First quarter 2016
Food and
Beverage
Recap
S n ac k o n T h at
T h e sn ac k in g tren d is d riv in g M & A in th e f o o d an d b ev erag e in d ustry as m il l en n ial s sh if t aw ay f ro m
trad itio n al th ree- m eal f o rm at.
The generational shift is causing more
than just changes to traditional social
and workplace environments. It’s also
transforming the landscape of the food and
beverage industry. Sales of snacks accounted
for approximately 40% of the North American
packaged food market, with continued growth
expected. This is largely due to millennials,
who are snacking more than any other group
in history.
According to a Canadian Ipsos survey, almost
half of all food and beverage consumption
are snacks, and on average Canadians are
snacking as many as six times per day. Betterfor-you snacks have gained significant traction
in recent years as consumers increasingly
prefer healthier alternatives. In particular,
millennials are driving this craze as they are
looking for fresher, unprocessed ingredients,
having been brought up in a time when there
was huge scrutiny on the obesity crisis and
a focus on healthy living. They are also less
concerned with observing the traditional
three-meal format and rather snack on the go,
with a focus on products that are better for
you but at the same time convenient.
Larger players in the food business have
shown their appetite to meet this need and
grow their snack portfolios. In many ways,
the snack food segment is similar to other
food and beverage categories discussed in
our previous Recaps, where larger industry
players are seeking to expand into this
growing market by targeting high-growth
players and paying handsomely for prime
targets. Examples include TreeHouse
Foods’ acquisition of Flagstone Foods,
a maker of healthy private label snacks,
for approximately 12 times EBITDA, and
Campbell Soup’s acquisition of organic
salsa and chips maker Garden Fresh for
approximately 15 times EBITDA.
Not to be outdone by burgeoning upstarts
in the industry, the traditional snack food
players have also re-engineered their product
offerings to include products that are higher
in protein or lower in salt content than before.
Snacks as a whole have also shifted some of
the traditional business models of the large
food and beverage players.
Kelloggs, the cereal giant, has seen its
snack portfolio, including Pringles, Cheez-It
and Keebler, among others, grow to almost
50% of its current business, up from 20% in
2000. Hormel, primarily a protein product
business, has seen greater growth in its
Wholly Guacamole product line than any of its
other brands and recently introduced a peanut
butter-based snack product, a divergence
from its traditional meat business focus. Even
private-label giant Treehouse Foods has seen
its snack category outgrow its historically
largest category, beverages, as a result of
various acquisitions.
This trend stretches out even to the beverage
segment, where over the last few months
we’ve seen soft drinks monarchs Coca-Cola
and PepsiCo both showing interest in Greekyogurt maker Chobani, which has ridden the
wave of growth in the Greek yogurt category,
as yogurt has gained significant presence as a
healthy snack.
th e
The non-traditional snack sector has a
plethora of new products that have recently
generated a lot of buzz, particularly among
individuals looking for healthy, nutrition-dense
snacks. The advent of clean protein, low-carb
and low-sugar food products is a fairly new
but innovative sector that has received major
interest from some of the largest food titans.
Hershey acquired jerky company Krave (for
approximately 9 times revenue) in order to
boost sales in its snack categories, which at
the time were struggling with the rising prices
for chocolate and dairy products. This quarter,
General Mills subsidiary Annie’s acquired
EPIC Provisions, the maker of a bison-based
protein bar. These acquisitions also highlight
millennial consumers’ desire for new brands
and new types of innovative snacks.
With the continuing trend of more and more
consumers snacking, expect to see further
M&A activity in the snack food segment.
Based on previous activity, not only are
traditional snack food companies making
acquisitions in the space, but even other
food and beverage industry titans that have
previously had a non-existent snack portfolio
are getting in on the act. The mid-market
segment is a prime target that larger players
will look to identify brands and products that
are riding the momentum of the snack craze.
Mid-market players with an innovative, betterfor-you snack food product portfolio are likely
to generate tremendous interest.
