Food & Beverage M&A Update – Insights from Natural Products Expo East 2019

The SC&H Capital team recently attended the Natural Products Expo East in Baltimore, where thousands of food and beverage companies attended to collaborate on the latest trends, manufacturing updates, and the future of the industry. The team spent three days connecting with industry experts and the following takeaways were a common theme throughout the event:

  1. Natural and organic products are driving growth in retail channels. According to SPINS, a leading performance analytics firm focused on consumer products, natural and organic products make up approximately 10.5% of total sales but account for nearly 30% of its growth. Conventional retailers have continued to deepen their natural and organic offerings, with natural products accounting for $39.6 billion of total dollar volume up from $32.0 billion in 2016.
  1. Consumers are searching for healthier snacking options, starting with meat snacks. Consumers are continually searching for healthier snacking options, which often results in looking for options that are high in protein and low in sugars. It is estimated that the healthy snacking category is approximately $17.5 billion in the U.S., of which $3 billion is made up of the meat snacking products such as beef jerky and sticks, biltong, and meat bars.
  1. Mainstream consumers adopt Paleo and grain-free diets. While diet trends come and go, PALEO and grain-free products are the fastest growing segment in conventional retail signaling the trend’s traction with the mainstream consumer. Paleo-positioned products increased by 45.3% to $536.7 million, and grain-free products have grown 76.0% to $271.5 million.
  1. Plant based products continue their impressive growth. From milk to meats, many of today’s consumers are looking to reduce or eliminate animal based products from their daily diets. Vegan labeled products represent a $7.1 billion market, growing at 10.1%, with especially impressive growth in salty snacks and yogurt categories. By 2029, the global alternative meat market is estimated to grow to over $140.0 billion by 2029, representing 10% of the $1.4 trillion global meat industry.

What do these trends mean for M&A?

As these and other trends continue to gain traction with mainstream consumers, large Consumer Product Groups (CPGs) are turning to M&A to capture companies who are product innovators in a “buy” versus “build” strategy. Recently, CPGs have been successful at investing in emerging brands through early-stage capital raises and lower middle-market M&A. This relatively lower risk strategy allows the CPGs to learn from some of the brightest and inventive entrepreneurs in the food space, while also positioning themselves as strategic partners as the brands mature.

Being a part of one of these emerging trends alone will not make a new brand an attractive M&A target or drive a premium valuation. Strategic acquirers are searching for brands with key value drivers, such as an established track record of growth and scalability, products with a premium price point, and the ability to enter into tangential product categories or ones with manufacturing capabilities and capacity to name a few.

As the pace of food and beverage M&A transactions continues to increase, the need to partner with experienced providers throughout the process is more important than ever.  In a market saturated with everchanging trends and a craving for ongoing innovation taking the time to focus on the required planning, understanding, and positioning of your business is of utmost importance when considering the future of your business.


SC&H Capital has completed numerous transactions in the food and beverage industry and continues to see an increase in prospective deals in this space. If you are considering a sale, or have been approached by a buyer, we encourage you to Contact Us in order to guide you through this process.