Food & Beverage Insights from Clearwater International
Autumn 2015
clearthought
Snacks
The global snacks market is seeing major consolidation as industry players capitalise on
fast-changing consumer trends.
A treat in store
The consumer drive towards healthy, nutritional and high-protein
products is having a huge impact on the food and beverage industry,
and especially the snacks market. Together with faster-paced lifestyles
and the emergent global middle class, snacking players are facing an
abundance of growth opportunities but also new competitors and the
need to get the right focus.
In this publication, we analyse these trends, discuss the moves of the
leading industry players, and provide an overview of recent M&A activity.
Healthy living
diet. This is driving demand for healthier and
more nutritious snacks, particularly among
millennials and parents of young children.
Both groups tend to be very health conscious,
preferring snacks that they consider to be
‘guilt-free’.
Snackification
Most people snack between meals and many
snack multiple times each day. What’s new is
that close to half of consumers now regularly
consume snacks as a meal alternative too.
This ‘snackification’ of meals is one of the big
opportunities for snack brands.
Most snacks are designed to satisfy a hunger
craving but those who snack in place of
traditional meals could be leaving a gap in their
This growing demand for healthier snacks is
causing upheaval throughout the global food
and drink industry. It has led to a flurry of
activity in new product development, caused
incumbent players to reassess their existing
recipes, and created spaces for new brands to
emerge.
DEAL ACTIVITY SNACKS SECTOR 2012-2015
4
3
2
Deal
Volume
1
13
12
6
4
10
10
1
10
12
10
7
5
3
4
Q1
9
10
7
2
5
16
11
1
3
3
1
Q2
Q3
2012
9
7
1
1
2
Q4
Q1
Q2
8
5
8
Q4
6
3
3
Q1
Q2
Q3
2013
9
8
6
1
Q3
6
5
3
Q1
Q2
1
Q4
2014
2015
Processing & preserving of potatoes
Manufacture of rusks, biscuits, pastry & cakes
Manufacture of cocoa, chocolate and sugar confectionery
Wholesale of sugar, chocolate & sugar confectionery
‘Big Food’ goes shopping
These trends have coincided with mounting
consumer distrust of so-called ‘Big Food’ - the
term used to define large food companies and
legacy brands. The problem is the questionable
ability of Big Food, known for its heavily
processed products, to deliver authentic and
genuine food experiences. Big Food has thus
found it very challenging to develop ‘betterfor-you’ businesses organically.
By contrast, consumers perceive speciality
players in the natural space to be much more
credible, and their better-for-you propositions
have found a strong market. It is no surprise
then that Big Food has started hunting for
speciality players to buy, and in doing so
hopes to acquire some authenticity in the
natural space.
Campbell Soup Company was one of the
first Big Food companies to recognise the
challenge. Since becoming CEO in 2011,
Denise Morrison has been repositioning the
business more within the realm of ‘small’ food,
pitching itself as “the biggest small company”.
To achieve this, Morrison has made a number
of acquisitions in the healthy food space, such
as Bolthouse Farms, a maker of organic juices
and smoothies.
clearthought | Autumn 2015
Clean label - the new industry
standard
There is a connection in the consumer mind
between healthy living and knowing exactly
what they are eating, and thus ‘clean label’ is
fast becoming a commercial necessity in the
food industry.
Many consumers already purchase ‘low
in’ or ‘free from’ products, whether due to
intolerances (to gluten, nuts, dairy, eggs,
etc) or general well-being (avoiding GMOs,
artificial additives, pesticide residues, trans
fats, etc). However, clean label is fast moving
beyond ‘free from’ and consumers are now
demanding shorter and more recognisable
ingredient lists. As clean eating is regarded as
a lifestyle choice by consumers, it is likely to
have much more staying power than a fad
diet.
The movement is not limited to healthy foods
but applies to the whole shopping basket,
including snacks. While consumers may not
be demanding ‘farm-to-table’ when it comes
to sweet treats, those that can marry health,
sensory pleasure and convenience will be the
winners.
Food & Beverage Insights from Clearwater International
Manufacturers are responding. Research from
Innova Market Insights has found that more
than 20% of newly launched products in the
US feature clean label positioning. There has
been a significant rise in the use of clean label
ingredients such as stevia and monk fruit
natural sweeteners, and natural colours such
as those based on spirulina, elderberry and
beetroot.
