Health & Wellness M&A
Health & Wellness Reports

Health & Wellness Report 1H 2022


The return to some form of normalcy after two years of masks, lockdowns, restrictions, and vaccines is shaking up the Health & Wellness Industry, and it’s happening fast. Maybe nowhere faster than in the fitness subsector, where gyms were hammered during the pandemic as people retreated to their homes, and in the home fitness market, where enthusiasts are rediscovering that they like being with other people at the gym instead of being stuck at home.

Following a busy 2021, M&A activity slowed in early 1H22, but there was a lot going on in the world and a lot to digest: a war in Europe, a struggling supply chain, stubborn inflation, and general uncertainly as we adjust away from COVID-era behaviors. As we left 2021 and entered 2022, fitness centers and studios that struggled during the depths of the pandemic appeared to rebound as gyms reported membership growth by 1Q22, though a recent survey shows “cleanliness” is in the top three factors when deciding on a membership.

Meanwhile, we are watching for the sticking power of at-home fitness businesses – including virtual classes and digitally connected equipment. Once dominant virtual cycling giant Peloton has ridden into hard times since its pandemic peak. And while people value gyms for their motivational and communal benefits, working at home was pretty convenient (but required a substantial investment). As physical gyms dabble in the home-fitness market, we may be looking at a hybrid future, something that’s neither the pre-pandemic after-work stop at the gym, or the stay-at-home and workout-by-video model…

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Healthcare Report 2H 2021


As vaccines were administered and everyone hoped that life had begun its return to relative normalcy, SDR observed a couple of trends that help us gain further insight into M&A trends across the sector – one backward-looking, and one forward-looking. The two-year-old COVID pandemic has certainly focused consumer attention on overall individual wellness, spurring an interest in active living, mental health, and additive nutrition. At the same time, as employees continue to return to the workplace, go back to beauty salons and spas, and put away their sweatpants, SDR anticipates a resurgence in demand for cosmetic, hair care, and other beauty products.

Overall, 2H21 leaves us optimistic for the health & wellness industry as we saw a substantial uptick in sector-wide transaction activity: 53% above the same period one year prior. Acquisitions were up in activewear, natural and organic foods, and supplements with big spikes in personal care and outdoor products, up 63% and 125% respectively.

The personal care and cosmetics market alone is expected to reach $149 billion by 2025, growing at a compound annual growth rate (CAGR) of nearly 6% and driven largely by demand for “clean beauty” products rich in natural, healthy ingredients. Additionally, the pandemic-spurred gravitation towards the convenience of direct-to-consumer marketing and e-commerce retail shows no signs of fading. Old habits may be hard to break, but when it comes to consumers, new habits may also prove hard to break…

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Health & Wellness Report 1H 2021


Perhaps there’s nothing like a mass contagion and streets filled with people wearing surgical masks to shock the system. If months of news conferences featuring the Surgeon General and hearing the words “ventilator” and “vulnerable population” won’t spur a renaissance in fitness and overall wellness, nothing will. As the world gets the vaccine and takes off its masks, we see opportunities in products and services that help people take better care of themselves. The Health & Wellness industry is center stage and in the spotlight.

In 1H21 we saw a continuing trend of interest in nutritional supplements (think probiotics, vitamins, and nutraceuticals) from both large consumer packaged goods (CPG) companies and private equity. We’re also watching how Health & Wellness product lines are leveraging brand recognition with direct-to-consumer online sales, bypassing third-party vendors. Gyms are reopening after a tumultuous year but are challenged by at-home fitness tech products, and employers that may have had an onsite gym are eying online fitness platform memberships as a perk for today’s hybrid office/work-at-home environment while investing in employee health after a long period of stay-at-home inactivity. And finally, we are keeping an eye on fitness tech such as wearables that collect data and monitor health as well as hardware/software combinations that allow home workouts in an online “group” setting…

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Health & Wellness Report 2H 2020


The health & wellness industry is broad – one of the broadest – and includes health supplements, nutraceuticals, wearable devices, and tech applications, all geared to helping people achieve and maintain good health. All of these subsectors, coincidentally, were also in the spotlight in 2020 during the global pandemic when people became more aware, and potentially concerned, about their health, while conflicted over stepping into a doctor’s office or hospital.