Ad van Geloven BV, based in Netherlands,
doing business as Hazelwood Convenience
Foods Tilburg B.V. produces snacks, finger
foods, and meal products for consumers,
professionals, retailers, wholesale traders and
industrial buyers. Products include sausages,
croquettes, fried bami noodle snacks, spring
rolls and others.
Following are brief summaries of selected
transactions in the North American food
and beverage industry from the first
quarter of 2016:
I n g red ien ts
•
Corona, CA-based Monster Beverage
Corporation entered into a definitive
agreement to acquire American Fruits and
Flavors for approximately US$690 million.
The transaction represents an enterprise
value of approximately 7.9 times EBITDA.
•
In addition, United Natural Foods acquired
Nor-Cal Produce, Inc. for approximately
US$69 million. This transaction represents an
enterprise value of approximately 0.5 times
net sales.
Nor-Cal Produce Inc. distributes conventional
and organic produce, and other fresh products
in Northern California.
Southern Comfort is an American liqueur
made from neutral spirits with fruit, spice
and whiskey flavouring. Tuaca is an Italian
flavoured liqueur with vanilla and citrus.
•
Groupe St-Hubert Inc. owns and operates
restaurants, bars and grocery stores in
Quebec, Ontario and the Maritimes. In
addition, the company produces and sells
sauces, seasonings, soups and broths, and
frozen dishes.
•
C o n f ec tio n ery
Montreal, QC-based Champlain Financial
Corporation acquired L.B. Maple Treat, Inc.
from Bedford Capital Management. The
financial terms of the transaction were not
disclosed.
Mississauga, ON-based Colio Estate Wines
Inc. acquired Provincial Beverages of Canada
Inc. The financial terms of the transaction
were not disclosed.
Provincial Beverages of Canada, based
in Nobleton, ON, produces, imports and
distributes alcoholic beverages in Canada. The
company provides beers, lagers, pilsners and
ciders through stores, restaurants and pubs.
Toronto, ON-based McCain Foods Limited
agreed to acquire a majority stake in Ad
van Geloven BV from TowerBrook Capital
Partners L.P. The financial terms of the
transaction were not disclosed.
2 | Food and Beverage Recap First quarter 2016
The Fresh Market, Inc., based in Greensboro,
NC, operates as a specialty grocer retailer
in the United States. The company operates
168 stores in 27 states across the nation
dedicated to providing the freshest and best
local ingredients.
•
Boise, ID-based Albertsons, LLC entered into
a purchase agreement to acquire 29 core
stores from Haggen, Inc. for approximately
US$106 million.
•
Haggen Inc. operates food and pharmacy
stores in the United States. Albertsons
will keep 15 of these 29 stores under the
Haggen banner which they purchased out of
bankruptcy.
•
Rosemont, IL-based US Foods, Inc. agreed to
acquire the assets of Cara Donna Provision
Co, Inc. The financial terms of the transaction
were not disclosed.
•
Cara Donna Provision Co, Inc., based in
Braintree, MA, distributes and wholesales
food products. The company offers products
in most major food categories including
appetizers, bread products, proteins and dry
snack foods.
•
Houston, TX-based Sysco Corporation acquired
North Star Seafood, LLC. The financial terms
of the transaction were not disclosed.
Vaughan, ON-based Cara Operations Limited
entered into a definitive agreement to acquire
Groupe St-Hubert Inc. for approximately
CA$540 million. The transaction represents
an enterprise value of approximately 12
times EBITDA.
Societe Des Produits Marnier produces,
distributes and sells liquors around the
world. They are best known for their flagship
brand Grand Marnier which is an orangeflavoured cognac.
•
•
D istrib utio n
R estauran ts
Sesto San Giovanni, Italy-based Davide
Campari – Milano SpA made a tender offer
to acquire a majority stake in Societe Des
Produits Marnier Lapostolle Societe Anonyme
for approximately €362 million. The
transaction represents an enterprise value of
approximately 22.4 times EBITDA.
Fro z en f o o d s
New York, NY-based Apollo Global
Management entered into a definitive
agreement to acquire The Fresh Market,
Inc. for approximately US$1.3 billion. The
transaction represents an enterprise value of
approximately 6.9 times EBITDA.