Protein goes mainstream
In Big Food, Kellogg Co. and General Mills have
committed to eliminating artificial ingredients
over the coming years; Nestlé is removing
all artificial flavours and colours from more
than 250 types of chocolate sold in America;
PepsiCo is removing the artificial sweetener
aspartame from Diet Pepsi while Coca-Cola
is promoting its use of the natural sweetener
stevia in Coke Life.
Nearly 4% of global product launches
recorded by Innova Market Insights in the
past 12 months used a ‘high in’ or ‘source
of’ protein positioning. The dairy sector has
responded particularly fast, and the trend for
high protein dairy products has moved from
sports nutrition into the mainstream. High
protein claims are now widespread in milk
drinks, yoghurts and dairy-based desserts.
Meanwhile, research from Ingredion has
shown that clean label is also on the radar
of consumers in the Far East. It found
that a short and simple ingredient list
was increasingly important, with Chinese
consumers among the most likely to read
ingredient lists out of 17 countries surveyed
around the world.
Recent deal highlights
• General Mills acquired Annie’s for ¤725m to further build its
presence in the branded natural and organic food markets.
Annie’s is particularly strong in convenience meals and snacks,
two of General Mills’ priority platforms.
• Back to Nature Foods (BNF), one of the original natural
food brands in the US, acquired SnackWell from Mondelēz.
SnackWell was originally launched by Nabisco in 1992 as a
line of reduced-fat and fat-free cookies and crackers, and will
significantly increase BNF’s scale in these categories.
• Natural Balance Foods (NBF), the British maker of Nakd and
Trek snack bars, was acquired by Belgian biscuits and cakes
maker Lotus Bakeries for ¤83m. NBF was founded a decade
High protein foods have also been feeding
the healthy living trend. Government advice
is generally that 10~35% of daily calorie
intake should come from protein, and many
consumers now recognise that protein helps to
boost energy levels, strengthen muscle growth
and bone maintenance, and improve satiety.
Dairy brands have been striving to find unique
points of differentiation. Arla’s Breaker HighProtein is a drinkable yoghurt packed in a
pouch, appealing to males as a functional and
convenient post-exercise snack. Danone’s
Greek-style yoghurt, Danio, is positioned as a
more permissible indulgence than chocolate
and crisps, being protein enriched yet full of
fruity flavours and thick textures.
ago, with the aim of creating a ‘wholefood revolution’ where
natural and affordable snacks would become mainstream.
Lotus will help NBF with international expansion.
• US private label food producer Hearthside Food Solutions
bought Dutch healthy bar producer VSI. VSI makes speciality
private label protein, sports and health bars, producing
around 250 million bars a year. The transaction will enable
the rapid scaling of VSI’s product development, formulations,
manufacturing and sales in North America.
• Coca-Cola has increased its share to take full control of
Innocent, a British maker of fruit smoothies. Coca-Cola has
invested heavily in the brand to increase European sales, while
committing to uphold Innocent’s ethical values and donating
10% of profits to charity.
Recent large snack deals
Target
United Biscuits (Holdings)
Wild Flavors
Russell Stover Candies
Target country
UK
Switzerland
Acquirer
Yildiz Holding
Archer Daniels Midland
Acquirer country
Deal value (¤m)
Turkey
2,488
US
2,300
US
Lindt & Spruengli
Switzerland
1,102
Archer Daniels Midland cocoa distribution business
US
Olam International
Singapore
1,060
Annie's
US
General Mills
NZ Snack Food Holdings
Shanghai Golden Monkey Food Joint Stock Co.
US
736
New Zealand
URC International Co.
Philippines
442
China
Hershey Netherlands
Netherlands
361
Archer Daniels Midland chocolate business
US
Cargill
US
335
Vista Bakery Inc
US
Shearer's Foods
US
315
Switzerland
280
Klemme
Germany
Aryzta
clearthought | Autumn 2015
Faster lifestyle
Faster-paced lifestyles continue to create
strong demand for pre-packaged, readyto-eat and on-the-go snacks. However,
the rising tide will not lift all boats. The
winners will need to have a very clear
focus, both on where their growth
opportunities lie, and how they will pursue
them.