That’s understandable. Health officials did a thorough job of explaining the presence of COVID-19 and issuing stay-at-home orders. But the unintended consequence appears to have been a dramatic drop in so-called “ambulatory care,” traditional and non-emergency doctor visits. And while some may have been fearful of seeking care in a traditional setting, others may have been unable, as a widespread loss of jobs corresponded to a loss of health insurance. In surveys, U.S. physicians reported 60%-80% drops in patient visits.

Although patients shied away from doctors’ offices, they were also increasingly reminded of the importance of overall wellness, maintaining their immune system, and monitoring personal health. Nutritional supplements were poised to surge.  As the pandemic spread, research found wearable fitness trackers designed to help people monitor general health may also help detect symptoms of COVID-19 and bolster public health efforts. And home health tech became a part of daily life: Global sales of non-contact infrared thermometers were expected to jump 55% by year’s end. Global sales of blood oxygen measurement devices (oximeters) are predicted to rise at a compound annual growth rate (CAGR) of nearly 7% between now and 2027, from a $1.75 billion industry to $3.1 billion…

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In the Health & Wellness sector – a broad consumer sector that includes nutritional supplements, fitness, and beauty care – 1H20 has been a double-edged sword. As consumers sought vitamin and mineral supplements to bolster their health during the COVID-19 pandemic or looked for ways to stay fit while socially distant, they were looking online instead of in traditional brick and mortar outlets.

For retail Health & Wellness, 2025 came five years early. The anticipated decline in brick and mortar retail has been accelerated by stay-at-home orders, virus-wary shoppers, and rapidly changing consumer habits. Just as Sears catalogs gutted hometown general stores at the dawn of the 20th Century, today’s sons of Amazon are reshaping the consumer landscape.


For Health & Wellness brands that depend on physical location and foot traffic, an already challenging environment got tougher in the first half of the year. Traffic in shopping malls – long the home of supplement giant GNC and beauty supply chains such as Sephora – took a beating in a viral storm that could be the beginning of a death spiral. Malls closed for virus concerns, anchor department stores fell into bankruptcy and slashed locations in reaction to declining traffic. Without anchors as magnets, smaller mall retailers like those in Health & Wellness suffered. Ultimately the malls themselves struggled…

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Perhaps more than in any other industry, M&A activity in the Health & Wellness industry is driven by the whims of consumer preferences. As younger generations embrace healthy living, preventive care and environmentally ethical lifestyles, expect the sector to continue to cater to those demands. SDR tracked 129 transactions across the industry in 2H 2019, and it is clear that the space has been active and a slowdown does not appear imminent.

As capital flows into the sector, two of the most active segments continue to be vitamins, minerals, and supplements manufacturers (think nutraceuticals, herbs, and powder supplements) and personal care products such as beauty and wellness products.

While there are examples of competitors using mergers as a platform to scale, much of the capital streams come from private equity and unrelated mega players (both public and private) looking to grow established brands. Both private equity and the mega players remain eager to tap into evolving consumer demand for products seen as more “natural,” organic, and environmentally responsible. Personal care company Burt’s Bees was an early example in both cases. No, it isn’t run by that bearded gentleman on the label, he was out of the business by 1999 and died in 2015. His cofounder sold 80% of the company to private equity in 2004 while expanding product lines, and in 2007 Burt’s Bees was acquired by publicly-traded Clorox for $925 million.

The demand is here. The money is here. The Global Wellness Institute pegs the global “wellness economy” at $4.5 trillion annually. Of that, the nonprofit Research and Education Institute reports physical activity accounts for about $828 billion and personal care/beauty tops $1 trillion…

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Health & Wellness Report - 1H 2019


The first half of 2019 saw a continuation of robust M&A activity in the Health & Wellness Industry, as strategic acquirers have rapidly pursued inorganic growth strategies to position themselves more competitively in today’s saturated market. SDR tracked 67 transactions involving businesses participating in and serving the Health & Wellness sector. Most notably, the Natural & Organic Foods, Health & Fitness, and Vitamins, Minerals, & Supplements segments led the pack with 15 recorded transactions each including several noteworthy deals closed so far this year. The Personal Care segment also continues to experience significant acquirer interest, with 12 deals recorded in 2019, including the largest transaction in the industry year to date – JAB Cosmetics’ acquisition of an additional 20% stake in Coty for $1.7 billion in cash.

