The consumer sector is constantly changing and developing and in the last ten years that change has arguably been more pronounced than ever.
There are a number of factors changing consumer habits and driving M&A. Clearwater International’s Consumer Team keeps up to date in this ever changing market and understands the appetites of corporate acquirers, listed markets and private equity buyers.
Key trends which we have observed include:
- The impact of ecommerce. As transactions continue to move online at a rapid pace the high street is changing. Corporate acquirers are seeking to rebalance their portfolios often acquiring ecommerce businesses to access new systems and management talent. Alongside this older retailers need to offload physical space and invest in new technology.
- Ever evolving consumer habits and tastes. Consumers spending habits have evolved and the increased affluence of consumers during the 80’s, 90’s and early 2000’s changed habits significantly. Increases in luxury goods, spending on cosmetics and beauty, dining out, health and well being are just some examples of changes in consumer habits. This creates high growth sectors which are of significant interest to private equity.
- The hangover from the financial crisis. Consumer spending across significant consumer markets, in Europe and the US in particular was seriously affected by the financial crisis in 2007/8 onwards. This has affected consumer habits with increased focus on value for money – which has driven consumers to value and discount retailers while also encouraging purchases of brands with a higher perceived quality and therefore value for money.
- The growing middle class in emerging economies and the globalisation of the consumer. As countries, including China, India and Brazil, undergo significant economic growth coupled with large populations new opportunities arise for more established western brands to sell into those markets. Larger consumer brands in developing economies are interested in acquiring western brands to strengthen their market positions. Other western brands are realising that there are local brands in emerging economies that have significant footholds where a western brand could not compete. M&A activity is a route for corporates to balance their brand portfolios appropriately
Our knowledge of these trends makes us an adviser of choice to consumer businesses across the entire spectrum including retail, ecommerce, leisure, consumer brands and hospitality.