1H 2019 Food & Beverage M&A Report

We tracked 190 M&A transactions in the Food & Beverage Industry during the first half of 2019, with a median deal multiple of 10.6x EBITDA and 1.4x revenue. Restaurants was the most active segment with 45 transactions. CPG Foods, Alcoholic Beverages and Proteins were also active segments and had between 29 and 31 transactions each. Publicly traded EBITDA multiples were an average of 18.2x TTM EBITDA for the Food & Beverage Industry segments we track, up from 13.7x TTM EBITDA at the end of 2018.

TRENDS TO WATCH

Meat Alternatives According to UBS, the plant-based meat alternatives market is poised to grow from $4.5 billion in 2018 to $85 billion by 2030; a growth rate of over 25% per year, which goes well beyond any anticipated growth trends in veganism or vegetarianism. Animal protein companies such as Tyson and Maple Leaf Foods are taking notice and investing in the plant-based meat alternative trend as well. However, if you look at the ingredient list on a Beyond Meat or Impossible Burger label, you will notice a long list of ingredients; many of which are highly processed. Certainly, consumption trends are based on the perception that a “plant-based” burger is healthier than an “animal-based” burger, however there is very little evidence that this perception is true. Undoubtedly, high levels of regular red meat consumption are negatively associated with an increased risk of heart disease and other health issues, but on a burger to burger comparison, they have a similar nutritional profile (similar calories but plant-based have slightly less saturated fat and higher sodium). Meanwhile, consumers are gravitating towards foods with simple, easy-to-pronounce food ingredients that are minimally processed. It will be interesting to see how the typical health-conscious, “better-for-you” consumer reacts to this dichotomy.