Strategic buyers and sponsor-backed platforms continue to dominate the M&A landscape in the Health & Wellness sector, accounting for three quarters of all activity so far this year. Although new sponsors are now increasingly seeking platform acquisitions from which to grow, as demonstrated by Swander Pace Capital’s investment in Bragg Live Food Products and TSG Consumer Partners’ acquisition of CorePower Yoga, industry participants continue to outpace pure funds in their pursuit of attractive targets.

The average EBITDA multiple for publicly traded Health & Wellness companies by the end of the first half of 2019 held steady since the end of 2018 at 12.5x LTM EBITDA. The Activewear segment traded at the highest average multiple of all segments at 15.2x EBITDA and the Vitamins, Minerals, & Supplements segment traded at the lowest multiple of 9.2x.


The Natural & Organic Foods segment has been among the most active in the Health & Wellness Industry in the first half of 2019. With 15 recorded transactions so far this year, it is clear that this segment’s incredible compounded annual growth rate of over 11% since 2005 has bolstered M&A activity in the space. Some notable transactions involving Natural & Organic Food Products this year have been…

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Health & Wellness Report - Q4 2018


Consumers are finally waking up (pun intended) to the fact that sleep has a huge impact on their overall health and wellness. In recent years, we have seen an outpouring of studies detailing how poor sleep can be linked to both physical and mental health, including:

  • Weight gain
  • Higher risks for medical conditions such as heart disease, stroke and diabetes
  • Decreased concentration and productivity
  • Decreased athletic performance and coordination

According to a study by RAND Europe, the U.S. loses approximately 3% of its total GDP, or $411 billion of lost productivity, due to sleep deprivation. With an increasingly large audience of educated consumers, individuals and companies alike are continuing to explore the impacts of sleep quality through data collection and product innovation to find solutions that ensure a good nights sleep.


The traditionally staid mattress industry has been undergoing a revolution of sorts, ignited in 2014 by the launch of Casper, an e-commerce mattress company. By 2017 the company garnered a pre-money valuation of $750 million during its $170 million Series C, led by the Target Corporation. Casper has since announced plans to go public in 2019. While Casper may have begun the e-commerce mattress model, several competitors have also emerged as market leaders in the mattress space including brands like Leesa, Purple and Tuft & Needle.

With such minimal innovation in the mattress space, it’s no wonder that upstarts have tried to revolutionize the space. As of 2015, Simmons, Serta and Sealy held over 50% of the global mattress market. With consumers’ growing interest in quality sleep, the global mattress industry is expected to reach $43 billion by 2024, a CAGR of 6.5% from 2017.

Although we are seeing a surge of innovation and growth in the space, there’s certainly a history of private equity investments in the mattress industry. Back in 2002, TA Associates and Friedman, Fleischer & Lowe acquired Tempur World, maker of the Tempur-Pedic foam mattresses, which at the time had $250 million in revenue. Tempur-Pedic went public the next year and by 2012, Tempur-Pedic had acquired Sealy, bringing the combined company valuation to $2.7 billion. Sealy’s own brush with PE began in 1997 with its acquisition by Bain Capital, followed by a buyout by KKR in 2003, before going public in 2004.
Given historic and recent trends, we expect to see continued movement in the space for years to come. Following the success of the e-commerce startups, we are beginning to see a movement towards establishing a brick-and-mortar presence. In order to fuel continued growth, Casper plans to open 200 retail stores where consumers can try out their products first…

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Health & Wellness Report - Q3 2018

Health & Wellness takes a comprehensive, integrated approach to overall wellbeing. As identified by CB Insights, the global wellness economy has grown to an astounding $3.7 trillion and has expanded beyond food, personal care products and exercise.

