Deal activity

2021 saw a high volume of M&A deals in the Food and Beverage sector as the market bounced back from the COVID induced slow down.

As a result of this heightened level of activity in 2021, 2022 volumes were slightly lower, as was expected. Despite this, M&A volume is still holding up despite the various issues currently facing the sector, such as surging inflation, labour shortages and the uncertain global economic outlook.

Our research indicates that there were 48 deals in the UK Food and Beverage sector in the first half of 2022, 35 transactions if international acquisition targets and Pet food deals are excluded. Alcohol, Bakery and Health/ Free-From sub-sectors continue to perform well.

There continues to be a mix of both PE and trade buyers active in the market. Of the 35 deals identified in our research 20% were direct PE investments, including:
LDC minority investment in Essex based premium milkshake business, Shaken Udder.
LDC investment in Bristol based artisan cake maker, Cakesmiths.
Endless LLP acquisition of KTC Edibles, one of UK’s largest suppliers of edible oils.
Caelum Capital acquired London based Compass Box Whisky.
LDC minority investment in Essex based premium milkshake business, Shaken Udder.
LDC investment in Bristol based artisan cake maker, Cakesmiths.
Endless LLP acquisition of KTC Edibles, one of UK’s largest suppliers of edible oils.
Caelum Capital acquired London based Compass Box Whisky.

High profile deals

The second half of 2021 saw a number of mega deals in the market, including:
Controlling stake in Tate & Lyle’s Primary Products division in America sold to KPS Capital, with an estimated EV of
£1.2 billion. Deal completed in April 2022.

Stock Spirits PLC taken private by CVC Capital Partners, with an estimated EV
of £0.8 billion.

Unilever sold its global tea business Ekaterra to CVC Capital Partners for
€4.5 billion. The brands include Lipton, PG tips, Pukka and Tazo.
Controlling stake in Tate & Lyle’s Primary Products division in America sold to KPS Capital, with an estimated EV of
£1.2 billion. Deal completed in April 2022.

Stock Spirits PLC taken private by CVC Capital Partners, with an estimated EV
of £0.8 billion.

Unilever sold its global tea business Ekaterra to CVC Capital Partners for
€4.5 billion. The brands include Lipton, PG tips, Pukka and Tazo.

Opportunities in Food and Beverage

There continues to be opportunities in the Food and Beverage sector for businesses to take advantage of, including:

  • Meat-free: A particular focus of R&D at the moment is on plant-based and Free-From products, which are proving attractive investments as consumers pay closer attention to their health and the environmental impact of their purchases.
  • Environmental, Social & Governance (ESG): Younger consumers in particular are more aware of the environmental and social impact of their purchases and are looking for brands that are demonstrating their credentials in these areas. There is demand for lower carbon-emission products and more environmentally friendly packaging.
  • Stay-at-home dining: There is now an increased demand for stay-at-home dining, as well as anytime food delivery. The rise of ghost kitchens, being kitchens with no physical restaurant and operating only through delivery providers, are just one example of these changing trends and the opportunity they provide. Key themes are expected to be stay-at-home foods (e.g. meal preparation kits), plant-based alternatives and frozen foods, which are a convenient, healthy and lower cost alternative to eating out.

Stormy seas ahead

However, there are significant head-winds affecting the sector, including surging inflation, supply chain disruption from raw material and labour shortages, significant energy price increases due to the war in Ukraine and the ongoing impact of Brexit.

The current global cost of living crisis and wage stagnation is restricting the ability to pass on rising costs to consumers, without potentially pushing them to alternative cheaper brands or own-label products.

The coming year will test the resilience of all businesses across the sector, and where there are challenges there will also continue to be M&A opportunities for both PE and Trade buyers.

How can Crowe help?

Our Corporate Finance team have significant experience in advising clients through the M&A process, whether you are looking to sell your business or grow through making acquisitions.

We can help identify buyers for your business or assist you in evaluating acquisition opportunities, providing deal-relevant advice throughout the process.

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advice, tailored service

We care about your business. Close working relationships are at the heart of our service delivery which sees our clients stay with us year after year, trusting us for our specialist advice and open dialogue.

We understand the food and beverage industry. Our expertise, market knowledge and access to professionals across our global network means we are well placed to offer insight and pragmatic advice to your businesses at each stage of its lifecycle.

We help you to make smart decisions that have lasting value. Working with you, we will help you to successfully adapt and overcome challenges in the food and beverage sector, both today and in the future.

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