KBS - Food Manufacturing - Market Insight

M&A ACTIVITY CONTINUES TO RISE WITHIN THE FOOD AND BEVERAGE INDUSTRY

The UK food manufacturing and distribution sector is experiencing remarkable growth, with mergers and acquisitions (M&A) activity on the rise. After a steady period following COVID-19, the sector appears poised for exponential growth, driven by evolving market dynamics and consumer preferences that are heavily influencing M&A activity. We have conducted an in-depth analysis of the company sales landscape within this sector, offering valuable insights into the key trends shaping sales activity. A notable trend is the customer-driven demand for more sustainable and environmentally friendly (‘greener’) products and services, which is playing a significant role in shaping acquisition strategies. Our extensive experience in managing successful transactions and ongoing engagement within this dynamic market has provided us with a unique perspective. Below, we present an overview of the current trends shaping the food manufacturing and distribution sector, including the strategic moves of leading acquirers and the vital role of private equity in driving industry consolidation. + BETTER ESG PRACTICES There is a greater need for ESG (environmental, social and governance) practices in the modern business world – and it is not solely customers who believe this. Transparent businesses that minimise their impact on the environment, wider society and workplace culture are becoming increasingly sought after by M&A acquirers and investors alike. + NEW PRODUCT DEMAND In an ever-busy society, convenience and grab-and-go options remain a priority for customers, but healthier, organic options with ‘low and no’ fats and sugars are increasingly in demand, as well as free-from, meat-free and plant-based. Companies manufacturing such products are highly sought after. + THE NEED FOR NEW CUSTOMERS Businesses in the sector are facing challenges to generate new customers. This is mainly due to the cost-of-living crisis, and companies are also deploying cost-cutting measures, including marketing. This has created a need to increase the budget available to such companies, being able to draw in new customers, grow sales figures, and to compete in a challenging market. + SCALING-UP OPERATIONS The status of the UK amongst the wider European community has changed in recent years, following Brexit. The costs of imported ingredients and products has risen, creating a need to scale operations nationally. Investors can not only benefit from this demand, but by steering marketing in a way to sell ‘homegrown’ and ‘Made in Great Britain’ products in a positive manner. Along with enhancing a wider geographic coverage, these ‘green’ and customer-driven motives have created more opportunities for M&A acquirers to put their hats forward in an evolving market. There is a need for those able to deliver greater financial and budgeting capabilities.