Consumer sector comment – September 2012

Date

This month, Facebook’s acquisition of online photo sharing site Instagram was finally cleared by regulators in the UK and US. Facebook acquired Instagram in May, shortly before its NASDAQ listing in a cash and shares deal worth around US$1 billion. Around the same time, Viddy, the start-up mobile video sharing app, described as the “Instagram of video”, raised US$30 million in investment to back further expansion.

There is currently much debate over the impact of social media on direct sales in the retail sector but there is no doubt consumers are increasingly using social media not just for making direct purchases but also for comparing prices, voicing opinions and seeking recommendations. Currently, direct sales from social platforms are estimated at around £200 million in a recent Barclays report but this compares with around £1 billion of influenced sales. One example is Pinterest, a pinboard style social photo-sharing website, which is now one of the top 3 most visited social networking sites in the US. According to Bizrate Insights, 32% of US online shoppers have made a purchase, based on what they have seen on Pinterest and other image-sharing sites.

In line with this trend, the European arm of DJ Esprit led a £3.2 million venture funding round in lyst.com in July. Lyst is a fashion focused s-commerce site, which collates the inventories of brands, designers and stores so that fashion followers can find out when, where and at what price clothes they want to buy go on sale. Retailers signed up include TopShop, Zara and net-a-porter.com It is free to join, with lyst being paid commission by retailers on goods bought through the website. Lyst was launched in London last year, by Chris Morton, ex Balderton Capital and plans to use the money to increase the number of fashion houses and retailers signed up to the site as well as expanding its teams in London and New York.

Deals

Petmeds.co.uk, an online store for animal medicines, food and grooming products has been acquired by MedicAnimal Ltd, the UK’s largest online retailer of pet food and healthcare supplies. The company aims to consolidate the UK’s online pet market and become the European market leader through a combination of acquisitions and continued organic growth. VetUK also announced its acquisition of Nutrecare Limited, a web-based Veterinary and Pet product retailer.

Stan James Ltd. has announced the acquisition of 25 betting shops from Betfred Ltd. for a total of £5 million. The move will increase Stan James’s betting shop estate to a total of 90. The firm has further plans to maintain its growth figures through a further expansion of sites.

Mid-counties Co-op Travel has increased its portfolio by purchasing eight stores from independent high street chain Travel Angels Ltd. This is part of the Mid-counties group plan to triple its portfolio over the next year, aiming to open more than 100 shops.

KSL Capital Partners, LLC announced the acquisition of The Belfry, a renowned hotel and golf resort in North Warwickshire. The firm specialises in travel and leisure businesses and owns several golf resorts in the US. Over the next few months they plan to renovate their first resort investment in Europe.

Serviced apartments operator Ascott has acquired The Cavendish Hotel in London for £158.8 million. There are plans to transform the 230-room hotel into a luxury resort and rename it Ascott St James London. The move will increase Ascott’s portfolio to 45 properties in 20 cities.

US based Hain Celestial Inc. has announced the purchase of some of the top packaged grocery brands of Premier Foods Plc for £200 million in a cash and stock transaction. The deal includes brands such as Hartley’s jam and Sun-Pat peanut butter which generated over $250m in sales during the last fiscal year.

Contemporary jewellery specialist, Green + Benz Ltd. located in Manchester, has been sold to a management team led by managing director, Helen Dimmick. Ms Dimmick stated: “Plans are in place to increase the turnover of the business in the next five years with store developments, expanding product ranges and services and online technology all avenues that will be explored further.”

St Austell Brewery Company Ltd. has acquired five new pubs – The Albion in Bristol, the Blue Ball Inn in Exeter, the George Hotel in Plympton, the Rose & Crown in Yealmpton near Plymouth and the Cornish Arms in Tavistock. This brings the brewery’s portfolio to 173 across the south west.

Italy-based Cremonini Group, one of the largest European food operators, has acquired the Bagel Factory, the biggest bagel shop operator in the UK. Cremonini’s experience with on-board train catering, railway stations, motorway and commercial catering places them in a good position to expand the target’s activities.