Food & Beverage Industry June 2020

Recent Industry Performance home orders, as seen by the following examples: All businesses have been affected, in some • Nestle SA (Nestle) reported organic sales way, by the ongoing coronavirus (COVID-19) growth of 4.3% in the first quarter of pandemic. While the majority of businesses 2020. have experienced negative impacts, others – such as several categories in the food and • Kraft Heinz Company’s (Kraft) sales were beverage sector – have benefited positively up 3.3% during the first quarter of 2020. due to their essential nature. Indeed, a In the U.S., the impact of the number of companies in this sector have coronavirus was more pronounced, with seen increasing sales during this quarterly sales up 6.4%. Kraft estimates unprecedented time, though some of these that the additional demand experienced same companies have also faced challenges as a result of the coronavirus resulted in resulting from the pandemic. This article approximately six-to-seven points of examines the positive and negative impacts incremental organic growth in the first that the coronavirus pandemic has had on quarter and about nine-to-10 points of Demand is on the rise two such segments in the food and additional EBITDA growth. beverage industry: packaged/branded food from retail channels as • Tyson Foods saw sales increase 3.0% and food distribution. during their second fiscal quarter, which consumers shelter in Packaged/Branded Food ended March 28, 2020. The company’s place. beef business unit saw a 3.0% increase The coronavirus pandemic rapidly in sales, while sales in their chicken accelerated in the U.S. in March 2020. The business was essentially flat with the stay-at-home orders issued by state and second fiscal quarter of 2019. local governments in response to the virus • Although Kellogg’s first quarter sales led to increased consumer demand for many were down 3.0%, March 2020 sales of packaged and branded foods. With several of its products were up by a restaurants closed to in-person dining, most significant amount as a result of the people stocked their pantries – many for pandemic. In fact, March 2020 sales of weeks at a time. As a result, many major ready-to-eat cereal were up 43.0% over companies reported a rise in sales March 2019, while sales of crackers concurrent with the increase in stay-at- increased almost 40.0%, waffle sales grew 45.0% and plant-based meat alternative sales increasing 7.7%, according to Food Business News, the increased 66.0%. company anticipates a decline in second quarter revenue as a result of weak demand in away-from-home channels. • Mondelez International (Mondelez) saw net sales increase 2.6% in the first quarter of 2020. Pantry- Further, Coca-Cola reported a 6.4% revenue gain in the first loading generated a 30.0% surge in sales for Mondelez quarter of 2020, mainly due to a 6.1% increase in physical at the onset of the stay-at-home orders in the U.S. In case volume. Volume growth was particularly strong in the the weeks that followed, growth eased somewhat to last three weeks of the first quarter as consumers prepared low-double digits and high-single digits. Mondelez to stay at home. However, at the beginning of April 2020, executives note that the sales surge is not merely a case Coca-Cola’s worldwide volumes plummeted 25.0% due to of consumer hoarding and that consumers are snacking the shuttering of restaurants, stadiums and movie theaters. more while confined to their homes. Outlook Even though first quarter 2020 sales increases were a boon to some of the major food manufacturers, the pandemic Many packaged and branded food companies report that also resulted in some major challenges. For instance, the forecasts for the remainder of 2020 are uncertain as is the deceleration of sales in the foodservice, vending and course of the virus itself. Still, several executives from major convenience store categories is pressuring the performance food companies note that, even in times of uncertainty, of some companies. As an example, historically, retail sales consumers tend to turn to name brands that they trust, have accounted for 45.0% of Tyson Foods’ total sales, with which will likely benefit these manufacturers. For example, the remaining 40.0% from foodservice and 15.0% from according to Kraft’s Chief Executive Officer Miguel Patricio, international sales. However, since the pandemic began, “[Consumers] want to experiment less. They want to about two-thirds of Tyson’s sales have shifted to retail. experiment less with new brands. And that’s what we’re While on the surface, one might think Tyson could simply seeing right now. Now our brands represent comfort for switch output to retail products, the company notes it has people. And I think that the consumers are coming back to been difficult to transition their plants to manufacture more big brands.” products for retail as opposed to foodservice. Food Distribution Moreover, many companies are experiencing operational challenges as a result of the pandemic. For example, Food distributors have experienced varying results since the production has slowed at food processing plants that were onset of the pandemic, depending, in large part, on the end- required to close temporarily when a significant number of markets they primarily serve. Examples of the differing workers became ill with COVID-19, while other plants chose levels of impact being felt by distributors is demonstrated to close in order to ensure operational safety. As a result of below: closures, companies such as Tyson Foods have been dealing with lower levels of productivity and higher costs of • Sysco, the largest foodservice distributor in the U.S., production. sells, markets and distributes food products to restaurants, healthcare and educational facilities, Meanwhile, beverage manufacturers seem to have been hit lodging establishments and other customers who harder by the coronavirus pandemic than food prepare meals away from home. According to Sysco, for manufacturers. While PepsiCo notes that the snacking its 13-week 2020 third fiscal quarter ended March 28, phenomenon is benefitting its Quaker Foods and Frito-Lay 2020, overall sales decreased 6.5% to $13.7 billion. businesses, beverage sales are dropping as consumers More specifically, for its U.S. foodservice segment, sales refrain from or restrict their visits to restaurants, gas for the fiscal third quarter were $9.6 billion, a decrease stations and