Beverages

The Agri, Food & Beverages with developments in the Agri, AGRI, industry is constantly evolving Food & Beverages industry, as to keep up to date with new well as new demands and strate- trends and preferences across FOOD & gic requirements, enabling us to different demographics. be a valuable M&A partner. Certi cation and con rmation of quality, ethical practices and BEVERAGES This report covers market sustainability are as important outlook, recent M&A and hot as ever to customers. topics in the Agri, Food & Bever- INDUSTRY GROUP ages industry. Feel free to M&A Worldwide and the Agri, contact any M&A Worldwide Food & Beverages specialist member for further information 2019 - Q3 EDITION group, are always keeping track

M&A WORLDWIDE THE NETWORK FOR MERGERS & ACQUISITIONS Established in 2004, M&A Worldwide is a leading global alliance of mid-market merger & acquisition specialists. M&A Worldwide has 42 member rms operating in 43 different countries. All members are closely linked in a global alliance to advise clients on mergers, acquisitions, divestitures, joint-ventures, capital raising, and other strategic transactions. In 2018 the members of M&A Worldwide closed 423 deals in for an aggregate value of over US$4.7 billion. M&A Worldwide is able to provide specialized M&A consultants in a variety of industries who are willing to share their knowledge and insights on various sectors. For more information, please visit www.m-a- worldwide.com OVERVIEW transaction in whole F&B industry TOP BRANDS ARE this year was announced in CHALLENGED BY NEW Australia. Asahi Group Holdings Beverages market has been (Japan) announced about decision COMERS among one of the hottest by to acquire the leading Australian number of completed M&A deals and cider producer - Carlton Asahi and CUB mega deal is in F&B industry and during last & United from similar to visible trends in smaller ve years it consisted around Anheuser-Busch InBev for USD size M&A as well. Members of M&A 18-23% from total completed F&B 11.3 billion. Asahi Group Worldwide in coverage of their deals. Therefore in this F&B report rationalizes their decision for this countries, reports that largest we will cover M&A trends in acquisition seeking to bring beverage brand producers are Beverages around the world. together some of Australia’s best challenged by new comers, which known and most loved brands allows for craft and other premium GLOBAL M&A TRENDS across the alcohol and producers increase their market non-alcohol categories, including share. The largest beverages During the rst 3Q of 2019 there Schweppes, Solo, Asahi and producers are looking ways how to were completed 85 transactions in Peroni along with Carlton Draught, ght declining sales, improve their beverages industry compared to Victoria Bitter, Great Northern and EBITDAs and consolidation is one 95 deals during the same period of Pure Blonde. This would lead to of the best cures both for sellers 2018. Europe was the most active potential cross-selling and buyers due to potential scene for M&A in beverages possibilities in different regions synergies in manufacturing and industry with around 50% of total and possibility to distribution and distribution. completed deals (Western Europe logistics costs due to synergies 38% and 12%), and scale. THE LINE BETWEEN followed by North America with ALCOHOL AND SOFT 13%. However, the largest DRINKS PRODUCERS IS FURTHER DISAPPEARING

It’s already normal that alcohol Geographical split of completed M&A transactions in Beverages (2019Q1-Q3) producers owns soft drink Source: Eikon Thomson Reuters producers and soft drink producers are going into alcohol 5% market to ght for the market 12% share. Coca Cola is very good example of it, as they launched 38% Lemon-do an alcoholic soft drink in Japan. They are also launching 13% Coca cola with coffee this year.

13% 5% 2% 9% 1% 3%

Australasia Eastern Europe Japan North America North Asia South America South Asia Southeast Asia Sub-Saharan Africa Western Europe

1 NON-ALCOHOL BEER, CIDER, WINES AND OTHER NON-ALCOHOLIC PREMIUM DRINKS ARE BOOMING

It is inuenced by changing lifestyle of consumers which are choosing more healthy drinks and food. The other trend we see, that countries are trying to solve social problems by prohibiting alcohol advertisements in mass & media. Therefore, alcohol producers started to advertise non-alcoholic versions of beer, cider, wine, cocktails mixes and other premium non-alcoholic drinks, which are now growing fast in many markets. Therefore, it is expected that this segment should continue to grow in future and gain much bigger market share, which is now considered still very low.