Today’s consumers are increasingly aware not just of what the product or service can do for them but how that product and service has been developed and manufactured. According to Euromonitor, “Consumers are increasingly adopting a holistic approach where skin, body and mind are considered a single entity.” Buzzwords that we keep hearing around Health & Wellness are: environment, sustainability, trust, integrity, authenticity. As such, we are seeing the increasing incorporation of food and beverage trends into beauty and personal care categories at even faster rates.


Transparency allows consumers to understand everything about a product throughout its supply chain. Today, transparency into products builds trust at a time when consumers are lacking in trust, especially regarding big brands. For millennials, and now Gen Z’ers, a connection with a brand is key to building that trust and the ease of uncovering information online helps build loyalty for them.


While sustainability can refer to a number of factors, we define it as being environmentally friendly. Companies can reap huge benefits from marketing their sustainability efforts to consumers. According to Nielsen polls in 2015, 66% of consumers across the globe were willing to pay more for sustainable brands, a sizable increase from only 50% two years earlier. Meanwhile, a whopping 73% of millennials indicate their willingness to pay up for sustainable products. Today, 64% of U.S. households buy sustainable products, an increase of four percentage points in only the past year.

As branded companies are seeking out areas of differentiation, they can highlight their sustainability efforts. For example, NEO Plastics produces innovative plastic packaging, flexible films and rigid food packaging that turn unrecycled plastics into clean sustainable energy. CPG companies are not only beginning to utilize NEO Plastics but are highlighting their usage of these products through prominent placement on their packaging…

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Health & Wellness Report - Q2 2018


Have Americans become more comfortable talking about their gut issues? It certainly seems that way with the growing appetite for probiotic foods, beverages and supplements in general and more specifically, fermented foods.

Probiotics are a type of functional food – foods that have shown health benefits – that contain beneficial live microorganisms, such as bacteria or yeast. While yogurt has been a mainstay in the U.S. diet for decades, only recently have a variety of foods and drinks with probiotics exploded in the market. According to Packaged Facts, 25% of adults in the U.S. actively seek out foods and beverages with probiotics or prebiotics.

As consumers continue on their health and wellness quest and see more “food as medicine,” interest in fermented foods has grown rapidly, despite these foods’ strong tastes and smells. Fermentation was used by many cultures around the globe as a way to preserve food but hasn’t been prevalent in American diets until recently. Kombucha has led the way to other fermented foods and beverages in the U.S., driven primarily by millennial interest and a focus on healthier beverages with less sugar.

Kombucha is made from fermented and sweetened tea and naturally contains alcohol due to the fermentation process. Originating in China, kombucha really took off in the U.S. after being pulled from shelves in 2010 due to the identification of elevated alcohol levels. Since then, many producers have sought to reduce the alcohol content to stay on grocers’ shelves and others, in contrast, have actively marketed the beverage as containing alcohol (branding it as kombucha beer). Kombucha has historically come in bottles at retail but can now be found more readily in kegs and 12 ounce cans. According to Statista, U.S. retail sales of kombucha are expected grow to $1.2B in 2020, from less than $400MM in 2014.

Large beverage companies are jumping on the bandwagon, with the recent acquisition of Clearly Kombucha by Molson Coors. Molson Coors is the first major brewery to get into the kombucha space, but despite the beverage’s natural alcohol content, it intends to use the acquisition to help build out its non-alcohol portfolio. In 2016, KeVita, a producer of probiotic drinks and kombucha, was sold to PepsiCo for $200MM, valuing the company at a 2.5x multiple of 2015 revenue. PepsiCo also launched Tropicana Essentials Probiotics in 2016, bringing probiotics traditionally seen in yogurt and kombucha to the mainstream juice aisle. Last March, the venture capital arm of General Mills, 301 INC, led a $6.5-million Series D investment round to benefit Farmhouse Culture, a fermented and probiotic food and beverage startup. Finally, Peet’s Coffee (owned by food & beverage conglomerate JAB Holding Company) was recently part of a $7.5-million Series B round of funding for Revive Kombucha last August…

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Health & Wellness Report - Q1 2018


With the new year comes the multitude of resolutions to be healthier and fitter. Experts and consumers alike are constantly redefining what this means and how best to accomplish it.