convenience stores. Indeed, while PepsiCo of 5.1% compared to the third quarter of fiscal 2019. posted a strong first quarter of 2020, with net revenue In response, Sysco has reduced its workforce by IFDA membership “have felt the impact of drastically slowed approximately 33.0% since March 2020 through both demand. Meanwhile they remain indispensable links in the temporary furloughs and permanent layoffs. This will supply chain to maintain critical institutions like hospitals, contribute to the company’s goal of reducing expenses eldercare facilities and even the military.” by more than $500.0 million in its fiscal fourth quarter. On the revenue side, Sysco is pursuing multiple Despite the difficulties being experienced by food opportunities in the grocery channel to help offset distributors working with the food-away-from-home losses in its traditional foodservice categories. segment of the industry, as noted previously, demand is on the rise from retail channels as consumers shelter in place. • In contrast, grocery distributor United Natural Foods Inc. Consumer stockpiling of staple items like eggs, flour, soup (UNFI) estimates a 12.0% net sales gain and a more than and pasta has escalated demand for food at retail, causing 50.0% surge in net income for its fiscal 2020 third grocers to limit the amount of some of the items customers quarter, driven by increased business amid the wish to purchase. Some grocers have even reduced coronavirus pandemic. In preliminary results released discounts to help shore up supplies, but in many cases, May 12, 2020, UNFI estimates sales of $6.67 billion for consumers continue to hoard products due to fears of a the 13-week quarter ended May 2, up 12.0% from $5.96 shortage. As a result, the supply chain is experiencing billion a year earlier. Meanwhile, net income is difficulty keeping up with demand. For example, demand for projected to come in at $88.0 million, a gain of 54.0% eggs has increased, and farmers are unable to produce from $57.0 million a year prior. additional product as quickly as needed. Jesse Laflamme, chief executive of specialty egg producer Pete & Gerry’s • Finally, Core-Mark, a marketer of food and merchandise Organic Eggs, says, “This supply chain wasn’t made to swell and supply solutions to the convenience retail industry like this.” in North America, indicates that net sales increased 4.9% in the first quarter of 2020 to $3.94 billion, While it would seem to be an easy fix – food manufacturers compared to $3.75 billion for the first quarter of 2019. should send more food to retail channels and less food to However, the company experienced a year-over-year foodservice channels – there are a variety of reasons that is sales decline of about 8.0% in April 2020 and anticipates not always easily done. First, labeling for retail is quite that the pandemic will adversely impact business for the different than labeling for foodservice. The U.S. Food and remainder of the second quarter and potentially Drug Administration mandates ingredient and nutrition subsequent quarters. Although most of Core-Mark’s labels on food sold at retail, whereas foodservice packaging customers are convenience retailers that continue to is not required to have that feature. Moreover, foodservice operate as essential businesses amid the coronavirus packaging does not require printed bar codes, whereas pandemic, the outbreak has hurt Core-Mark’s sales retail products require a bar code. Also, food that is since fewer people are visiting convenience stores. delivered to foodservice companies is oftentimes sent in bulk sizes that are too large to redistribute to the retail In total, the International Foodservice Distributors sector; in fact, they are sometimes too big to be sold by Association (IFDA) estimates that, in the U.S., the warehouse sellers such as Costco. foodservice distribution industry will lose $24.0 billion during the months of April, May and June 2020. Food Still, Food Management reports that the food supply and Management notes that, as high-volume customers distribution markets – in dealing with the sudden including restaurants, schools, hotels, colleges, school contraction of the foodservice channel and a concurrent districts and entertainment venues close down or severely surge in the retail channel – have “seen a convergence” as curtail operations because of the coronavirus, foodservice product is diverted from “the fast-shrinking foodservice end distributors such as Sysco Corporation, US Foods and the to the suddenly booming retail one.” The crisis has also small- and mid-size independent businesses comprising the enticed foodservice distributors, including major firms like Sysco and U.S. Foods, into retail distribution; notably, Food Packaged/Branded Food Management anticipates this shift may persist for the long- term. • Sauer Brands Inc., a manufacturer of condiments, seasonings and spices, acquired Chicago Custom Foods In that regard, Sysco has announced it is “pursuing new LLC from Highlander Partners, LP for an undisclosed sources of revenue by leveraging its supply chain expertise sum. Chicago Custom Foods is the creator of Kernel to provide services to the retail grocery sector.” Sysco Season’s popcorn seasonings, along with Tasty Shakes anticipates that expanding into the grocery sector “will help oatmeal mix-ins and Veggie Season’s vegetable off-set some of the declines in the food-away-from-home seasonings. The company’s products are sold in more segment and also positions the Company well to capitalize than 22,000 retailers worldwide. President and Chief on growth opportunities after the COVID-19 crisis subsides.” Executive Officer of Highlander Partners Jeff Hull says Similarly, US Foods, the second-largest foodservice that the sale “marks the culmination of a very deliberate distributor in the nation, released a statement from strategy of broadening the product line…” Chairman and CEO Pietro Satriano stating, “We are exploring new ways that US Foods can leverage our business • Krave Pure Foods, a premium jerky manufacturer that capabilities during this challenging time, including starting to was created by Sonoma Foods founder Jon Sebastiani in sell some of our inventory to retail outlets like grocery 2009 and acquired by The Hershey Company in 2015, stores and temporarily contracting some of our distribution was reacquired by Sonoma Foods for an undisclosed workforce to companies experiencing a spike in demand.” sum.

