Wed, Feb 8, 2023
Food and Beverage M&A Landscape – Winter 2023
M&A deal activity in the food and beverage space remained relatively steady quarter over quarter, with 73 deals announced in Q4 2022 compared to 71 in Q3. Overall, there were 310 deals announced in 2022, a decrease of 64 transactions year over year. Transaction volumes in Q4 2022 were lower than the previous year, with 73 deals announced compared to 85. Q4 2022 marks the 10th consecutive quarter with over 70 deals announced in the North American food and beverage space.
Q4 2022 saw several significant North American deals in the alcoholic beverages and ingredients spaces. Notable transactions within these areas include PAI Partners’ acquisition of Savory Solutions Group from International Flavors and Fragrances Inc. and Campari Group’s acquisition of Wilderness Trail Distillery LLC. Alcoholic beverages, nonalcoholic beverages, better-for-you, ingredients and confectionery/snacks categories were the most active in terms of deal volume, representing 70% of total transactions in the quarter.
M&A activity in the food and beverage sector in 2022 remains predominantly driven by strategic buyers (including companies primarily owned by private equity investors), with strategic transactions representing 81% of total deal volume. Of the 310 deals announced over the year, 242 (78%) were completed by privately owned buyers.
Deal flow in Q4 2022 increased marginally quarter over quarter, demonstrating the inherent resilience of the food and beverage industry despite several economic obstacles. The combined effects of interest rate hikes, stable, yet high levels of inflation, trade sanctions, and overall market uncertainty have contributed to the sustained hesitancy among strategic and financial buyers. To maintain margins, companies within the food and beverage industry continue to offset the high input costs associated with these macroeconomic challenges through price increases, causing retail prices to rise at historic rates. Despite higher financing costs and volatile equity valuations for public companies, M&A activity has remained steady within the food and beverage space because of the essential nature of the underlying goods and the abundance of dry powder and excess capital on the balance sheets of private equity firms and corporations. As we head into 2023, we believe these factors will continue to serve as the main drivers for M&A deal flow within the food and beverage industry.
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