retailers, contend that federal rules will counter a patchwork of state-level GMO labeling legislation. The legislation’s critics argue that the law could make it difficult for consumers to determine if GMOs are present in foods. Despite substantial scientific evidence that GMOs are safe, their presence in the food supply remains controversial.

Industry Indicators

  • US nondurable goods manufacturers’ shipments of food products, an indicator of demand for food manufacturing, rose 0.3% year-to-date in July 2016 compared to the same period in 2015.
  • US retail sales for food and beverage stores, a potential measure of food demand, increased 2.1% in the first eight months of 2016 compared to the same period in 2015.

Posted by Terry Fick.

Read the Entire Food & Beverage 4th Quarter Newsletter Here


Food & Beverage Industry M&A News

By Terry Fick | Sep 01, 2016

food and beverage industryFood & Beverage Industry – A major recall of frozen foods contaminated by listeria bacteria is putting pressure on government regulators to take a closer look at safety practices in the food manufacturing sector. Millions of packages of fruits and vegetables made by Washington-based CRF Frozen Foods were pulled from store shelves in April and May 2016, making the incident one of the largest food recalls in recent history, according to the Associated Press. The company’s recall includes more than 350 product lines under 40 different brand names, and CRF’s retail customers — which include Costco, Target, Trader Joe’s, and Safeway — have imposed secondary recalls of at least 150 additional products, Food Safety News reports. There is evidence that past enforcement of health and safety regulations has been lax at the CRF plant where the listeria outbreak originated: FDA and state agriculture inspectors documented several code violations at the facility since 2014 that were never adequately resolved. The US Justice Department is investigating a similar incident in which Dole Food recalled listeria-contaminated packaged salad products earlier this year, more than a year after federal investigators first found evidence of contamination at one of the company’s production plants.

Commercial water bottlers may face increased opposition from the public and government agencies concerned about water usage and pollution caused by discarded bottles. A recent vote by residents near Portland, Oregon, to halt construction of a commercial water bottling plant could signal growing opposition to the industry. Hood River County voters defeated an eight-year effort by Nestlé Waters North America to build a bottling plant, citing drought and environmental issues. An appeal is possible, according to the Wall Street Journal. A similar fight is underway in Flathead County, Montana.

Industry Indicators

  • US nondurable goods manufacturers’ shipments of food products, an indicator of demand for food manufacturing, rose 0.2% year-to-date in May 2016 compared to the same period in 2015.
  • US retail sales for food and beverage stores, a potential measure of food demand, increased 2.5% in the first six months of 2016 compared to the same period in 2015.

Posted by Terry Fick.

Read the Entire Food & Beverage 3rd Quarter Newsletter Here


Food & Beverage Industry M&A Trends

By Terry Fick | May 12, 2016

food & beverageOn the public markets, the S&P Food & Beverage Index held steady compared to the rest of the market in January but remained somewhat flat as the quarter ended. Starbucks (SBUX) continues to be one of the sector’s public leaders. The stock has appreciated 49% over the past year and currently yields 1.33%.

As consumers become more interested in products free from artificial dyes and flavors, a growing number of food manufacturers are using natural spices to color their packaged foods. Kraft Heinz recently began using turmeric as a replacement for yellow #5 and yellow #6 in its flagship macaroni and cheese brand. Annatto is another spice that is increasingly being used in place of yellow dyes, while paprika gives an orange color to products ranging from sausages to cake icing, according to The Wall Street Journal. Several other major food companies, including Hershey’s and General Mills, are also increasing their use of spices and other natural ingredients. Food manufacturers must invest heavily in research and development to ensure that the new recipes don’t affect an item’s taste or texture. 

Sales of coconut water are growing steadily in the US and globally as consumers continue to stock up on healthier beverages. The US coconut water market reached $778 million in annual revenue in 2015, a 27% increase from the previous year, according to Technavio. The research firm expects US sales to continue growing by about 26% per year through 2019, to about $1.9 billion. Leading US coconut water brands include Coca-Cola’s Zico, PepsiCo’s O.N.E., and Vita Coco.

  • US nondurable goods manufacturers’ shipments of food products, an indicator of demand for food manufacturing, fell 0.6% year-to-date in February 2016 compared to the same period in 2015.
  • US retail sales for food & beverage stores, a potential measure of food demand, increased 3.2% in the first three months of 2016 compared to the same period in 2015.
  • US nondurable goods manufacturers’ shipments of beverages, an indicator of beverage products and bottling production, rose 5.2% year-to-date in February 2016 compared to the same period in 2015.

Posted by Terry Fick.

Read the Entire Food & Beverage 2nd Quarter Newsletter Here


M&A News from the Food & Beverage Industry

By Terry Fick | Mar 03, 2016

Food & BeverageFood & beverage wholesalers may see labor costs rise in the short term as heavy demand for truck drivers in the US puts pressure on employers to increase salaries. Average annual pay for truckers reached a record $57,000 in 2015, up 17% from the average two years earlier, according to the National Transportation Institute. In that same period, average wages for all US industries rose by less than 4%. The strengthening economy is creating stiff competition for drivers as companies expand their distribution networks to transport higher volumes of products. Trucking industry groups estimate that nearly 50,000 additional drivers are needed just to keep up with demand, The Wall Street Journal reports. Many distributors pass the costs of salary increases along to grocers, retailers, and other customers.

The improving public image of natural saturated fats is helping food manufacturers sell more butter, whole milk, red meat and other full-fat products. US butter sales rose about 15% in 2014 and another 6% in the first three months of 2015, and global sales are increasing at a rate of 2% to 4% per year, according to a recent analysis by Credit Suisse. Meanwhile, sales of whole milk rose 11% in the first six months of this year, compared to a 14% decline in skim milk purchases. Consumers are cutting back on heavily processed foods and trans-fats in favor of foods with more natural ingredients, including items rich in saturated fats such as organic dairy products, grass-fed meats, natural oils, and nuts.

Industry Indicators

  • US retail sales for food services and drinking places, a potential measure of food demand, increased 8.1% in 2015 compared to 2014.
  • US tourism spending for food services and drinking places, an indicator for food distributor revenues, increased 7.7% in the third quarter of 2015 compared to the same period in 2014.

Posted by Terry Fick.

Read the Entire Food & Beverage 1st Quarter Newsletter Here