Corporate financial advisor Oghma Partners has released a new UK Food and Beverage Sector M&A report, noting that UK plant-based companies “particularly struggled” in 2023.
The report showed how in the third tertial of 2023 (T3) the food and beverage market saw an increase in the volume of deals (46 transactions) compared to the same period in the prior year (up 91.7%). Deal value increased by around 5% to £1,230 million year-on-year (YoY).
A recorded 75% of deals in 2023 had an estimated value of £10 million or less, up from 69% of deals in 2022. Oghma reported that both 2022 and 2023 experienced a high volume of low value deals compared to the five-year average between 2017-2021 (around 57%).
Overseas buyers were responsible for 23.3% of deal volume in 2023, which was slightly down from 27.4% of deal volume in 2022, and the five-year average of 17%.
Meat-free “shake out” will continue, says Oghma
Mark Lynch, partner at Oghma Partners, said: “The key issues that impacted M&A in 2022 dragged over into the start of 2023 with inflationary cost pressures, the cost-of-living crisis and the increased cost of debt suppressing the higher value deals in the first half of the year (with the exception of the Glanbia Cheese acquisition).
“However, deal volume increased compared to 2022, 116 deals for 2023 (an increase of 57%). We believe that this increase in activity in part reflected pent up seller activity and, in addition, the sad bonus of a large number of businesses acquired out of administration. In June, Vegan Food Group (formerly known as VFC) acquired Meatless Farm, in July VBites acquired Plant and Bean, and in December it was announced VBites had gone into administration.
“It hasn’t just been the smaller players struggling… the meat-free industry has faced a triple whammy – a cost-of-living crisis turning consumers away from higher cost meat-free products, cost inflation and much reduced investor appetite to provide follow-on funding.”
Lynch continued: “We suspect that the meat-free shake out will continue this year. However, fewer players with greater scale should be able to provide a focused marketing effort to help re-engage the consumer and retailers in due course.
“Looking into the rest of the year we would be surprised if deal volume changes much. However, we do expect to see a pick up in deal value. Financing terms have stabilised or are easing and valuation expectations have become more modest. The combination of these two aforementioned factors combined with an easing input cost environment should provide a more palatable cocktail for success in 2024.”