Haddon House Food Products, Inc., based in
Medford, NJ, imports, exports and distributes
dry, refrigerated, and frozen gourmet and
specialty foods, confections, ethnic specialities
and natural/organic products to retailers in the
United States and internationally.
Metarie, LA-based Sazerac Company, Inc.
entered into an agreement to acquire the
Southern Comfort and Tuaca brands from
Brown-Forman Corporation for approximately
US$544 million. The transaction represents
an enterprise value of approximately 4.7
times net sales.
•
•
Providence, RI-based United Natural Foods,
Inc. entered into a definitive agreement to
acquire Haddon House Food Products, Inc. for
approximately US$220 million. The transaction
represents an enterprise value of approximately
11 times EBITDA.
A l c o h o l ic b ev erag es
•
R etail
N atural Fo o d s D istrib utio n
•
American Fruits and Flavors, based
in Pacoima, CA, manufactures and
distributes fruit-based products and fruit
concentrates worldwide. It also engages in
supplying flavours to food and beverage
manufacturers, processing fruit juices and
concentrates and producing blends of fruit
and flavour combinations.
•
for business and special event use. If offers
business, wedding and individual personalized
gifts in addition to seasonal and holiday
chocolate.
•
L.B. Maple Treat, based in Granby, QC,
produces and distributes maple syrup. It also
produces maple syrup products including
cookies, candies, biscuits, pancake mixes,
coffee and other maple based confectionary
products.
North Star Seafood, LLC, based in Pompano
Beach, FL, is a wholesale distribution company
that imports and exports seafood including
fin fishes, crabs, lobsters, Asian specialty
products, shrimps, hors d’oeuvres, scallops,
fresh shellfishes, squid and octopus, smoked
seafood and kosher meals.
(continued on back page)
Vancouver, BC-based Tricor Pacific Founders
Capital acquired Totally Chocolate Inc. from
Jeff Robinson. The financial terms of the
transaction were not disclosed.
Totally Chocolate Inc., based in Blaine,
Washington, produces custom chocolate
Data source: Capital IQ Inc., Post News Releases
E rn st & Y o un g O ren d a f o o d an d b ev erag e in d ex
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14x
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12x
11x
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10x
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Food Processing
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1Q 16
4Q 15
3Q 15
2Q 15
1Q 15
4Q 14
3Q 14
2Q 14
1Q 14
4Q 13
3Q 13
2Q 13
1Q 13
4Q 12
3Q 12
2Q 12
1Q 12
4Q 11
3Q 11
2Q 11
1Q 11
4Q 10
3Q 10
2Q 10
1Q 10
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G ro c ery an d c o n v en ien c e retail
SuperValu Inc.
SVU
Kroger Co.
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Whole Foods Market, Inc.
WFM
10x
9 x
R estauran t an d f o o d serv ic e
Starbucks Corporation
SBUX
McDonald’s Corp.
MCD
Jack in the Box Inc.
JACK
Yum! Brands, Inc.
YUM
Darden Restaurants, Inc.
DRI
Brinker International, Inc.
EAT
Dine Equity Inc.
DIN
8 x
C anad ian F ood C omp anies
1Q 16
4Q 15
3Q 15
2Q 15
1Q 15
4Q 14
3Q 14
2Q 14
1Q 14
4Q 13
3Q 13
2Q 13
1Q 13
4Q 12
3Q 12
2Q 12
1Q 12
4Q 11
3Q 11
2Q 11
1Q 11
4Q 10
3Q 10
2Q 10
1Q 10
7 x
U S F ood C omp anies
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350
$40,000
$35,000
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$30,000
250
$25,000
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$20,000
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$15,000
100
$10,000
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1
Q1 16
Q4 15
Q3 15
Q2 15
Q1 15
Q4 14
Q3 14
Q2 14
Q1 14
Q4 13
Q3 13
Q2 13
Q1 13
Q4 12
Q3 12
Q2 12
Q1 12
Q4 11
Q3 11
Q2 11
Q1 11
Q4 10
Q3 10
Q2 10
Q1 10
1
0
Aggregate Transaction Value ($US million)
Transaction Volume and Size
Number of Transactions
Tyson Foods
The Kraft Heinz Company
Mondelez International, Inc.
