KBS - Food Manufacturing - Market Insight

MOTIVATIONS OF TRADE ACQUIRERS AND CONSOLIDATORS IN FOOD MANUFACTURING AND DISTRIBUTION

+ BROADER PRODUCT AND SERVICE PORTFOLIOS Consolidators are leveraging acquisitions to create comprehensive offerings, spanning the entire food supply chain. Many customers, including retailers and wholesalers, value a “one-stop shop” approach that integrates manufacturing, packaging, and distribution services. + ACCESS TO SPECIALISED EXPERTISE AND TECHNOLOGY Acquired businesses often bring specialised knowledge in areas like sustainable manufacturing practices, advanced food safety technologies, or efficient logistics systems. Trade consolidators use these acquisitions to enhance their capabilities and address high-demand areas within the industry. + RECURRING REVENUE STREAMS The predictability offered by contracts with major retailers or foodservice companies is highly attractive. These steady revenue streams appeal particularly to private equity-backed consolidators seeking reliable returns on investment within a rapidly growing sector. + SUSTAINABILITY AND INNOVATION DEMAND Increasing consumer and regulatory pressure for sustainability has created demand for eco-friendly practices and innovative food solutions. Acquisitions allow consolidators to rapidly adopt new technologies and processes, positioning themselves competitively in the market. + SYNERGIES AND COST EFFICIENCIES Consolidators achieve economies of scale by integrating operational elements such as logistics networks, procurement, and production facilities across multiple acquisitions. This integration reduces costs and improves profitability, making businesses more competitive in a price-sensitive market. In recent years, trade consolidators’ interest in acquiring food manufacturing and distribution companies has been driven by the need to achieve scale, diversify expertise, and strengthen their market position in a highly competitive and continually evolving industry. As consumer demands for sustainable and innovative food solutions grow, businesses are increasingly seeking partners that can deliver integrated manufacturing, packaging, and distribution services. Acquirers view this demand surge as an opportunity to build comprehensive “farm-to-fork” solutions by combining specialised providers. This approach enables them to serve a diverse range of clients, from retailers to foodservice operators, while improving operational efficiencies and leveraging economies of scale. The predictability of recurring revenue from long-term contracts with major retailers and food distributors is another major attraction. This financial stability is especially appealing to private equity-backed consolidators seeking reliable returns. Additionally, acquiring established food manufacturers or distributors allows consolidators to quickly incorporate advanced capabilities, such as automation, sustainable processing technologies, and efficient supply chain solutions, which are crucial for remaining competitive in a fast-evolving sector. Ultimately, these acquisitions enable consolidators to solidify their presence in a lucrative market, drive innovation, and adapt to the shifting preferences and regulatory requirements in the food industry.

This approach enables consolidators to build robust, scalable operations capable of meeting the evolving demands of the food manufacturing and distribution sector.