Report: Alcoholic beverages lead Q2 M&A transactions

Dive Brief:

  • The alcoholic beverage segment led the food and beverage industry in number of Q2 2016 M&A transactions with 49 recorded in the segment, followed by CPG foods (44) and non-alcoholic beverages (26), according to a new quarterly M&A report from SDR Ventures.
  • Natural and organic brands have been a hot commodity and a target for expansion and diversification by many major food and beverage players, but the report recorded only eight transactions in this segment last quarter. That was less than 10 transactions in the dairy segment and 13 in the proteins category.
  • Anheuser-Busch InBev, Hormel, McCormick, and Amplify Snack Brands were among the most active strategic buyers named in the report.

Dive Insight:

It's no surprise that the alcoholic beverage segment continues to be a hotbed of M&A activity, as major players like AB InBev and MillerCoors continue to acquire craft brewers as their own U.S. sales and market shares decline.

These moves are as much about relevancy as necessity. The coveted millennial generation is gravitating toward craft beer, which often offers the authenticity and bold flavors they demand. This is pushing big brewers to adopt new marketing techniques and pursue internal innovation, as well as diversifying their portfolios and offseting lagging sales through acquisitive growth.

M&A analysts often point to natural and organic companies as a central focus area for major food and beverage companies, so the low number of transactions in this segment compared to others last quarter is notable. A partial explanation could be that some natural and organic companies also fell under categories like proteins, dairy or non-alcoholic beverages, so the report may have placed those transactions in the other segments.

But it could also signal another critical M&A trend seen across food and beverage: industry consolidation. Acquisitions in product categories new to a company or where a company wants to expand are still key for strategic buyers, such as dairy giant Danone's recently announced purchase of WhiteWave Foods, a plant-based food and beverage leader. 

However, consolidation among competitors has also become commonplace and skyrocketed M&A deal values last year. That namely included the Kraft Heinz merger and the AB InBev-SABMiller merger, which just received SABMiller's board approval and cleared all regulatory hurdles as of last week. Other instances have come up so far this year, such as in the snacks and confectionery industries with Snyder's-Lance's acquisition of Diamond Foods and Mondelez's rejected takeover of Hershey .  

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Filed Under: Corporate