According to the ACSM’s (American College of Sports Medicine) Worldwide Survey of Fitness Trends for 2018, the re-emergence of group exercise workouts is a key trend this year. Consumers enjoy the camaraderie of working out with others and benefit from the accountability that results from committing to a group and class time. Providers are constantly creating new and different concepts to appeal to fitness enthusiasts, unmotivated exercisers and newcomers. The ACSM expects that boxing and kickboxing studios will proliferate in 2018, along with time-efficient workouts.

In 2016, there were over 35,000 membership-based exercise facilities in the U.S. The top 5 fitness and health clubs accounted for less than 20% of the U.S. market, with no player having a market share greater than 5%.

The proliferation of new and unique fitness studios enables consumers to choose exactly how they want to work out – whether focusing on one specific exercise type or mixing it up and participating in classes at several studios every week. The popularity of ClassPass underscores this phenomenon. ClassPass provides all-access membership to over 8,000 studios worldwide without committing to high monthly fees at an individual location. In 2017, ClassPass raised a $70M Series C led by Temasek, along with current investors including GV and General Catalyst.

As the population ages, the current generation of older adults recognizes the need to maintain an active lifestyle. Clubs are implementing tactics to attract this population, such as lower music or better lighting during traditionally slower times (i.e., mid-day) or programs tailored for older adults.

Traditional clubs and fitness studios are also looking for ways to connect with their consumers – both inside and outside the studio. The camaraderie of the group class keeps members coming back, and consumers now have the choice to bring the fitness studio experience home. Flywheel started out as an indoor cycling, studio-based workout and late last year began selling bikes with online classes for users to workout at home. Peloton, which provides a similar workout, has evolved around the at-home user and enables members to work out with a live group electronically or from a catalog of on-demand classes…

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Q4 2017 Health & Wellness Report


The beauty landscape is quickly shifting, as consumers across numerous demographics are increasingly focusing on “self-care.” Consumers are not only changing where they purchase products, but also the basis for their decision-making process and how much they are willing to pay for products and services.

As a rule of thumb, the Beauty segment is following the same general trends as the broader Health & Wellness industry and Consumer Products sector; however, trends are more pronounced in Beauty:

Product Delivery and Marketing

At the core of many beauty product consumers’ behavioral shifts are the devices and digital platforms that provide health-tracking capabilities and help lift the veil for consumers on the inputs/ingredients behind the products they purchase.

Social influencers are also having an impact on how consumers are making purchasing decisions. They are not only driving customers to certain brands and new products, but are even developing their own lines and using customer feedback to generate new ideas and fine-tune existing products.


Despite higher prices in most cases, beauty product consumers are favoring brands and products that prioritize customer experience, unique ingredients/formulations and environmental consciousness. Large brands are using acquisitions to launch themselves into premium spaces.

In November 2017, Unilever announced its acquisition of Sundial Brands to add to its portfolio of “purpose-led” companies. Unilever said in press release that the acquisition is “part of a broader Company transformation” aimed at community impact. As part of the agreement, Unilever and Sundial are creating a $50-100 million investment fund to empower women of color entrepreneurs.

In December 2017, Colgate-Palmolive announced acquisitions of professional skin care firms PCA Skin and EltaMD, which have combined sales of $100 million. Part of Colgate-Palmolive’s acquisition strategy is to focus on higher-margin personal care…

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Health & Wellness Report - Q3 2017


According to a Frost & Sullivan study in 2016, the $10.1B nutraceutical ingredient sub-segment lends interesting insight into what is most important to consumers. Combining to represent nearly 20% of the space, four categories stand out to us as the most attractive for investment: Cognitive Health, Cardiovascular Health, Eye Health, and Digestive Health.

These four areas are not necessarily the highest growth sub-segments, but they have the highest “Expected Ease of Premiumization.” In other words, there is more room for formulators to differentiate their products by adding premium ingredients or innovation. Perhaps not coincidentally, these are areas of clearly defined impact relative to others (i.e., general wellness, weight management, etc.). We aren’t speaking to quality of life with this conclusion, but rather reduction of overall healthcare costs. According to the American Health Association, the expected cost of cardiovascular disease in the U.S. was $876B in 2015, but is expected to nearly double to $1.6T by 2030, which amounts to a 4.4% CAGR. It’s possible that the 6% expected CAGR through 2020 in the ingredient market represents consumers trying to outpace expected health issues in the future.