Occasions, e.g. breakfast
on-the-go
The ‘snackification’ of meal occasion has
been most apparent at breakfast time, as
time-pressed consumers want to make
a quicker start to their day. In Western
markets, sales of breakfast snacks such as
granola and yoghurt bars have risen sharply
in recent years while the market for readyto-eat cereals has been stagnating or even
shrinking.
Food & Beverage Insights from Clearwater International
Emerging market consumers are becoming
just as time-poor as their Western
counterparts. Since China’s Bright Food
launched its Momchilovtsi ambient yoghurt
in 2010, the category has rocketed and
is expected to be worth ¤5bn in China in
2017. The product doesn’t need to be
refrigerated and is thus readily consumed
on-the-go, often for breakfast.
Convergence, e.g. out of home
The trend for ‘out of home’ consumption
is encouraging a convergence between
food service and packaged snacks. Some
segments of the food service industry such as coffee shops and retail bakeries are developing and packaging snacks
for take-away. Such offerings are often
perceived to be fresher and healthier, and
can be consumed warm back in the office
or on-the-go.
Recent deal highlights
• Cereal maker Post Holdings acquired MOM Brands for ¤1bn
and tapped into the growth trends in the breakfast cereal
space. MOM has focused on a healthy, quality proposition
at good prices and found strong demand. Of note: 90% of
its portfolio is bagged, thus reducing packaging costs and
appealing to the consumer’s ecological sensitivities.
• Unilever sold its meat snacks division, including the Peperami
and BiFi brands, to Jack Link’s, a US-based player in protein
snacks. Unilever intends to concentrate on brands that can
stretch across many markets, while the deal gives Jack Link’s
an expanded portfolio and stronger consumer base across
Europe.
• Shearer’s Foods, a maker of private label sweet and savoury
snacks, acquired the private brands business of Snyder’sLance. The deal doubled the size of Shearer’s Foods and
At the same time, there are also packaged
snacks players that are developing products
that mimic food service. In China, for
example, milk tea cups - powder sachets in
paper cups that can be reconstituted onthe-go with hot water - have driven the
instant tea category to a penetration rate
five times higher than instant coffee.
Finding a focus, e.g. M&A
Many of the deals in the snacking
space have been driven by the need
to focus. Big Food are divesting snack
brands that are poorly suited to their
global sales and distribution platforms.
Snacking players with both branded and
private label businesses are deciding
between one or the other. And those
snack brands that have found the right
position are now seeking partnerships to
reach new consumers either nationally or
internationally. Such focus is needed in a
time of so much change.
leaves Snyder’s-Lance free to focus on its branded business.
Snyder’s-Lance now intends to invest in growth opportunities
such as better-for-you, nutritional and premium snacks.
• UK private equity firm LDC backed a ¤48m management
buyout of British crisp manufacturer Seabrook. The company
is famed for its bold flavours such as pickled onion and
Worcester sauce. In recent years, it has launched a number
of innovative products, including a lattice range, and has also
tapped into healthy living with its products becoming totally
gluten-free.
• Bahrain-listed PE group Investcorp bought gourmet UK
crisp maker Tyrrells from Langholm Capital in a ¤138m deal.
Tyrrells is developing an international footprint, recently
acquiring Australian crisp manufacturer Yarra Valley Snack
Foods, and Investcorp will help accelerate the snack maker’s
overseas expansion.
clearthought | Autumn 2015
Food & Beverage Insights from Clearwater International
Hot topic: Hot chocolate
The chocolate market has been a
particularly active M&A sector this year.
• A notable deal saw Swiss Lindt &
Sprüngli Group, the world’s largest
producer of premium chocolate,
make its biggest ever acquisition
when it purchased Russell Stover
Candies. Lindt is now the third largest
chocolate producer in North America,
behind Hershey and Mars, and says it
is looking to increase its share of the
US chocolate market to 10% within
the next three years.
• Over in Europe, Ferrero International which makes Nutella and Tic Tacs
as well as its famous foil-wrapped
Ferrero Rocher chocolates - acquired
British manufacturer Thorntons to
expand its business in the UK.
The deal was notable for marking the
loss of one of Britain’s last remaining
home-grown chocolate brands to an
overseas buyer, after Cadbury and
Green & Black’s were sold to Kraft
Foods in 2009.