Outlook • Philadelphia Macaroni Company acquired A. Zerega’s Sons for an undisclosed sum, creating the largest While it is possible for some companies, such as Sysco, to privately-owned pasta manufacturer in the U.S. A. pivot from foodservice distribution to retail sales Zerega’s Sons will operate as a wholly-owned subsidiary distribution, it is proving to be a challenge for others. of Philadelphia Macaroni Company and will essentially Looking ahead, Mark Allen, chief executive officer of the double Philadelphia Macaroni’s production and IFDA, anticipates that the supply chain “will look manufacturing capacity. fundamentally different” as a result of the pandemic. Indeed, as a first step, the IFDA and FMI-The Food Industry • Mondelez acquired a majority interest in Give & Go, a Association have launched a matchmaking partnership that manufacturer of sweet baked foods, for an undisclosed connects foodservice distributors that have excess capacity sum. Give & Go will operate separately under the terms with food retailers and wholesalers who require additional of the agreement. resources. Food Distributors At the same time, Food Management suggests that “the extended loss of business [in the] spring [of 2020] may force • On September 12, 2019, US Foods announced that it a number of distributors into bankruptcy, acquisition or had successfully acquired five separate operating merger,” which would lead to further consolidation of the companies (Food Services of America, Inc. (FSA), food distribution segment of the industry. Systems Services of America, Amerifresh, Ameristar Meats and GAMPAC Express) within the Services Group Food and Beverage M&A Activity of America Food Group for $1.8 billion. The deal received approval from the U.S. Federal Trade Within the first quarter of 2020, even with the global Commission only after US Foods agreed to divest three uncertainty resulting from the coronavirus pandemic, many distribution centers – one in Boise, ID; another in Fargo, food and beverage companies continued M&A activity, ND and a third in the greater Seattle area – that were including the following notable transactions: operated by FSA, which is one of the largest regional broadline distribution companies in the U.S. serving 16 Other food and beverage companies remain on the lookout states in the West and Midwest from nine distribution for M&A opportunities despite the global pandemic. For centers. instance, Nestle is working on several strategies for potential additions or dispositions of businesses in their • On December 30, 2019, Performance Food Group company; these particular strategies would have been in the Company (PFG) completed a $2.0 billion acquisition of works regardless of the pandemic and ensuing economic Reinhart Foodservice, L.L.C. (Reinhart). As a result of the crisis and include the exploration of several strategic options merger of PFG and Reinhart – the third- and fifth-largest such as a potential sale of its Yinlu peanut milk and canned foodservice distributors in the U.S., respectively – PFG is rice porridge business in China. The company also positioned to be one of the largest food distributors in anticipates that the economic crisis may end up spurring the U.S., with approximately $30.0 billion in annual net more deals as a result of financial difficulties; however, revenue. Nestle notes that it may be too early to speculate on potential acquisitions since the nature of the pandemic is very fluid.

