M&A activity

The past year has been a busy one for M&A activity in the Food and Beverage industry.

Fuelled by changing consumer tastes driven by younger consumers, defensive acquisition plays from mature and established players, and the race to acquire innovative health conscious food companies, M&A activity has been strong.

At Clearwater International, we recorded a total of 41 deals in the global food ingredients market for 2015. For the first seven months of 2016, 20 deals have closed. This indicates that strong deal volumes are set to continue.

As a result of the aforementioned trends, M&A volume is expected to remain strong in the near future, particularly for innovative health focused companies.



Major deal drivers

Changing tastes of younger consumers

Health conscious and nutritionally aware millennials are driving huge changes in consumer preferences in the F&B sector. Consumers are moving away from prepackaged, artificial foods with an increasing demand for natural, organic and simple ingredients in developed countries. Demand from developing countries is also beginning to shift and this will drive further growth for companies producing these foodstuffs. As companies look to make their products healthier, innovative food ingredient companies are also in demand.

Big player consolidation

Furthermore, the food ingredients sector remains highly fragmented, with the top three F&B companies in most markets typically controlling around 25% of the market.

One of the major deals in the market over the past year was the €56bn takeover by Heinz of Kraft Foods to create Kraft Heinz, backed by Warren Buffet’s Berkshire Hathaway and 3G Capital.

As consumers move away from packaged foods, larger and more mature F&B companies are turning to M&A for scale in order to drive synergies to increase profits and capture market share. The Kraft Heinz deal is a perfect example of this strategy as the combined company expects to achieve €1.35bn in annual cost savings by the end of 2017.

Larger companies’ appetite for start-up food manufacturers

Scale and cost cutting can only go so far when companies are looking to increase profitability. For this reason, larger players in the market are looking to acquire health conscious and innovative start-ups to grow. This drive to acquire these high growth, organic, gluten-free and natural F&B companies has resulted in high valuation multiples for these companies as larger players scramble for limited deals.

Private equity and venture capital

Private equity and venture capital have been highly active in mid market F&B deals, attracted by high growth and the potential for innovation in the sector.

In particular there has been an emergence of specialised, F&B focused private equity and venture capital funds including Kainos Capital and Edible Ventures. Kainos Capital’s portfolio includes branded nutritional business Healthy Delights and Slimfast, the iconic meal replacement and weight loss brand. Edible Ventures invest in high growth F&B companies and their portfolio includes Maple, a nutritional water product, and Deep River Snacks, a healthy snack company.

Selected F&B deals 2016

Target Target country Description Acquirer Acquirer country
52% stake in Santa Rita Harinas Spain Production and marketing of flours and cooking ingredients Ebro Foods SA Spain
Coop Norge Kaffe AS Norway Manufacturer and retailer of coffee Jacobs Douwe Egberts B.V. Netherlands
Extrakt Chemie Dr. Bruno Stellmach GmbH & Co. KG Germany Producer of specialty ingredient extracts Frutarom Industries Ltd Israel
25% stake in Martinavarro Ltd Spain Grows, packs, supplies, and exports citrus fruits and fresh vegetables Miura Private Equity Spain
Nutricafés, S.A. Portugal Production and distribution of roasted coffee Massimo Zanetti (Lavazza) Italy
Rynkeby Foods A/S Denmark Juice manufacturer Eckes-Granini Limited Germany
Novo Dia Cafés Lda Portugal Roasts, processes, and markets coffee and related products NewCoffee Company Portugal
Novadelta Suisse LLC Switzerland Large distribution client portfolio in Switzerland Delta Cafés Portugal
Sosa Ingredients S.L. Spain Manufactures and distributes food ingredients Meridia Capital Spain
Discefa S.L. Spain Processing and distribution of frozen octopus GED Capital and Oquendo Capital Spain
Nutra Canada Inc. Canada Manufacturer of small fruit and vegetable extracts DIANA Group SA France
Teawolf LLC US Coffee, tea, vanilla and botanical extract Doehler Group SE Germany
J. M. Swank Company, Inc. US Food ingredient sourcing and distribution Platinum Equity, LLC US
American Fruits & Flavor LLC US Production and marketing of fruit flavours, juices, concentrates, natural sweeteners and other fruit-based products Monster Beverage Corporation US
Ramón Sabater, S.A.U. Spain Processing and distribution of paprika, spices and herbs Portobello Capital Gestion, SGECR, S.A. Spain
MedPalett AS Norway Specialist in food ingredients containing anthocyanins Evonik Industries AG Germany
FrieslandCampina Kievit BV's beverages vending activities Netherlands Food and beverage ingredients manufacturer Barry Callebaut AG Switzerland


Based on defensive consolidation plays by large players in the F&B market, and the race to acquire innovative companies, we expect deal volumes to remain strong in the second half of 2016 and well into 2017. As the market consolidates we also expect to see the emergence of major new food and ingredient players in the medium term.

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