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Michael Poole

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Industry Trends

M&A Activity Expected to Pick up in Second Half of 2023

U.S. food and agriculture M&A activity has dropped by around 20% in H1 2023 due to rising labor and raw materials costs, and consumer resistance to price hikes. However, a rebound is anticipated in the second half of the year as acquirers focus on tech-enabled firms to enhance operational efficiencies and reduce production costs. Strong acquisition targets will be those that embrace emerging technologies to streamline operations, enabling manufacturers to navigate shrinking profit margins.1 2

U.S. Food Prices Expected to Stabilize in Second Half of 2023

The consumer price index for all food categories in May rose 4.0% from the previous year, increasing 0.3% from April 2023. The food-at-home category, including grocery store food purchases, increased 5.8% in May from the year before and 0.1% from the preceding month. The food-away-from-home category, including restaurant purchases, increased by 8.3% over the same period. According to USDA's economic research service, food prices are expected to stabilize in the second half of 2023.3

Grain Giant Megadeal Creates Concerns for U.S. Farmers

Egg prices are expected to moderate in 2022 after months of drastic price increases following the worst Avian Influenza outbreak in U.S. history. According to the Bureau of Labor Statistics, egg prices fell 6.7% in February, with a dozen grade-A eggs costing roughly $4.21. USDA data also shows that the bird population is slowly regrowing and increased by 1% in February. USDA projects a 26.8% fall in egg prices and a 4% increase in production this year.4

Kroger Losing Out to Bargain Retailers

Price-sensitive consumers gravitate towards discount grocers, presenting challenges for mid-tier retailers like Kroger. In Q1 2023, Kroger reported a modest 3.5% year-over-year sales increase. In contrast, discount grocers like Walmart and Family Dollar experienced impressive grocery comparable sales growth of nearly 10%. Furthermore, Kroger's average prices were approximately 9% higher year-to-date than comparable groceries at Walmart. The data suggests many grocers will need to make strategic adjustments to remain competitive with consumer preferences.5

Cultivated Meat Approved to Enter U.S. Market

In June, the USDA granted inspection approval to Upside Foods and Eat Just, officially allowing cultivated meat to enter the U.S. market. These approvals open the doors for other companies aiming to disrupt the U.S. meat sector. As the first companies to navigate the rigorous approval process, Upside Foods and Eat Just are poised to introduce their cell-cultivated chicken products at renowned restaurants while actively expanding production capabilities to meet growing demand.6

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • NJOY Holdings, Inc.
  • Altria Group, Inc.
  • $51.40
  • Penelope Bourbon LLC
  • Luxco, Inc.
  • $45.93
  • Innovations Group, Inc.
  • KEBD Enterprises, LLC
  • $30.30
  • A Production Winery and Planted Vineyards in Alexander Valley, Sonoma County, California
  • The Duckhorn Portfolio, Inc.
  • $29.43
  • Emerald Nuts of Campbell Soup Company
  • Flagstone Foods, Inc.
  • $22.70
  • Deseret Wellness, LLC
  • Curaleaf Holdings, Inc.
  • $17.50
  • Hempaid, LLC
  • TerrAscend Corp.
  • $12.40
  • Chef Inspirational Foods, Inc.
  • MamaMancini's Holdings, Inc.
  • $6.51
  • certain assets of Yofiit
  • 14901100 Canada Inc.
  • $2.65
  • Stabilized Rice Bran Business of RiceBran Technologies
  • Stabil Nutrition LLC
  • $1.82

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • The No Bake Cookie Co. LLC
  • Village Family Capital
  • n/a
  • New Carbon Company, LLC
  • Arbor Investments
  • n/a
  • QualiTech, Inc.
  • MidOcean Partners LLP
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Panera Bread Company
  • Hamra Enterprises, Inc.
  • n/a
  • Lucky Foods
  • Daesang Corporation
  • n/a
  • G D S Foods Inc
  • Ferraro Foods, Inc.
  • n/a
  • Gillette Citrus, Inc.
  • Kings River Packing, LP
  • n/a
  • PMQ Pizza brand
  • WTWH Media, LLC
  • n/a
  • Boring Brew, LLC/Boring Coffee Lab, LLC
  • Metavesco, Inc.
  • $0.29
  • Anodyne Coffee Roasting Co.
  • FairWave Holdings, LLC
  • n/a
  • Catawba Island Brewing Co.
  • Twin Oast Brewing LLC
  • n/a

 

Source S&P Capital IQ as of 07/05/2023 and PCE Proprietary Data

PCE Transactions

Contacts

David Jasmund

Orlando Office

407-621-2111 |

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Michael Poole

Orlando Office

407-621-2112 |

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Will Stewart

Orlando Office

407-621-2124 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. 1. "Food and Beverage MA Industry Insights - Spring 2023 Executive Summary" Kroll, 16 May, 2023.
  2. 2. Doering, Christopher, et al. "7 Trends Shaping Food and Beverage in 2023." Food Dive, 10 Jan. 2023.
  3. 3. "Summary Findings: Food Price Outlook, 2023." U.S. Department of Agriculture, Economic Research Service, 30 June 2023.
  4. 4. Thomas, Patrick, "Farmers Worry Bunge’s $8.2 Billion Deal to Buy Viterra Will Diminish Competition" WSJ, 17 June, 2023.
  5. 5. Lee, Jinjoo. "Kroger Gets Stuck in the Middle Aisle." Wall Street Journal, 15 June 2023.
  6. 6. Poinski, Megan. "Cultivated Meat to Enter US Market with Full USDA Approval for Eat Just and Upside Foods." Food Dive, 21 June 2023.
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