• Another deal saw Cargill acquire
Archer Daniels Midland’s (ADM)
chocolate manufacturing business
for ¤386m. Meanwhile, Olam
International, the Singaporean
coffee-to-cashews trader, is seeking
to acquire ADM’s cocoa business
for ¤1.1bn. The deal would make
Olam one of the leading cocoa
processors alongside Barry Callebaut
of Switzerland and Cargill of the
US. Singapore’s state investment
company Temasek holds a majority
stake in Olam.
The China opportunity
China’s snacking market is one of the most dynamic worldwide, fast adopting global trends and proving itself to be a
source of innovations with global potential.
Imported snacks
Since 2009, the imported food sector has grown at a compound
annual growth rate of 27% - much faster than the market average.
Following milk powder, snacks is the second largest category of
imported packaged food.
The underlying driver has been the growing middle class, with its
stronger spending power, but it is more nuanced than that. Chinese
snacks have been very traditional and consumers, who are keen to
indulge themselves, now look for greater variety and novelty.
distribution, they cannot rest there. Now the pressure is on to better
understand and meet the evolving needs of the Chinese consumer,
and stay competitive against fast-moving local competition.
Mondelēz, for example, has seen growth slowing and is therefore
innovating around its major product platforms to tap into new
consumer needs. As the healthy living drive is changing the face of
treats in China, Mondelēz recently introduced a new Oreo ‘thin’. The
diameter of the cookies is the same but they’re only about half as
thick. The concept was so successful that Mondelēz then launched
the product in the US.
Moreover, many Chinese are now travelling overseas and there is a
desire to bring their experiences back to China with them, in order
to consume and gift the snacks that they found and enjoyed on their
travels. The rapid increase in availability of imported snacks, especially
on cross-border e-commerce platforms, has made this more possible.
Chinese outbound
Exporting to China has become an interesting opportunity for
international snack brands, especially heritage or established brands
with a premium positioning and an offering that suits the Chinese
palate.
For example: the largest Chinese snacks player - Hefei Huatai Group,
which owns the QiaQia nut and seed brand - has its eye on baked
snacks and chocolate players in Europe and the US, focusing on
established brands positioned in the mid to high end. Their intention,
as with other Chinese buyers, is to bring international snack brands to
China.
In China for China
There are more than 5,000 companies operating in China’s snacking
space, and thus categories such as biscuits, salty snacks and sweet
breads are fragmented. Although Western Big Food may have
established sizeable businesses in China through broad and deep
We expect to see both inbound and outbound activity in the snacks
space over the coming years, with a ramp up in the number of
Chinese acquisitions of Western snack brands.
clearthought | Autumn 2015
Recent deal highlights
• Hershey acquired an 80% stake
in Shanghai Golden Monkey,
a privately held confectionery
company. The deal gives Hershey
a presence in China’s sugar
confectionery and snacking markets
and complements its existing
portfolio in the region.
• Campbell Soup Company acquired
the Danish Kelsen Group which
produces baked snacks including the
Kjeldsens and Royal Dansk brands.
Kelsen has been exporting Danish
butter cookies to China for many
years and has become a leading
player in the assortment segment
of the fast-growing sweet biscuits
category in China. The acquisition
provides Campbell with a platform
for additional growth in key
emerging markets.
• Nestlé acquired Hsu Fu Chi, the
Chinese sweets company which
also plays in cakes and cereal bars.
The deal makes Nestlé a significant
player in China’s confectionery
space, complementing its existing
confectionery brands in the country:
Kit Kat, Wafer, Polo and Fruittips.
• Shanghai-based Bright Food Group’s
acquisition of Weetabix in 2012
remains a landmark outbound
deal. Weetabix has portfolio
brands in cereals and cereal
bars. In September 2015, Baring
Private Equity Asia took a 40%
stake in Weetabix and will work in
partnership with Bright Food to help
execute the cross-border growth
strategy.
Food & Beverage Insights from Clearwater International
Hot Topic: Deals with Emerging Markets
In addition to China, deal activity involving other emerging markets is heating up.
The internationalisation of snacking companies is morphing from a Western to a
global phenomenon.
•K
ellogg Co. acquired a majority stake in Egyptian snack maker Bisco Misr, which
makes Minto-brand candies and Bisco Wafers cookies. The deal is part of a drive
by Kellogg’s to increase exposure to snack trends and emerging markets, both of
which offer better growth prospects than breakfast cereals.
