Press Releases

Specialty Foods & Beverages M&A Status Update


The Food and Agriculture industry has undergone a noticeable fragmentation in response to Covid-19. With the extended closures of most restaurants around the country, many businesses have seen revenues rapidly decline as supply chains and end markets imploded over the course of the past several months. Such companies now face the choice of expending large amounts of capital in order to adapt and develop new business lines or playing a dangerous game of wait and see as they cling to PPP loans to keep them afloat. According to a study done by the National Restaurant Association, the U.S. restaurant industry is set to lose over $240 billion by the end of 2020. A loss of this magnitude is sure to have far reaching rippling effects that will take time to recover from.

With a steady demand for food and fewer options to substitutes, consumers have turned to food and beverage retailers in order to meet their needs. Limited sub-industries have benefited from this as much as specialty food, which saw a 41.6% YOY growth in sales in March followed by a 20.7% YOY growth in April, based on data collected by Food Industry Executive. While panic buying has mostly subsided, the revenue prospect for specialty food manufacturers remains extremely attractive, as the likelihood of a quick recovery within the restaurant industry remains unlikely.

Top players in the industry have taken notice of the earning potential and mobilized to snap-up well positioned companies. On Jun 10th Nestle Health Science acquired a majority stake in Vital Proteins, a collagen and plant based health and wellness food manufacturer.  As recent as July 3rd a notable acquisition on behalf of Vibrant Foods, which purchased CoFresh Snack Foods as a means of securing a foothold in the ethnic and healthy snacking market. As most major transactions can be lengthy processes, this signals the beginning of what is expected to be a competitive timeframe in the specialty food manufacturing M&A space.

Key consumer trends to be aware of are the emphases on health, wellness, and nutrition as well as convenience. Companies that are able to service these trends will be well positioned to command a premium price from buyers. The sheer variety and breadth of demand ensures that most companies in specialty food manufacturing will be able to garner more competitive valuations and greater interest over their more generic counterparts.

In 3 of the first 4 months of 2020, specialty items grew faster YOY than conventional products.
April “slowdown” still well-above normal and straining supply chain.