2H 2019 Food & Beverage M&A Report

We tracked 147 M&A transactions in the Food & Beverage Industry during the second half of 2019, with a median deal multiple of 8.5x EBITDA and 1.3x revenue. The most active segment was CPG Foods with 31 transactions. Restaurants and Alcoholic Beverages were also active segments and had 29 transactions each. Publicly traded EBITDA multiples were an average of 21.1x TTM EBITDA for the Food & Beverage Industry segments we track, up from 18.2x TTM EBITDA from the first half of 2019.

TRENDS TO WATCH

A recent research survey conducted by the Agri-Food Analytics Labs, at Dalhousie University in Nova Scotia, Canada, found that Canadians are highly concerned about food waste, driven partially by rising food costs. Approximately 53% of survey participants said they plan to take steps to reduce food waste in their home in 2020. Many also plan to eat out less often, look for discounts at retailers and plan to buy in bulk to save on food-related expenditures. Awareness of in-home food waste has been rising and a recent study by Ohio State indicated that the top drivers of food waste in the home are concerns about food safety, odor, appearance and dates on the label. “No one knows what ‘use by’ and ‘best by’ labels mean and people think they are a safety indicator when they are generally a quality indicator,” said the study’s author, Brian Roe. The study found that Americans consume only about 40-50% of the fruits, vegetables, dairy and meat they purchase. Currently, product date labeling is required only for infant formula at a federal level, however there are new labeling rules being proposed to help reduce consumer confusion over “use by” (safety) and “best if used by” (quality) guidelines.