Industry Update
Beverage Industry
Q4 2014
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Beverage Industry Report – Q4 2014
Table of Contents*
Industry Overview .................................................................................................................................................................. 3 M&A Overview ......................................................................................................................................................................... 4 Industry Trends ....................................................................................................................................................................... 4 Recent Transactions .............................................................................................................................................................. 5 Public Market Data1 ............................................................................................................................................................... 6 About MPI ................................................................................................................................................................................... 8 * This publication is also available in soft copy on the MPI website: http://www.mpival.com/resources.html.
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Beverage Industry Report – Q4 2014
Industry Overview
This publication focuses on major events, developments and trends happening within the brewery, wine
and spirits, cold beverage (such as soft drinks and energy drinks) and hot beverage (coffee and tea)
segments of the Beverage Industry.
The Beverage Industry is predominately composed of a few large industry players that are currently in
the mature stage of their lifecycles. Large and small industry participants alike are constantly faced with
internal and external challenges. Presently, the following trends are reshaping the industry:
• Health-consciousness: Health-consciousness has matured into consumer activism, leading big
beverage companies to tailor products in response to customer feedback. States are also being faced
with legislation aimed at educating consumers on the dangers of specific beverages.
• Shifting consumer preference: As consumers continue turning away from carbonated soft drinks,
alternatives such as energy drinks and coconut water have seen dramatic growth. In addition, the
craft beer industry continues to expand as consumer desire for hop-heavy brews increases.
• Innovation: Product innovation remains crucial as consumer preference continues to shift.
Although consumers are turning away from traditional carbonated soft drinks such as Coca-Cola,
interest in handcrafted sodas is increasing. Recently, Starbucks introduced its Fizzio platform
allowing customers to add controlled levels of carbonation to almost any drink they desire. As a
result, there has been increased competition and interest in premium carbonated coffee. In addition,
“coffee beers” are gaining in popularity, with even Starbucks experimenting with a non-alcoholic,
beer flavored latte.
As the stock price performance graph below suggests, the Beverage Industry as a whole has outpaced
the S&P 500 over the last five years, with the breweries segment leading the way in recent periods.
350.0%
Quarterly Benchmark Performance*
Breweries
Wine & Spirits
Non-­‐Alcoholic
S&P 500
300.0%
250.0%
200.0%
150.0%
100.0%
50.0%
0.0%
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Beverage Industry Report – Q4 2014
M&A Overview
Highlighted Transaction: Cott Acquires DSS Group Inc.
• On November 6, 2014, Cott Corporation agreed to buy DSS Group Inc.
for $1.25 billion (including debt).
• The acquisition will enable Cott to branch out beyond private-label soft
drinks and expand into water and coffee home delivery and services.
• DS Services was acquired last year by New York-based private equity firm
Crestview Partners.
• The purchase price is about 7.1 times DSS’s estimated 2014 adjusted
EBITDA.
• Enterprise Value: $1.2 billion.
Industry Trends
As shown below, a few mega deals at the start of 2014 have resulting in full-year 2014 volume that
surpassed observed deal volume in the previous two years (2012 and 2013). However, deal count
contracted for a third consecutive year. For the 2014 calendar year, we observed 38 deals in the
beverage industry, totaling $27.3 billion.
Industry M&A Activity
(Announced Transaction)
Volume ($bn)
Median M&A EBITDA Multiples
Median EBITDA Multiple
Deal Count
18.0x
$90.0
120
100
$70.0
$60.0
$30.0
13.2x
14.0x
12.0x
80
11.3x
10.6x
10.0x
$50.0
$40.0
16.0x
$77.9
$80.0
$39.4
$30.4
$25.0
$27.3
$29.6
$20.0
$11.5
$10.0
60
8.0x
40
6.0x
0
2008
2009
2010
2011
2012
8.6x
9.6x
9.3x
9.4x
2012
2013
4.0x
20
$9.7
$0.0
2007
Avg. EBITDA
16.9x
2013
2014
2.0x
0.0x
2007
2008
2009
2010
2011
2014
Source: S&P Capital IQ
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Beverage Industry Report – Q4 2014
Recent Transactions
Announced
Buyer
Date
Target
Target Description
11/6/2014
Cott Corporation
DSS Group, I nc.
DSS Group, Inc., through its subsidiary, manufactures bottled water and offers home and
office bottled water delivery services. The company is based in Atlanta, Georgia. As of
December 12, 2014, DSS Group, I nc. operates as a subsidiary of Cott Corporation.
11/11/2014
Lexaria Corp.
Poppy's T eas LLC (nka:ViPova Poppy's Teas LLC produces cannabinoid infused teas. The company was founded in 2014
Tea)
and is based in St Augustine, Florida. As of December 12, 2014, Poppy's Teas LLC operates
as a subsidiary of Lexaria Corp.