General Mills, Inc.
ConAgra Foods, Inc.
Dean Foods Company
Campbell Soup Company
McCormick & Company,
Incorporated
Hormel Foods Corporation
The Hershey Company
Kellogg Company
B ev erag es
The Coca-Cola Company
Pepsico, Inc.
Constellation Brands Inc.
13x
6x
T i ck er
s y m b ol
$-
Q1 2015 figure exludes Heinz's acquisi on of Kra Foods Inc. ($62B) for presenta on purposes.
Number of Transactions
Aggregate Transaction Value
Note: The indices used in this newsletter have been compiled by Ernst & Young Orenda Corporate Finance Inc. solely
for illustrative purposes. The companies chosen are publicly traded companies that are commonly used for industry
composites to show stock performances within a sector. The indices do not include all public companies that could
be categorized within each sector, and were not created as benchmarks, nor should they imply benchmarking or
recommendations for a particular stock and/or sector.
C anadi an f ood and
b everage com pani es
T i ck er
s y m b ol
Fo o d p ro c essin g
Maple Leaf Foods Inc.
George Weston Limited
Saputo Inc.
High Liner Foods Inc.
MFI
WN
SAP
HLF
B ev erag es
Molson Coors Brewing
Company
Cott Corporation
Lassonde Industries Inc.
Andrew Peller Limited
Corby Spirit & Wine Limited
TAP
BCB
LAS.A
ADW.A
CSW.A
G ro c ery an d c o n v en ien c e retail
Loblaw Companies
L
Metro Inc.
MRU.A
Alimentation Couche-Tard Inc. ATD.B
Charts: Ernst & Young Orenda Corporate Finance Inc.
Data source: Capital IQ, Inc., Bloomberg
Food and Beverage Recap First quarter 2016 | 3
P ro tein
•
Berkeley, CA-based Annie’s, Inc. acquired EPIC Provisions LLC. The
financial terms of the transaction were not disclosed.
EPIC Provisions LLC, based in Austin, TX, manufactures and sells meatbased protein bars in the United States. It offers beef, bison, lamb, turkey
and liver savory bars, and fruit and nut bars.
•
C an ad ian Fo o d an d B ev erag e L ead er
Stephen Dewis
Toronto, Ontario
+1 416 943 2063
stephen.dewis@ca.ey.com
Richmond, BC-based Premium Brands Holding Corporation entered into
a definitive agreement to acquire substantially all of the assets of C&C
Packing Inc. from the Cons family for approximately CA$146 million.
The transaction represents an enterprise value of approximately 0.6
times revenue.
C&C Packing Inc., based in Saint-Leonard, QC, engages in purchasing,
processing, and supplying meat products in Canada and the North
Eastern United States. The company offers beef, pork, lamb, veal, poultry,
turkey and other meat products.
•
Shawnee Mission, KS-based Seaboard Foods LLC entered into an asset
purchase agreement to acquire certain assets of Christensen Farms and
Feedlots, Inc. for approximately US$71 million.
Seaboard Foods LLC acquired a portion of Christensen Farms & Feedlot
Inc.’s hog inventory, a feed mill, truck washes and certain hog farms in
Colorado.
•
Lyn, ON-based Burnbrae Farms Limited entered into an agreement to
acquire the assets of Michael Foods Canada from Post Holdings. The
financial terms of the transactions were not disclosed.
Michael Foods, based in Minnetonka, MN, offers organic and cage free
eggs as well as other egg based products.
E Y
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ED None
The information and opinion within this document has been derived from various
sources of research including but not limited to Capital IQ, Loblaw Companies
Limited Press Releases, Post News Releases Legalweek, RBC Economics,
Bloomberg, Just-Food, Canadian Grocer and Hoovers.
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Data source: Capital IQ Inc.