InSight

Exit and Growth Strategies for Middle Market Businesses

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


Leave a Comment