Notable Closed M&A Transactions— Packaged Food & Beverage Products

Year Closed Target Acquirer Target Packaged Food & Beverage Category Name: Name: 2020 Chicago Custom Foods LLC Sauer Brands, Inc. Condiments, spices, seasonings, and extracts 2020 Prime Pork, LLC HyLife Ltd. Duroc pork products 2020 Krave Pure Foods, Inc. Sonoma Brands Culinary-style meat and poultry snacks 2020 A. Zerega's Sons, Inc. Philadelphia Macaroni Company, Inc. Custom dry pasta 2020 First Start Holdings Inc. Grays Peak Capital LP Organic food and snacking products for children 2020 Casbah Sahara Natural Foods, Inc. US Durum Products Ltd. Vegetarian prepared mixes and side dishes 2020 Engelman's Bakery Inc. Shoreline Equity Partners, LLC Fresh and frozen bakery products 2020 Sadler's Smokehouse, Ltd. Hormel Foods Corporation (NYSE:HRL) Pit-smoked meats 2020 Grecian Delight Foods, Inc. Kronos Foods Corp. Mediterranean food products 2020 S&D Coffee, Inc. Westrock Coffee Company, LLC Coffee, tea, and extracts 2020 Farmwise LLC B&G Foods, Inc. (NYSE:BGS) Frozen French fries 2020 Kronos Foods Corp. Entrepreneurial Equity Partners LP Mediterranean food products 2020 Fortune Fish Company Inc. Investcorp Holdings B.S.C. Seafood and related products 2020 Schoep's Ice Cream Co., Inc. Brothers International Desserts Inc. Ice cream, novelties, and sherbet 2020 Morey's Seafood International, LLC SeaPak Shrimp & Seafood Company Fish and seafood products 2020 Marroquin Organic International, Inc. AGRANA Beteiligungs-Aktiengesellschaft (WBAG:AGR) Organic and non-GMO ingredients 2020 Mochi Ice Cream Company Lakeview Capital Inc. Japanese pastries and frozen desserts 2020 Limitless Coffee, LLC Keurig Dr Pepper Inc. (NYSE:KDP) Coffee and tea 2020 Creminelli Fine Meats, LLC Daniele International, Inc. Italian salami sausages 2020 fairlife, LLC The Coca-Cola Company (NYSE:KO) Dairy products 2019 RB Foods, Inc. The Good Bean, Inc. Bean based chips 2019 Pamela's Products, Inc. Quinoa Corporation Gluten-free food products 2019 Golden Island Jerky Company, Inc. Link Snacks, Inc. Gourmet jerky products 2019 Murry's, Inc. Encore Consumer Capital, LP Various food products 2019 Quest Nutrition, LLC The Simply Good Foods Company Protein bars and related products 2019 Joseph's Pasta Company, Inc. LaSalle Capital Pasta and sauce products 2019 Wisconsin Cheese Group, LLC Centre Partners Management LLC Cheese products 2019 Creative Snacks Co., LLC KIND LLC Snack foods 2019 popchips, inc. Velocity Snack Brands Popped potato chips and related products

Sources: S&P Capital IQ and public data

Notable Closed M&A Transactions— Packaged Food & Beverage Products (continued)

Year Closed Target Acquirer Target Packaged Food & Beverage Category Name: Name: 2019 Blendtopia, Inc. Peak Foods, LLC Smoothie blended products 2019 D'Agostino Pasta Co. L. H. Hayward & Co., LLC Pasts and pasta sauces 2019 ONE Brands, LLC The Hershey Company (NYSE:HSY) Snack bars 2019 Cameron's Coffee and Distribution Company Grupo Nutresa S. A. (BVC:NUTRESA) Coffee and tea 2019 Freed Foods, Inc. Grays Peak Capital LP Quinoa food products for children 2019 Cafe Valley, Inc. Swander Pace Capital Bakery products 2019 Superior Cake Products, Inc. Sara Lee Frozen Bakery Sweet baked goods 2019 The Christie Cookie Company Rich Products Corporation Gourmet cookies and brownies 2019 Evans Food Group Ltd. Benestar Brands Pork rinds 2019 Stonewall Kitchen, LLC Audax Management; Yukon Partners Management Specialty food products 2019 Deiorio Foods, Inc. Rudolph Capital, LLC Bakery products 2019 Perfect Bar, LLC Mondelez International, Inc. (NasdaqGS:MDLZ) Protein bars 2019 Ultima Health Products, Inc. WM Partners, LP Sugar-free electrolyte hydration products