• United Biscuits, the British snack manufacturer, was sold to Yildiz Holding of
Turkey by Blackstone and PAI Partners. The deal reflects the rise of emerging
markets and their appetite for Western brands. Yildiz’s international sales have
now doubled as a proportion of revenues, up to 70%, and further international
expansion is planned.
• Universal Robina from the Philippines acquired NZ Snack Food Holdings - the
holding company of Griffin’s Foods, New Zealand’s leading biscuit and snack food
company. Griffin’s has a growing presence in Australia and provides Universal
Robina with a strong platform for Asian expansion.
M&A BY TARGET REGION
2
2
1
7
2015
9
2
5
Balkan States
Baltic States
Eastern Europe
Far East & Central Asia
Middle East
Nordic States
North America
Oceania
South & Central America
Western Europe
11
5
29
2014
11
5
6
24
Balkan States
Baltic States
Eastern Europe
Far East & Central Asia
Middle East
Nordic States
North America
Oceania
South & Central America
Western Europe
M&A BY ACQUIRER REGION
1
1
1
6
8
2015
5
2
Balkan States
Baltic States
Eastern Europe
Far East & Central Asia
Middle East
Nordic States
North America
Oceania
South & Central America
Western Europe
11
2
30
9
2014
6
2
3
22
Balkan States
Baltic States
Eastern Europe
Far East & Central Asia
Middle East
Nordic States
North America
Oceania
South & Central America
Western Europe
Conclusion
The heady mix of healthy living and faster lifestyles, combined with growing demand for Western brands and innovative new products
from emerging markets, is fundamentally reshaping the global snacks sector.
This is creating a unique M&A environment, as both Big Food and new upstarts seek to tap into these trends and gain market share.
Our research suggests strong M&A activity in the years ahead.
clearthought | Autumn 2015
Food & Beverage Insights from Clearwater International
Meet the team
Deal highlights
Some of our recent food and beverage deals
Gareth
James Iley
Sinclair
Largo Foods
Cutting’s
Leading manufacturer and
distributor of snack foods
Distributor of fresh food to
the hospitality industry
Clearwater International advised the
shareholders of Largo Foods on the
sale to Intersnack Group
Clearwater International advised
Miura Private Equity on the
acquisition of Cutting’s
The J. M. Smucker Co
Pastisart
Leading American food
and drinks group
Spanish frozen pastries
and bakery manufacturer
Clearwater International advised
on the acquisition of Chinese oat
brand Seamild
Clearwater International advised the
company on raising capital from a
group of banks
Partner
Partner, China
052808
0367
+44 (0)845
7704 113
gareth.iley@cwicf.com
james.sinclair@cwicf.com
Marc Gillespie
Søren
Nørbjerg
Partner Denmark
Partner,
+45
40 21 45
190302
+44 (0)845
052
soren.norbjerg@cwicf.com
marc.gillespie@cwicf.com
John Sheridan
Sarah
Charman
Partner, Ireland
Consumer Analyst
+353 1 517 5841
+44
(0)845 052 0393
john.sheridan@cwicf.com
sarah.charman@cwicf.com
Miguel Marti
Senior Advisor,
Spain
Jackie
Naghten
+34
917 812
890
Consumer
Consultant
miguel.marti@cwicf.com
+44 (0)845 052 0300
jackie.naghten@cwicf.com
John Clarke
Director, UK
Alex Patey
+44 845 052 0358
Manager
john.clarke@cwicf.com
+44 (0)845 052 0398
alex.patey@cwicf.com
Lars Rau Jacobsen
System Frugt A/S
Frutarom
Danish market leader for
packaged dried fruit and nuts
Israeli flavours and speciality
fine ingredients company
Clearwater International advised
System Frugt on the sale of 80% of
its shares to Odin Equity Partners
Clearwater International advised
Frutarom on acquiring a 79% stake
in Nutrafur, a Spanish manufacturer
of speciality natural plant extracts
Director, Denmark
Perri
+45 25Blakey
39 45 71
Deal
Originaton
lars.rau.jacobsen@cwicf.com
+44 (0)845 052 0390
perri.blakey@cwicf.com
José Couto
Senior Analyst, Portugal
+351 912 044 468
jose.couto@cwicf.com
James Marshall
Deal Origination, UK
+44 845 052 0391
james.marshall@cwicf.com
www.clearwaterinternational.com
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