Food industry M&A hit a record total in 2017, reaching its highest point in over 15 years, according to data tracked by The Food Institute. Total deals for the year climbed to 591, moving well past 2016's high of 505 deals, but still remaining under 1999's record 813 deals.
Food processors took part in 191 deals in 2017, a 33.6% increase from 2016. Cargill, Nestle, Premium Brands Holdings and Unilever were the most active companies in the category, together making up 12% of the acquisitions. Unilever continued to invest in small and artisanal brands in 2017, such as Sir Kensington's, Pukka Herbs, Mae Terra, Tazo, and Sun Basket. Other processors maintained their efforts to acquire smaller, artisanal and specialty brands, as well. General Mills' food incubator 301 Inc. invested in healthy snacking startup D's Naturals and acquired a minority stake in Purely Elizabeth; Campbell Soup Co. acquired Pacific Foods; Cargill invested in lab-grown meat producer Memphis Meats; Conagra Brands acquired snack makers Thanasi Foods LLC, Bigs LLC and Angie's Artisan Treats LLC; Dean Foods invested in milk alternative producer Good Karma; Hershey Co. acquired Amplify Snack Brands; and Nestle acquired Chameleon Cold-Brew, meatless frozen food maker Sweet Earth, and stakes in Blue Bottle Coffee and healthy ready meals group Freshly.
This trend of "buying innovation" is one we have been seeing for a few years, as companies decided it may be easier to acquire an established artisanal or specialty brand, rather than try to create one of their own. In The Food Institute's upcoming webinar, our own Brian Todd and Karen Martin of BMO Capital Markets will discuss the current M&A market conditions for food companies, with a focus on how businesses are switching to "buying innovation."
Moving on to retailers, acquisitions in this category slowed down significantly in the past year, after hitting a high of 101 deals in 2016. Supermarket acquisitions dropped 39% in 2017 from the previous year, while convenience store acquisitions fell 54.4%. However, M&A in the other retailers category, which includes dollar stores, drug stores and e-commerce retailers, increased slightly in 2017, and was host to one of the largest deals of the year in any category, Amazon's acquisition of Whole Foods Market.
Investment firms and banks were busy as usual, involved in 109 deals in 2017, a 40% increase from the previous year, while the overall restaurant category saw a 22% increase from 2016 to 2017, driven by online foodservice businesses which have been slowly ramping up M&A over the past few years.
Overall, food businesses are becoming more active in the M&A arena, as consumer tastes change and many large companies aim to acquire startups or competitors. With 2017 being the second year of almost triple digit growth in acquisitions, it will be increasingly important for food businesses to keep an eye on merger activity to see if it will continue to trend upwards, or if we the industry has hit its M&A peak. For more information about the past year's acquisitions, and what they will mean for the years to come, make sure to check out our Food Business Mergers & Acquisitions 2017 report, now available for pre-order!
It's certainly not over, but farmers and food producers may receive a few months' respite as tariffs in the Sino-U.S. trade war will not escalate for 90 days. Additionally, they can at least look forward to a new normal as the United States-Mexico-Canada Agreement (USMCA) moves forward to full ratification.read more
Jennette has been with The Food Institute since 2013. As Marketing Director, she is responsible for promoting all Food Institute books, seminars and webinars, as well as writing and editing the Food Institute’s annual publications, such as Food Business Mergers & Acquisitions, The Food Industry Review and The Almanac of the Canning, Freezing, Preserving Industries. Additionally, she writes for and edits the daily news update, Today in Food, and contributes to the weekly Food Institute Report. She has a background in non-profit and environmental marketing, programming and writing, and graduated from Rowan University in 2012 with a degree in Communication Studies.
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