This serves to anecdotally confirm that consumers are looking for new ways to improve their health, whether motivated by reduction of cost or improving quality of life. Businesses that can “premiumize,” as Frost & Sullivan would put it, to genuinely improve efficacy while controlling cost may be best positioned to win…

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As you have probably observed from prior issues of this report, we are of the opinion that to form a coherent view on Health & Wellness is to watch the consumer. In the past, we have explored how consumers spend their money, but this quarter, we have focused on how consumers spend their time.

The Wall Street Journal has prepared a fascinating infographical dashboard  summarizing data from the American Time Use Survey. While we are too new to some of this analysis to draw conclusions, we think there are some hypotheses worth sharing with you.

Personal care & sleep rule

Americans who are employed full-time spent 8.86 hours per day caring for themselves (including sleep). This actually exceeded the portion of the day spent working (8.13 hours) in 2015. But in 2016, personal care activities grew to 9.12 hours per day…

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Q1 2017 Health & Wellness Report


Healthy Living is now a proper noun and it has pervaded every consumer category. In previous issues, we have written about people wearing athleisure apparel to work and drinking energy drinks when they are just relaxing at home. Now, in Q1, we are focusing on secular trends that we find notable and that will likely drive M&A in the coming year.


Yes, we know you rolled your eyes when you saw that headline. “Fanbase” has become the CPG equivalent to tech words like “disruptive” and “tech-enabled.” However, Healthy Living, if defined as a consumer’s methodology for taking care of oneself, is not an industry; it’s a literary genre. The two most popular industries on YouTube, Beauty and Fitness, combined for over 220 billion views in 2016, or 31 videos per person on earth last year, according to a Pixability Study on digital presence in beauty.

While Beauty & Personal Care was expected to grow by a modest 3.6% in 2016, and the number of YouTube users only grew by 3.4%, beauty-related video views on YouTube grew 176% from March 2015 to June 2016. That is a secular shift worth watching…

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Q4 2016 Health & Wellness Report

Over the past year or so, the number of subscribers to our health and wellness quarterly report has increased markedly. We have readers ranging from brand managers of apparel companies to VC investors focused on CPG food. We find this amazing, because every time we discuss health and wellness internally, the most common question we ask is, “what the heck is it?”

We think of ourselves as physically active individuals, but it’s hard to clearly identify the term’s underpinning. Is “health and wellness” a utility-based movement, where consumers seek products and services to make themselves healthier or better performers? Maybe health and wellness is something that people enjoy, or even use to form their identity, and the evidence lies in what people do outside of the sports or exercise occasion. While we do not have easy answers to these questions, we are watching some interesting things.


What if we told you that people wear sportswear and shoes when they hang out at home three times as often as when they play team sports? You probably wouldn’t be that surprised, because far more people wear sports attire than play team sports. What if we told you that the ratio of those casual occasions to working out was nearly 1:1? That might be a bit surprising. It’s true. People love gear, and there are usage occasions for sports and exercise-related products outside of sports and exercise. We are starting to wonder if we’ll see this same trend appear in other areas. Do people just wear exercise apparel because it’s more comfortable, or because it’s a way to express their identity? We think it’s the latter, and we think that products and brands are blurring the lines between healthy eating, supplementation, activity and everyday life.

Hold on, before the next topic we have to adjust our spandex.


Energy drinks blow our minds…

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Health and Wellness M&A Report - Q3 2016

The consumer mindset is changing. While the food and beverage space is experiencing the most pronounced overhaul, other categories are not far behind. People increasingly are mindful of the health implications of the products and services that they consume. The 2015 Nielsen Health & Wellness Survey pointed out that nearly half of global consumers are trying to lose weight, while nearly 75% plan to change their diets in the next year and 72% plan to prioritize exercise. Likewise, nearly 25% of North American consumers are willing to pay premiums for non-GMO and organic food.

Perhaps most intriguing of all trends is that Millennials and Generation Z (which collectively represent all consumers under age 34) not only rate highest in terms of valuing health attributes in products, but they are comparatively the most willing to pay premiums for them.

