M&A activity in sustainable food and drinks brands
1. M&A Activity in Sustainable Food and Drinks Brands
Introduction
Alongside the growing pressure on the leading multinational corporations to adopt
ethical codes of practice, there exists a rising consumer demand for sustainable
products. Unable to easily develop this organically, major food and drink
manufacturers must look to acquire successful sustainable brands in order to gain a
stake in this sector. This report analyzes current M&A trends in this industry.
Features and benefits
• Identify the driving forces behind the growth of sustainable brands.
• Examine a regional analysis of global M&A activity in the sustainable food and
drinks brands sector.
• Learn what makes an attractive target for leading food and drinks manufacturers
and what features offer the best promise of continued success.
• Understand how a sustainable brand can continue to be successful after being
acquired by a large-scale manufacturer.
• Study key examples of industry consolidation in this sector over the past three
years.
Highlights
Sustainable brands attempt to differentiate themselves using their ethical
credibility. However, there are limits to the growth of sustainable brands because of
restrictions associated with their scale and distribution network. Although deals with
larger partners threaten their degree of independence, investment is required for
growth.
Illustrating the emerging nature of this sector, deals involving sustainable brands
make up a small fraction of the total M&A activity involving food and drinks
companies. During 2009-2010 Coca-Cola made acquisitions worth an estimated $15
billion in the food and drinks sector worldwide.
The sustainable brands sector will continue to grow, both in the developed
economies where it is already strong, but also in the developing economies. As
incomes rise in fast-growing economies like India and China a cohort of sustainable
and ethical consumers will establish themselves as a key target for both local and
multinational manufacturers.
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Your key questions answered
2. • What are 'sustainable brands' and what has been their impact upon the consumer
products industry over the past few years?
• Which companies has a history of acquiring sustainable brands and is there any
apparent strategic direction in the pattern of acquisitions?
• How can companies learn from the evolution of the sustainability trend and
previous M&A activity in this sector?
• Are certain regions more synonomous with this M&A activity than others and what
factors are influencing this
• What has been the impact of the global financial crisis on M&A activity in the
sustainable brands sector?
Table Of Contents
Executive Summary
Introduction
Market dynamics
Pre- & post-merger strategies
Case studies
Future outlook
About the author
Disclaimer
Introduction
Summary
Introduction
Scope
Definitions
Explanation of terms
Growth of sustainable brands
Global connectedness
Consumer awareness
Sustainable entrepreneurs
Sustainability as a marketing tool
Features of sustainable brands
Consumers feel a connection to the brand
Sustainable credentials are fundamentally linked to brand values
Sustainable brands are premium brands - at the moment
People
Sustainable companies are generally small companies
Sustainable brands – easier to buy than build
Strategic issues
Consumer mistrust
Barriers to developing an authentic brand narrative
Intangible assets
Merger and acquisition activity 2008–2010
Small value transactions are the norm
US companies dominate
Types of acquirer
3. Large-scale manufacturers
Small- or medium-sized manufacturers
Private equity
Market dynamics
Summary
Introduction
Geographical breakdown of acquiring companies
North America and Europe lead M&A activity
The US dominates the market, with the UK a distant second
Geographical breakdown of target companies
North American and European companies are the most popular targets
US companies again at the forefront
Deal values
Reported deal values and the average deal size are falling
Significant transactions
Types of transactions
Pre and post merger strategies
Summary
Introduction
Drivers for acquirers
Emerging niches – filling gaps in product portfolio
Achieving scale
Buying innovation and an entrepreneurial approach
Buying expertise and enthusiasm
Access to a sustainable supply chain and contacts
The halo effect
Part of a wider sustainability strategy
Drivers for targets
Growth strategy – diversification of markets
Improving distribution networks
Capital backing for growth
Marketing muscle
What makes an attractive target?
Scalable opportunities
A product that fits the mainstream
A history of strong growth
A defensible position
Ethical credentials
Post merger
An open relationship between the two companies
Keeping key people incentivized post-acquisition
Front-footing criticism
Predicting the future
Acquisition case studies
Summary
Introduction
The Coca-Cola Company
4. Acquisition of Honest Tea, 2008 and 2011
Acquisition of a stake in Innocent Drinks, 2009 and 2010
The Hain Celestial Group
Acquisitions history
Private equity
Acquisition of Plum Baby by Darwin Private Equity
Investment in O.N.E. Natural Experience by PepsiCo and Catterton Partners
Future outlook
Summary
Introduction
A global focus on sustainability
Limited resources
Development of the middle class
The future of sustainable brands
Market growth will continue
Proliferation of brands in the short-term, fewer in the long-term
Sustainable claims will need to become more specific
Future trends in M&A
Innovative approaches to mergers and integration of acquisitions
More consolidation of brands
Creation of ever-larger conglomerates of sustainable brands
Private equity will remain a significant player
Growth outside Europe and the US
Appendix
Scope
Methodology
Secondary research
Bibliography/References
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