Notable Closed M&A Transactions— Food Distribution

Year Closed Target Acquirer Target Business Description Name: Name: 2020 Butts Foods, Inc Quirch Foods, LLC Distributor of protein foods 2020 Smart Foodservice Stores LLC US Foods, Inc. Wholesale food distributor 2020 Allen Brothers Wholesale Distributors, Inc. National Convenience Distributors, LLC Wholesale grocery and convenience products distributor 2020 Rochester Meat Company, Inc. Latina Boulevard Foods, LLC Distributor of meats and other food products 2020 Island Natural, Inc. Nassau Candy, Inc. Distributor of natural food products 2020 Lancaster Foods, LLC The Coastal Companies Distributor of vegetables and fruits 2020 Cawoods Produce, Inc. Florida Veg Investments LLC Distributor of dairy and food products 2020 Produce Alliance, LLC Buyers Edge Platform, LLC Distributor of produce to food service clients 2020 Sid Wainer & Son, Inc. The Chefs' Warehouse, Inc. (NasdaqGS:CHEF) Distributor of specialty food products 2020 Sweet Nature Inc. Green Boy Group B.V. Distributor of specialty non-GMO and organic syrups 2020 Seattle Fish Company International Fortune Fish Company Inc. Distributor of seafood 2020 Florida Veg Investments LLC Shoreline Equity Partners, LLC Distributor of food products 2019 Reinhart FoodService L.L.C. Performance Food Group Company (NYSE:PFGC) Distributor of food products to the foodservice sector 2019 Watchung Spring Water Co., Inc. ReadyRefresh Distributor of water and other beverages 2019 Green Farms Inc. Sole Source Capital LLC Distributor of produce, dairy, and specialty food products 2019 Washington Produce Caruso Produce, Inc. Distributor of food products 2019 Golden Greek Fresh/Happy Farm Produce GrubMarket, Inc. Distributor of fruits and vegetables 2019 Gold Star Foods Inc. Good Source Solutions, Inc. Distributor of food products to schools 2019 Food Group of Companies of Services Group of Amer. US Foods, Inc. Distributor of food products 2019 J. Kings Food Service Professionals, Inc. Sysco Corporation (NYSE:SYY) Distributor of food products 2019 Prinova Group LLC Nagase America Corporation Distributor of food ingredients 2019 Brands Within Reach, LLC New Age Beverages Corporation (NasdaqCM:NBEV) Distributor of food and beverages 2019 FreshPack Produce, Inc. Creation Gardens, Inc. Distributor of fruits and vegetables 2019 Jubilee Foods, Inc. Fortune Fish Company Inc. Distributor of frozen seafood, oysters, and local gourmet products 2019 Get Fresh Produce, Inc. IF & P Foods, Inc. Distributor of food products to the foodservice sector 2019 Heeren Bros. Inc./Walsma & Lyons, Inc. Vine Line Produce Distribution Wholesale distributor of fruits and vegetables 2019 Classic Provisions Inc. Fortune Fish Company Inc. Distributor of food products 2019 Better Life Organics Triple B Corporation Distributor of organic produce and food products 2019 Gilbert Foods, LLC The Coastal Companies Distributor of perishable food products

Sources: S&P Capital IQ and public data Publicly Traded Food & Beverage Companies

($ in millions) Stock Enterprise % of 52- LTM Revenue Growth LTM Margins EV / LTM EV / NFY Company Ticker Value Wk. High Revenue EBITDA 1 Year 3 Years G. Profit EBITDA Revenue EBITDA Revenue EBITDA