11/12/2014
Unknown
Brand New Vintage Limited, Yarra Valley Assets
Brand New Vintage Limited, Yarra Valley Assets comprises land, winery, vineyard,
buildings, plant and equipment, and contracts associated with the winery, processing, and
storage business. T he assets are located in Australia.
11/12/2014
Casella Wines Pty. Limited
Peter Lehmann Wines Ltd.
Peter Lehmann Wines Limited manufactures and sells wine in Australia. The company sells
its wine in bottle and in bulk. It also exports its product to the United Kingdom, Europe,
North America, and internationally. The company was founded in 1979 and is based in
Tanunda, Australia. Peter Lehmann Wines Limited is the former subsidiary of Hess Group
Australia Pty Ltd. As of December 19, 2014, Peter Lehmann Wines Ltd. operates as a
subsidiary of Casella Wines Pty. Limited.
11/27/2014
The Coca-­‐Cola Company
SABMiller, Appletiser Brands SABMiller, Appletiser Brands And 19 Non-­‐Alcoholic Ready-­‐To-­‐Drink Brands In Africa And
And 19 Non-­‐Alcoholic Ready-­‐ Latin America comprises Appletiser brands and 19 non-­‐alcoholic r eady-­‐to-­‐drink brands.
To-­‐Drink Brands I n Africa And Latin America
12/9/2014
CleanPath Resources Corp.
Nature Bev, I nc.
Nature Bev, Inc. produces and distributes functional beverage products to customers
worldwide. Its products include aquifer and elevated pH alkaline water, weight loss
beverages, physical and mental health enhancement products, rejuvenating sport drinks,
and healthy energy drinks. The company is headquartered in Los Angeles, California. It has
distribution centers in San Francisco and Los Angeles, California; Las Vegas, Nevada;
Chicago, I llinois; Arizona; and T exas.
12/16/2014
Coca-­‐Cola East Japan Co.Ltd.
Sendai Coca-­‐Cola Bottling Co., Ltd.
Sendai Coca-­‐Cola Bottling Co., Ltd. produces soft drinks. The company was incorporated in
1962 and is based in Sendai, Japan. Sendai Coca-­‐Cola Bottling Co., Ltd. operates as a
subsidiary of Kamei Corporation.
12/16/2014
Koninklijke Wessanen N.V.
Abafoods s.r.l.
Abafoods s.r.l. produces vegetable organic drinks by processing cereals and soya beans.
The company produces its products from the extraction of cereals, such as rice, spelt,
kamut, oat, barley, millet, and quinoa and leguminosaes, including soy. Abafoods s.r.l. was
founded in 1997 and is based in Badia Polesine, I taly.
12/19/2014
Kofola Spolka Akcyjna
Radenska d.d. Radenci
Radenska d.d. Radenci engages in producing, filling, and marketing mineral waters and non-­‐
alcoholic beverages. The company offers natural mineral and spring waters, and flavored
water; soft drinks, including ice tea, and Sprint and Pepsi drinks; and gastronomy
products. It offers its products in Slovenia; and exports to Croatia, Italy, Austria, Kosovo,
Bosnia and Herzegovina, the United States, Canada, Slovakia, and internationally. The
company was founded in 1869 and is based in Radenci, Slovenia. Radenska d.d. Radenci
operates as a subsidiary of Pivovarna Lasko DD.
Source: S&P Capital IQ
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Beverage Industry Report – Q4 2014
Public Market Data1
12/31/2014
Close (2) High
Low
Enterprise
Value (EV)(3) LTM
NFY
LTM
NFY
LTM
NFY
93.86
94.89
69.14
191,643
10.6x
10.2x
38.5%
40.0%
16.4x
17.1x
Big Rock Brewery I nc.
12.87
19.99
11.63
83
24.1x
17.7x
9.3%
12.5%
NM
NA
Boston Beer Co. I nc.
289.54
299.00
202.78
3,726
20.9x
21.1x
20.0%
19.3%
42.1x
42.7x
Carlsberg A/S
478.80
608.50
443.30
114,332
8.5x
8.6x
20.0%
20.4%
13.9x
14.0x
Constellation Brands I nc.
98.17
100.77
68.54
26,059
15.3x
14.7x
29.0%
29.6%
24.6x
23.2x
Craft Brew Alliance, I nc.
