The annual deal value for the UK food and beverage (F&B) sector in 2021 was an estimated £6.6 billion, the largest figure recorded since 2010.
According to a report by Oghma Partners LLP, the UK F&B market continued its strong performance into the last four months of the year with total deal volume up 50.8% on 2020 levels.
Some of the key trends noted in the 2021 merger and acquisitions (M&A) report:
- There was a wave of activity in the plant based F&B M&A space. Notable activity during the period included Portuguese conglomerate, Sonae, acquiring Gosh Food, the UK producer of vegan sausages, burgers and falafels. Canadian dairy company, Saputo, also acquired the dairy alternative cheese producer, Bute Island Foods for an undisclosed amount
- Direct to Consumer (D2C) – Big food companies were keen to expand into this area as was seen with Nestlé’s acquisition of SimplyCook. This deal followed on from their acquisition of the healthy meal kit provider, Mindful Chef at the end of 2020. Further activity in the space included Italian pasta giant, Barilla, acquiring a majority stake in D2C meal kit start up Pasta Evangelists, an acquisition that represents a new step in Barilla’s international growth strategy
- Despite the increased popularity of plant based products, the protein space was particularly active with most of the the higher value deals for the year attributed to this subsector. Notable deals included Sofina Foods’, one of Canada’s largest food producers, acquisition of Eight Fifty Food Group, the business behind Karro Food Group and Young’s Seafood, for £1.2 billion
- Pilgrim’s Pride also strengthened its position in the global protein market by acquiring Kerry’s Meats and Meals business, enhancing their value added portfolio with market leading brands such as Richmond and Fridge Raiders.
The appetite from financial investors remained strong throughout 2021; in volume terms they accounted for 20.7% of total deal activity compared to 20.3% in 2020.
When comparing deal activity from financial buyers in value terms, there was a significant increase in both absolute value (2021: c. £2.6 billion vs 2020: c. £380 million) and the proportion of total deal value (2021: 39.3% vs 2020: 25.5%). Oghma Partners’ report suggests that this activity is driven by “the relative defensiveness” of the sector’s cashflows combined with “loose monetary policy” which has led to an inflow of funds into private equity companies as well as a low cost of debt.
Additionally, overseas buyers had another active year, accounting for 39.1% of total deal volume. This was the highest percentage of non-UK corporate buyers involved in UK F&B deals since 2010.