Branded Processed & Packaged Foods B&G Foods, Inc. BGS $ 3,341 96.3% $ 1,697 $ 319 0.9% 5.4% 24.2% 18.8% 2.0x 10.5x 1.8x 9.9x Campbell Soup Company CPB 21,151 89.9% 8,078 1,727 13.4% 0.6% 33.9% 21.4% 2.6x 12.2x 2.4x 11.7x Conagra Brands, Inc. CAG 26,944 97.9% 10,380 2,178 16.7% 9.0% 27.8% 21.0% 2.6x 12.4x 2.5x 11.6x Flowers Foods, Inc. FLO 5,845 94.1% 4,210 529 5.0% 2.5% 48.3% 12.6% 1.4x 11.0x 1.5x 13.7x General Mills, Inc. GIS 52,056 98.8% 16,765 3,897 1.0% 2.1% 34.9% 23.2% 3.1x 13.4x 3.0x 13.7x The Hershey Company HSY 32,211 84.4% 8,007 1,980 2.2% 2.2% 44.9% 24.7% 4.0x 16.3x 4.0x 16.1x Hormel Foods Corporation HRL 25,952 94.9% 9,599 1,319 0.1% 0.7% 19.5% 13.7% 2.7x 19.7x 2.6x 19.2x Hostess Brands, Inc. TWNK 2,591 82.7% 928 175 7.4% 7.3% 32.9% 18.9% 2.8x 14.8x 2.6x 11.7x John B. Sanfilippo & Son, Inc. JBSS 1,064 79.3% 893 96 2.5% 0.6% 20.0% 10.7% 1.2x 11.1x 1.1x n/a J & J Snack Foods Corp. JJSF 2,218 67.2% 1,194 171 3.3% 5.6% 28.6% 14.3% 1.9x 13.0x 2.4x 23.7x The J. M. Smucker Company SJM 18,486 91.8% 7,611 1,733 (1.4%) 0.9% 38.2% 22.8% 2.4x 10.7x 2.4x 10.7x Kellogg Company K 30,424 93.2% 13,468 2,336 (1.5%) 1.5% 33.1% 17.3% 2.3x 13.0x 2.3x 14.4x Lancaster Colony Corporation LANC 4,046 92.7% 1,337 223 3.5% 3.8% 26.0% 16.7% 3.0x 18.1x 3.1x 18.4x McCormick & Company, Incorporated MKC 27,567 98.1% 5,328 1,179 0.2% 6.4% 40.3% 22.1% 5.2x 23.4x 5.1x 23.7x Mondelez International, Inc. MDLZ 92,282 87.4% 26,037 6,394 1.3% 0.2% 39.2% 24.6% 3.5x 14.4x 3.6x 17.7x Nestlé S.A. NESN 340,215 91.7% 95,886 21,098 1.2% 1.1% 49.8% 22.0% 3.5x 16.1x 3.8x 16.9x PepsiCo, Inc. PEP 212,616 90.4% 68,158 12,572 4.9% 2.7% 55.4% 18.4% 3.1x 16.9x 3.2x 16.3x Median $ 25,952 91.8% $ 8,007 $ 1,727 2.2% 2.2% 33.9% 18.9% 2.7x 13.4x 2.6x 15.3x Mean $ 52,883 90.1% $ 16,446 $ 3,407 3.6% 3.1% 35.1% 19.0% 2.8x 14.5x 2.8x 15.6x

Private Label Food & Beverage Lamb Weston Holdings, Inc. LW $ 10,994 64.2% $ 3,949 $ 935 7.6% 8.3% 26.2% 23.7% 2.8x 11.8x 3.2x 16.2x Seneca Foods Corporation SENE.A 580 87.3% 1,290 91 9.7% 0.0% 8.5% 7.0% 0.4x 6.4x n/a n/a TreeHouse Foods, Inc. THS 4,957 88.6% 4,307 511 3.2% (12.6%) 18.5% 11.9% 1.2x 9.7x 1.2x 10.2x Median $ 4,957 87.3% $ 3,949 $ 511 7.6% 0.0% 18.5% 11.9% 1.2x 9.7x 2.2x 13.2x Mean $ 5,510 80.0% $ 3,182 $ 512 6.8% (1.4%) 17.7% 14.2% 1.5x 9.3x 2.2x 13.2x

