2016


What´s driving in the Food and Beverage industry?

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The food and beverage industry was marked last year by its biggest M&A deal up to date, with the $ 62.6billion takeover of Kraft by Heinz. As the main goal behind this merger was to address the problem of low growth in sales through a reduction in costs and thus boosting profits, this deal may have started a new wave of consolidation among big companies in the industry to face the new changes in consumer tastes, especially in developed economies. People are shifting their eating habits towards natural, healthier and local products where growth has been faster in contrast to packaged food companies.

Another reason behind these M&A deals is the interest of big food companies in start-ups that offer innovation and more growth in revenues, which pushed their valuations upwards. Examples include the minority stake investment of Coca-Cola in Suja Juice that produces organic juices and the acquisition of Unilever of an Italian ice cream maker that uses only organic and natural ingredients in its products to add to its Magnum and Ben & Jerry´s brands.

Specialization is also a driver that has pushed companies in this industry to perform M&A transaction as a strategy to grow big in one corner.

The looks for 2016 promise a strong year for M&A in the food industry given the low interest rates, the economic recovery and private equity firms’ appetite for these assets.

 

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