13.34
17.97
10.07
265
18.8x
NA
7.2%
NA
NM
NM
Heineken NV
58.95
64.00
44.14
45,785
11.4x
10.4x
20.9%
23.0%
25.0x
21.8x
Molson Coors Brewing Company
74.52
77.93
50.90
16,636
20.2x
12.1x
19.6%
32.9%
24.9x
24.8x
SABMiller plc
33.61
38.57
26.50
63,117
10.8x
9.9x
34.4%
37.2%
14.8x
14.3x
Tsingtao Brewery Company Limited
52.60
66.80
51.75
59,447
20.0x
20.7x
9.9%
9.6%
35.6x
34.1x
Median
17.1x
12.1x
20.0%
23.0%
24.8x
22.5x
Company
52-­‐Week
EV/EBITDA
EBITDA Margin
Market Cap/Earnings
Breweries
Anheuser-­‐Busch I nBev SA/NV
Wine & S pirits
Brown-­‐Forman Corporation
87.84
97.97
73.44
19,452
19.2x
18.1x
33.2%
25.8%
27.8x
26.7x
Diageo plc
18.49
20.44
9.50
55,975
16.4x
15.3x
33.2%
32.8%
20.6x
19.6x
Pernod-­‐Ricard SA
92.26
96.23
78.82
32,915
14.7x
13.7x
28.2%
28.8%
24.0x
18.9x
Median
16.4x
15.3x
33.2%
28.8%
24.0x
19.6x
Median EBITDA Multiples -­‐ Breweries
Median EBITDA Multiples -­‐ Wine & Spirits
20.0x
20.0x
18.0x
16.2x
17.1x
16.0x
10.0x
15.0x
16.0x
12.7x
14.0x
12.0x
18.0x
9.6x
10.8x
14.0x
11.0x
12.0x
9.2x
12.6x
13.4x
12.9x
2009
2010
2011
15.3x
16.4x
11.2x
10.0x
8.0x
8.0x
6.0x
6.0x
4.0x
4.0x
2.0x
2.0x
0.0x
0.0x
2008
2009
2010
2011
2012
Average of Medians (12.4x)
2013
2014
2008
2012
2013
2014
Average of Medians (13.8x)
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Beverage Industry Report – Q4 2014
Public Market Data1
12/31/2014
Close (2) High
Low
Enterprise
Value (EV)(3) LTM
NFY
LTM
NFY
LTM
NFY
A.G.Barr p.l.c.
5.90
6.72
5.10
685
14.4x
13.9x
18.3%
18.8%
22.0x
21.2x
Cott Corporation
8.01
9.45
6.66
1,378
7.8x
8.0x
8.6%
8.4%
NM
34.4x
Dr Pepper Snapple Group, I nc.
71.68
74.28
46.88
16,210
11.1x
11.2x
24.0%
23.7%
19.7x
19.3x
Farmer Brothers Co.
29.45
31.86
18.05
455
14.7x
9.6x
5.8%
8.4%
36.7x
30.3x
Keurig Green Mountain, I nc.
132.40
158.87
73.29
20,882
17.3x
16.0x
25.7%
24.7%
36.0x
32.6x
Monster Beverage Corporation
108.35
113.50
63.00
17,167
23.8x
23.1x
30.0%
30.4%
41.9x
39.5x
National Beverage Corp.
22.62
27.32
15.42
1,021
12.7x
NA
12.6%
NA
22.1x
NA
Pepsico, I nc.
94.56
100.70
77.01
161,334
12.6x
12.5x
19.1%
19.3%
20.4x
20.5x
Starbucks Corporation
82.05
84.20
67.93
61,604
17.4x
14.1x
21.5%
22.9%
29.7x
25.1x
The Coca-­‐Cola Company
42.22
45.00
36.89
203,247
15.5x
15.7x
28.4%
28.1%
23.0x
21.4x
Median
14.5x
13.9x
20.3%
22.9%
23.0x
25.1x
Company
52-­‐Week
EV/EBITDA
EBITDA Margin
Market Cap/Earnings
Non-­‐Alcoholic Beverages
Median EBITDA Multiples -­‐ Non-­‐Alcoholic
20.0x
18.0x
16.0x
14.5x
14.0x
12.0x
10.0x
8.0x
10.4x
10.7x
10.7x
10.0x
11.9x
7.6x
6.0x
4.0x
2.0x
0.0x
2008
2009
2010
2011
2012
2013
2014
Average of Medians (10.8x)
1
Source: As reported by S&P Capital IQ.
(2) Reported in local currency
(3) In millions of local currency
Definitions:
Enterprise Value – defined by S&P Capital IQ as “market cap. + total debt + preferred equity + total minority interest – cash and
equivalents”
LTM – latest twelve months
EBITDA – adjusted earnings before interest, taxes, depreciation and amortization
NFY – next fiscal year
EPS – earnings per share
NA – not available, NM – not meaningful
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Beverage Industry Report – Q4 2014
About MPI
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