Food Ingredients Givaudan SA GIVN $ 36,892 98.9% $ 6,405 $ 1,292 12.2% 10.0% 40.8% 20.2% 5.8x 28.6x 5.4x 25.1x Ingredion Incorporated INGR 7,334 84.9% 6,216 998 (2.2%) 2.4% 21.2% 16.1% 1.2x 7.3x 1.3x 8.3x International Flavors & Fragrances Inc. IFF 18,246 85.9% 5,190 1,128 19.5% 18.0% 41.4% 21.7% 3.5x 16.2x 3.6x 16.2x Kerry Group plc KRZ 23,887 86.9% 8,126 1,193 9.6% 5.7% 46.6% 14.7% 2.9x 20.0x 3.0x 20.5x Sensient Technologies Corporation SXT 2,709 66.9% 1,326 206 (3.8%) (1.4%) 31.0% 15.5% 2.0x 13.1x 2.2x 12.6x Symrise AG SY1 16,663 98.4% 3,824 780 8.0% 5.5% 40.1% 20.4% 4.4x 21.4x 4.1x 19.5x Tate & Lyle plc TATE 4,429 83.9% 3,588 647 4.6% 1.5% 100.0% 18.0% 1.2x 6.8x 1.3x 8.0x Median $ 16,663 85.9% $ 5,190 $ 998 8.0% 5.5% 40.8% 18.0% 2.9x 16.2x 3.6x 16.2x Mean $ 15,737 86.5% $ 4,954 $ 892 6.9% 6.0% 45.9% 18.1% 3.0x 16.2x 3.4x 16.5x

Grocery & Foodservice Distribution AMCON Distributing Company DIT $ 77 58.0% $ 1,059 $ 14 6.5% 5.4% 8.0% 1.3% 0.1x 5.6x n/a n/a Core-Mark Holding Company, Inc. CORE 1,649 66.8% 13,513 232 4.8% 4.4% 6.9% 1.7% 0.1x 7.1x 0.1x 10.5x Performance Food Group Company PFGC 6,555 49.5% 25,211 608 36.7% 14.7% 11.6% 2.4% 0.3x 10.8x 0.3x 20.4x SpartanNash Company SPTN 1,340 93.6% 8,850 215 7.6% 4.3% 14.6% 2.4% 0.2x 6.2x 0.2x 7.9x Sysco Corporation SYY 36,633 66.6% 59,502 3,174 (0.8%) 2.9% 19.0% 5.3% 0.6x 11.5x 0.8x 21.7x The Chefs' Warehouse, Inc. CHEF 851 37.7% 1,610 103 8.6% 9.7% 25.5% 6.4% 0.5x 8.3x 0.8x 46.0x United Natural Foods, Inc. UNFI 5,200 91.2% 25,232 454 43.6% 40.2% 9.5% 1.8% 0.2x 11.5x 0.2x 7.9x US Foods Holding Corp. USFD 9,223 46.3% 26,247 1,106 7.6% 4.3% 17.5% 4.2% 0.4x 8.3x 0.4x 13.2x Median $ 3,424 62.3% $ 19,362 $ 343 7.6% 4.9% 13.1% 2.4% 0.2x 8.3x 0.3x 13.2x Mean $ 7,691 63.7% $ 20,153 $ 738 14.3% 10.8% 14.1% 3.2% 0.3x 8.7x 0.4x 18.2x

Food Retail Ingles Markets, Incorporated IMKT.A $ 1,560 86.2% $ 4,362 $ 304 4.9% 4.3% 24.5% 7.0% 0.4x 5.1x 0.4x 5.9x The Kroger Co. KR 39,312 88.3% 122,286 6,238 0.4% 2.0% 22.8% 5.1% 0.3x 6.3x 0.4x 7.8x Natural Grocers by Vitamin Cottage NGVC 331 86.6% 959 103 8.7% 9.2% 26.7% 10.7% 0.3x 3.2x n/a n/a Sprouts Farmers Market, Inc. SFM 3,190 95.3% 5,867 625 10.0% 11.9% 34.3% 10.6% 0.5x 5.1x 0.7x 11.0x Village Super Market, Inc. VLGE.A 298 83.9% 1,659 66 1.2% 0.6% 27.6% 4.0% 0.2x 4.5x n/a n/a Median $ 1,560 86.6% $ 4,362 $ 304 4.9% 4.3% 26.7% 7.0% 0.3x 5.1x 0.4x 7.8x Mean $ 8,938 88.1% $ 27,027 $ 1,467 5.0% 5.6% 27.2% 7.5% 0.3x 4.9x 0.5x 8.3x Publicly Traded Food & Beverage Companies ($ in millions) Stock Enterprise % of 52- LTM Revenue Growth LTM Margins EV / LTM EV / NFY Company Ticker Value Wk. High Revenue EBITDA 1 Year 3 Years G. Profit EBITDA Revenue EBITDA Revenue EBITDA

