Summary of the most important M&A deals in the food and beverage industry in 2021

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M&A activity in the food and drink sector remained robust in 2021 amid a sharp increase in Covid cases. Emerging CPG brands capitalizing on large traditional categories, particularly chocolate confectionery, snacks and beverages, focused on health and wellness, have been grabbed by consumer giants in historic stocks.

Analysts expect a good outlook for mergers and acquisitions in key sectors, including consumer spending entering 2022, as a recent Dykema survey showed that 75% of those polled anticipated a strengthening in the U.S. merger market and acquisitions over the next 12 months. The optimism stems mainly from strong balance sheets and liquidity, balanced equity and debt, and the impending retirement of baby boomer owners, they noted.

Among the food and beverage subcategories, the precision farming space is likely to see record M&A activity in 2022, PitchBook predicted. Fermented proteins will also see significant widespread adoption gains this year, with the record of venture capital funding fueling growth.

Here’s a recap of the top food and beverage deals in 2021:

Acquisition of Hu Chocolate by Mondelēz

Transaction size: $ 361 million

Post-assessment: $ 388.17 million

Vegan and paleo chocolate producer Hu Master Holdings was acquired by Mondelēz in January for an estimated $ 361 million. Cookie maker Oreo previously invested a minority in Hu through its venture capital hub, SnackFutures, before becoming full ownership. Hu raised total funding of $ 10 million in January 2021, according to PitchBook, and reached $ 32 million in revenue by the end of the year.

Market importance: Traditional consumer companies, such as Mondelēz and PepsiCo

DYNAMISM
, create their own venture capital units and startup accelerators to stay abreast of the latest consumer trends. The integration of emerging brands into these programs is generally seen as a harbinger of larger collaborations in the future. Similar to brands recently engulfed by Mondelēz including Tate’s Bake Shop and Perfect Snacks, Hu is now expected to leverage the snacking powerhouse’s distribution network and supply chain to move from the natural and specialty channel to mass retailers, such as Target

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. Learn more about the incredible entrepreneurial journey of Hu’s founders here.

Hershey’s

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Acquisition of Lily’s Sweets

Transaction size: $ 450 million (estimated)

Post-assessment: $ 423.19 million

Low-sugar chocolate maker Lily’s Sweets was acquired by Hershey in June, as part of the US chocolate giant’s efforts to bolster its growing portfolio of better-for-you snack brands. The company, which was founded by Cynthia Tice to use stevia to sweeten the classic chocolate indulgence, has seen revenue increase in figures per trip every year in 2020 and 2021, according to PitchBook, reaching $ 110 million before the start. acquisition.

Market importance: There has never been a shortage of innovation in the multi-billion dollar chocolate confectionery category, and competition only seems to be intensifying with emerging brands, including Mid-Day Squares which has come into force lately. Lily’s Sweets’ strong growth reflects the growing market appetite for reduced-sugar chocolate and all sugar-free confectionery in the United States, with sales expected to increase 3.3% and 14.6% per year. year, to reach $ 241.4 million and $ 735.4 million in 2021, respectively, Euromonitor data showed. Read the latest original news here.

Acquisition of Kodiak Cakes by L Catterton

Transaction size: Between $ 500 million and $ 750 million (estimated)

Post-assessment: N / A

Utah-based Kodiak Cakes, which offers a line of premium breakfast products including flapjack waffles, granola muffins, oatmeal, and fat-free whole grain brownie mixes , without preservatives or sugar, was acquired by the largest private equity group L Catterton. in an LBO estimated at $ 1 billion in July. The company’s total revenue rose from $ 200 million in 2020 to $ 1.58 billion in 2021, PitchBook showed. Kodiak Cakes raised $ 33.82 million in total funding prior to the acquisition.

Market importance: L Catterton called Kodiak Cakes a “Powerful Brand” in the Attractive Better-for-You Breakfast and Snacks categories. The deal also indicated how brands sometimes prefer strategic PE to large CPGs as a buyer, as the former could deliver more value and benefits. L Catterton hopes to usher in the next chapter of growth for Kodiak Cakes with approximately $ 30 billion in equity, including investments in The Honest Company, Plum Organics, Sweet Leaf Tea and Home Chef.

Coca Cola

KO
Acquisition of BodyArmor

Transaction size: 5.6 billion dollars

Post-assessment: 8 billion dollars

The Coca-Cola beverage heavyweight took full control of New York-based sports drink company BodyArmor for $ 5.6 billion in November. The producer of drinks containing electrolytes, coconut water and vitamins has already raised a total of $ 326 million in funding before the deal, according to PitchBook, and has increased its annual revenue by 40% l last year to reach $ 1.4 billion. Famous early supporters included Jennifer Lopez, Carrie Underwood and the late NBA basketball player Kobe Bryant.

Market importance: Sports drinks are a rapidly growing industry, where traditional soda makers continue to profit to attract a growing number of health-conscious buyers. Mintel

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Sports and performance drinks are estimated to be worth around $ 13.6 billion in 2025, up from $ 10.8 billion in 2020. Agreement with BodyArmor signals Coca-Cola’s efforts to compete with PepsiCo which holds a significant share in space with Gatorade. Previously, Coca-Cola divested several underperforming brands, including Zico and Odwalla, to accelerate revenue growth.

Hershey’s acquisition of the pretzels from Dot

Transaction size: $ 1.2 billion

Post-assessment: N / A

Committed to creating a “powerhouse of snacks,” Hershey acquired premium pretzel maker Dot’s and its co-maker for $ 1.2 billion. The brand is said to account for 9% of the market share in the overall $ 2 billion pretzel category and has grown rapidly at a rate of 131.88% in the past year, reaching $ 160 million in revenue. The deal is the second-largest in Hershey’s history, as the chocolate giant continued to enter the salty snack category allowed through a series of acquisitions over the years, including Pirate’s Booty and parent of SkinnyPop, Amplify. Dot’s is also the fastest growing US pretzel brand, according to PitchBook, accounting for 55% of total pretzel category growth in 2021.

Market importance: Older CPG brands continue to enter the rapidly growing global healthy snacks market, which is expected to reach $ 32.88 billion in revenue in the coming years, according to Grand View Research, growing 5.2% from 2014 and 2025. Self-made brands capabilities, such as those of Dot, are particularly attractive to potential acquirers because they are seen as better equipped to scale. Hershey has also already invested in Quinn Foods, launched by Kristy Lewis over ten years ago to reinvent traditional savory and gourmet snacks with healthier ingredients and sustainable agriculture. Learn more about their founder’s vision and growth plans here.

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