2014 showed remarkably high activity in the number of completed M&A transactions within the Food, Beverage and Agricultural industry. The past year saw an increase in completed deals on a global level, from 1,537 in 2013 to 1,730 in 2014 – an increase of almost 13%.
The Food & Beverage sector team at Clearwater International expects these high levels of M&A activity to continue in 2015, driven by attractive underlying market trends and industry appetite for acquisitions:
- Access to growth markets where demographic development, increasing consumer wealth, and a growing middle class are driving demand for food and convenience solutions. Weak growth in mature markets is placing pressure on regional food groups to pursue new markets in order to support growth;
- Continued consolidation driven by economics of scale and product focus – especially with increased legislation and consumer demand for traceability and documentation;
- Continued vertical integration, to control the value chain from ‘farm to fork’, will also continue to drive acquisition activity – especially with increasing consumer demand for Clear Label products, documenting the content and purity of the products;
- Consumer trends favouring healthy and organic food, as well as innovative convenience products, are driving the multinational food groups to acquire smaller food players which benefit from innovative solutions and strong consumer perception; and
- The Food & Beverage industry is perceived by most financial investors as a ‘safe haven’, as a result of multiple global private equity transactions in the sector in 2014 – a trend which we expect to continue into 2015.