Non-Alcoholic Beverages The Coca-Cola Company KO $ 234,900 78.1% $ 37,173 $ 13,203 7.1% (3.0%) 60.7% 35.5% 6.3x 17.8x 7.1x 21.9x Keurig Dr Pepper Inc. KDP 53,790 88.6% 11,229 3,369 24.8% - 57.0% 30.0% 4.8x 16.0x 4.8x 15.0x Monster Beverage Corporation MNST 36,932 100.7% 4,317 1,535 10.6% 11.5% 59.8% 35.6% 8.6x 24.1x 8.6x 24.3x National Beverage Corp. FIZZ 2,390 97.7% 978 183 (4.0%) 7.2% 36.4% 18.7% 2.4x 13.1x 2.5x 14.8x PepsiCo, Inc. PEP 212,616 90.4% 68,158 12,572 4.9% 2.7% 55.4% 18.4% 3.1x 16.9x 3.2x 16.3x Median $ 53,790 90.4% $ 11,229 $ 3,369 7.1% 2.7% 57.0% 30.0% 4.8x 16.9x 4.8x 16.3x Mean $ 108,125 91.1% $ 24,371 $ 6,172 8.7% 3.7% 53.8% 27.6% 5.0x 17.6x 5.2x 18.5x

Alcoholic Beverages Anheuser-Busch InBev SA/NV ABI $ 201,548 47.3% $ 51,108 $ 19,126 (5.6%) 1.4% 60.6% 37.4% 3.9x 10.5x 4.4x 11.9x Brown-Forman Corporation BF.B 32,433 90.2% 3,398 1,205 2.6% 3.9% 63.4% 35.5% 9.5x 26.9x 10.3x 28.6x The Boston Beer Company, Inc. SAM 6,771 101.0% 1,329 215 25.7% 14.8% 48.2% 16.2% 5.1x 31.4x 4.2x 26.2x Carlsberg A/S CARL 22,975 86.0% 9,897 2,231 5.4% 1.7% 49.5% 22.5% 2.3x 10.3x n/a n/a Constellation Brands, Inc. STZ 45,559 81.9% 8,344 883 2.8% 4.5% 51.4% 10.6% 5.5x n/a 6.0x 16.5x Diageo plc DGE 101,397 78.5% 17,428 6,410 4.9% 5.2% 61.5% 36.8% 5.8x 15.8x 6.6x 19.7x Heineken N.V. HEIA 71,991 80.0% 26,898 6,320 6.6% 4.9% 39.9% 23.5% 2.7x 11.4x 3.1x 14.1x Molson Coors Beverage Company TAP 17,644 61.6% 10,379 2,201 (3.4%) 15.8% 37.9% 21.2% 1.7x 8.0x 1.9x 8.9x Median $ 38,996 80.9% $ 10,138 $ 2,216 3.9% 4.7% 50.4% 23.0% 4.5x 11.4x 4.5x 15.3x Mean $ 62,540 78.3% $ 16,098 $ 4,824 4.9% 6.5% 51.6% 25.5% 4.6x 16.3x 4.4x 14.8x

Food & Beverage Index Performance vs. S&P 500

The branded processed and packaged foods, food retail, non-alcoholic beverages and food ingredients sectors have outperformed the S&P 500 over the past two years.

Note: Valuation data as of 06/01/2020 Sources: S&P Capital IQ and public data About Prairie Capital Advisors

Prairie offers investment banking, ESOP advisory, valuation advisory and financial reporting valuations to support the growth and ownership transition strategies of middle- market companies. Headquartered in Oakbrook Terrace, Illinois, Prairie is a leading advisor to closely-held companies nationwide.

Securities transactions are effected and offered through Prairie Capital Markets, LLC (“Prairie”), member FINRA/SIPC. PRAIRIE and Prairie Capital Advisors are service marks registered with the U.S. Patent & Trademark Office. This document is a result of Prairie Capital Markets, LLC and is for informational purposes only. It is not intended as an offer or solicitation with respect to the sale or purchase of a security. The opinions expressed are the views of the writer and do not reflect the views and opinions of Prairie. Prairie shall not be Timothy Witt Terrel Bressler Anthony Dolan Dan Delap liable for damages resulting from the Managing Director Managing Director Director Vice President use of or reliance upon the information [email protected] [email protected] [email protected] [email protected] presented herein.