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 The food and beverage industry has fared better than other industries in the economic downturn. Yet large food and beverage companies are frustrated by the lack of growth, and many smaller companies are concerned about larger firms leveraging their brand and relationships with the larger food and beverage retailers to take market share.
A number of larger food and beverage firms are adapting an aggressive stance and seeking large transformational M&A deals, while others are pursuing smaller tuck-in acquisitions to shore up their market position and enter emerging markets.
Clearly, M&A is hot again in food and beverage, and ultimately the trend we have seen for decades will continue: the big get bigger. At the same time, smaller firms are eagerly planning their own growth strategy.
This means that smaller food and beverage firms will need to be uniquely positioned to be acquired or to merge with others; it could also mean pursuing some unique business positioning that will allow them to maintain independence and still be able to sustain or grow market share.
Therefore, it is not only the big that get bigger, but also, the small that either get absorbed or are forced to grow larger. It is very clear that consolidation in the food and beverage business will continue in one form or another.
Recent M&As have several interesting characteristics:
• The focus is strategic, not financial engineering.
• The strategic intent is on growing market share and growing existing brands, along with acquiring new brands to access new consumer channels. A key objective is global expansion, often beginning with a partnership, particularly in emerging markets such as India, China and Brazil.
• Valuations are down due to reduced multipliers and two years of down earnings.
• M&A is less about reducing costs (this has been the focus of most organizations for the last two years) and more about growth in revenue.
• Funding is less from financial institutions and more from internal resources.
Tompkins International supports M&A activities via:
• Candidate Identification and qualification, globally
• Investment feasibility
• Distribution assessment & strategy
• Competitive intelligence and SWOT
• Market assessment
• Commercial and supply chain due diligence before an acquisition
• First 100 days after M&A
• Supply chain integration
• Achieving long-term supply chain excellence
• Sustaining ongoing market growth
More M&A Resources:
More on Mergers and Acquisitions
M&A in Asia Support and Strategy: Learn from the experts at Technomic Asia.
M&A Podcast Series:
Supply Chain Due Diligence and Mergers and Acquisitions: Click here for listening options and transcript
Four Keys to Success with Mergers and Acquisitions:
Click here for listening options and transcript
Creating Mergers and Acquisitions that Work and Meet Expectations: Click here for listening options and transcript
Blog posts:
Are You an M&A Sinner? Repent and Heed the Lessons Learned!
Private equity firms make supply chains the star when adding value to their porfolio companies.
A caution on mergers and acquisitions and how they affect companies and their supply chains.
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