It’s no surprise that the innovation in most categories has moved toward consumer experiences that tend toward simplicity, authenticity and activity. Some of the fastest growing categories in non-durable goods are vitamins, herbs, sports supplements and healthy aging.

We expect to see continued activity in areas that provide consumers with an avenue to experience enjoyable products within this realm. Categories to watch for in Q4 2016 are vitamins, minerals and supplements (VMS), beauty and personal care and outdoor lifestyle products.

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Q2 2016 Health & Wellness M&A Report

The Health & Wellness sector of consumer products was once an afterthought, a niche within categories that were only addressed by specialty retailers and distributors, and small brands impassioned by the pursuit of visions despite the misalignment between lifestyle and profit.

Today, these visions have become viable businesses. In apparel, we are watching astronomical growth in the Activewear category, where female consumers have found empowerment by blending their active lifestyles with their everyday choices in what to wear. An entire generation of consumers has deconstructed and reconstructed its identity and value set to express its lifestyle.

Similar things are taking place in other areas of consumer products. What was once termed the “leisure category” now shares a common thread with healthy and active lifestyle brands. Brands ranging from Lululemon Athletica to Callaway allow consumers to express their values and passions outside the environs of their favorite activities.

Two factors are driving M&A and private placement activity in 2016: (1) consumers want to be healthy, but increasingly they are shifting trust to healthcare resources that they can access on their own, versus the healthcare system (see the chart below to the right); and (2) consumers want to express their lifestyles of health and wellness through the products they purchase.

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Industry Overview

Health and Wellness Segments vs. S&P 500 - Q1 2016

As the average age for the U.S. population continues to increase, opportunity rises for companies in the Health & Wellness industry that can address rising consumer demand to combat the effects of aging and to maximize overall health. Dietary consciousness is a leading trend for aging consumers as sales for digestive and anti-aging supplements have risen, specifically products produced with natural and organic ingredients. GNC attributes recent increases in customer acquisitions to its emphasis on plant-based proteins and probiotics. Acquisition efforts also are heating up for nutrition companies that have established strong brand recognition, consumer data analytics and niche products. In February, WellNext, LLC announced its acquisition of Stop Aging Now, a leader within the direct-to-consumer nutraceuticals market. “Stop Aging Now enables us to improve our service through digital channels while offering hundreds of the very best products to our customers,” said Ojesh Bhalla, chief commercial officer of WellNext. With growing demand and a vast array of available product brands, SDR expects acquisition activity to continue through 2016.

The Health & Wellness industry as a whole recognized significant secular growth in Q1 2016, which was primarily driven by Active Lifestyle apparel and devices. Operators have recognized that athletic clothing is being worn for much more than exercise, specifically among women. Consumers are trending toward spending their growing disposable income on affordable athletic wear for everyday use. Kate Spade New York and Beyond Yoga geared up this January to launch a co-lab collection around “Ath-leisure.” Industry titans Nike and Under Armour also recognize the opportunity and have launched ad campaigns targeting women. Additionally, Nike launched its first women’s exclusive retail store and Under Armour announced its Health Box, which includes a heart rate monitor, fitness band and smart scale, in addition to its newly introduced smart shoe and two different sweat-resistant wireless headphones. A major argument that suggests athleisure is here to stay is the growing and complementing “social fitness” trend where users on social media post about workouts, meal preparation and active lifestyle, motivating followers to structure their lives around living healthily and exercising often.

Beyond devices, attire and supplements, consumers are more aware of what ingredients and additives go into the food they eat. Because of the desire to minimize processing, the role of food science is being reframed to embrace the spirit of natural products while addressing societal concerns. Consumers are making purchase decisions to avoid artificial sweeteners, preservatives, colors, flavors, MSG, genetically modified ingredients and unidentifiable chemicals. In response, High Pressure Processing (HPP) is becoming a more common nutrient-friendly, less-processed alternative to high heat pasteurization. Benefits of HPP include food nutrient and flavor retention and no added chemicals. This natural trend, also known as “Green Chemistry,” is playing a big role for operators producing health & wellness products.

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