Middle market M&A deals quarterly: food and beverage

Each quarter RSM’s senior industry analysts and mergers and acquisitions professionals provide a glimpse into the consumer products deal environment. In this article, we are featuring deal activity through Q3 2021 within the food and beverage sector.

While on-trend food and beverage companies are still attractive to private equity firms and larger brands, the current M&A landscape continues to shift toward add-on acquisitions that provide additional market share or entrance into new segments. Brands preparing for sale that demonstrate strong consumer connectivity, offer health and wellness benefits, and are convenient to customers have attracted significant interest. While the uncertainty caused by the unprecedented macroeconomic landscape slowed deal activity during Q3 2021 to the lowest levels since Q2 2020, businesses that have demonstrated the ability to maintain supply and protect margins found eager buyers, particularly within the beverage sector. These companies continue to attract significant interest from potential buyers.

Note closed transactions for both food and beverage for the quarter.

Illustrative deals that closed during Q3 2021

Nestlé acquired Nuun & Co. Inc.

• Nestlé’s health science division acquired Nuun in early Q3; Nuun’s product portfolio includes dissolvable tablets and powders for health-focused consumers.

The Wonderful Company acquired Lewis Cellars

• The Wonderful Company acquired Lewis Cellars in September 2021; this acquisition expands The Wonderful Company’s reach in the wine business with their third acquisition within the space.

Community Brewing Ventures acquired Unknown Brewing and SweetWater Brewing Co. acquired the Fort Collins Brewery

• These acquisitions demonstrated the continued craft brewery consolidation within the space.

What’s happening?

Entering the fourth quarter, investors will look for food and beverage companies that can maintain profitability as they navigate a volatile reopening and recovery. In addition, those companies that can successfully demonstrate pass-through pricing will be the ones to watch and will likely catch investor interest.