Valuation of beverage businesses region and industry wide EV/EBITDA multiples of all active equities in F&B (Small & Micro < USD 1billion)

Food & Beverages Non-Alcoholic Beverages (45) Food Processing (578) Brewers (38) Fishing & Farming (222) Tobacco (15) Distillers & Wineries (62)

All 9,89 8,36 9,20 10,89 11,58 11,91 13,82

Emerging Europe (36) 6,42 9,55 6,20 5,42 28,05 7,79

Latin America (55) 7,19 5,05 7,67 7,34 7,71 5,52

Africa (58) 7,94 17,39 6,84 10,65 11,97 11,12

Middle East and Africa (94) 8,32 7,78 7,56 10,65 13,37 11,12

Europe (147) 8,73 11,21 7,73 10,00 10,12 12,96

Middle East (43) 9,19 6,51 9,42 14,86

Developed Asia Paci c (162) 9,28 5,47 9,03 16,31 10,45 15,23

Developed Europe (116) 9,48 11,48 8,56 9,18 9,97 14,95

Euro Zone (83) 9,68 10,23 8,84 10,35 9,05 16,09

Global Emerging Markets (632) 10,12 8,17 9,36 11,13 12,50 13,59 12,95

North America (50) 10,30 13,81 9,57 25,56 9,50 10,23 13,57

MENA (42) 10,66 7,77 10,83 11,60 32,63

Asia Paci c (604) 11,06 9,17 10,21 13,05 13,09 18,69 14,83

Emerging Asia Paci c (444) 11,82 13,26 10,73 13,01 14,16 18,69 14,71

Source: Eikon Thomson Reuters

2 ARGENTINA tion included a 170 hectares-farm. Bodegas y Viñedos Santiago Gragna Ltda. S.R.L. was sold to • In April 2018, the Ortega Gil Compañía Cervecerías Unidas Argentina is a leading country in Fournier Spanish family sold S.A., a Chilean group specialized in terms of food production with vast Bodega & Viñedos O. Fournier the winery and beer sector. natural resources and an S.A. to the Agostino Family, a extremely fertile land. For the local winemaking investor. period corresponding to January – May 2019, Argentina exported food • In December 2018, the Arizu products for USD 10 billion, being family announced the sale of soybeans and its sub-products, Bodega Luigi Bosca e Hos shing products, meat and wine S.R.L., to L Catterton Latin are the most relevant. The volume America, the largest global increased +11.3% (vs January – private equity fund dedicated to May 2018), reaching a total of 18 the consumer sector. L million tons. Catterton Latin America plans to drive both the global growth Wine Sector in Argentina and Recent of the iconic brands of the Transactions winery as well as its long-term vision to expand into the most Wine Sector in Argentina and relevant international markets. Recent Transactions Despite the drop in domestic • In January 2019, Compañía consumption, the Argentine wine Cervecerías Unidas S.A. (a sector received investments from Chilean group specialized in the national and foreign companies in winery and beer sector), recent years. Growing acquired Bodegas y Viñedos competitiveness in the wine Santiago Gragna Ltda. S.R.L., sector globally, but also locally, led from Pernod Ricard Argentina to consolidation in recent years, S.R.L. The transaction included with relevant international players the Gragna, Colón and Santa acquiring traditional Silvia brands, the Gragna family-owned wineries. winery and two vineyards (one located in San Juan the other The integration of new players to one in Mendoza). the business is accompanied by a transformation in the market and • In June 2019, SPI Group (a a growth in supply across the Russian holding company owner premium segment. During 2018 of Achaval Ferrer Winery), led by and 2019, M&A activity in millionaire businessman Mr. Yuri Argentina’s wine sector was Sheer, acquired Viñas Familia dynamic, especially driven by Aristi S.A. (Melipal winery), large wineries: located in Agrelo, Mendoza. • In March 2018, Silvio Ben- venuto (one of the former SanCor Cooperativas Unidas owners of La Campagnola Ltda., advised by Finanzas & S.A.C.I., a local food company) Gestión, sold its industrial sold Bodega Colle di Boasi S.A. facilities in Chivilcoy and Morteros (a winery located in Uco Valley, and its brands Las Tres Niñas and Mendoza) to Bodegas Bianchi Angelita to Adecoagro S.A., one of S.A., a 90-year-old fami- the largest agricultural companies ly-owned company. The acquisi- in South America.

3 AUSTRALIA have made several high-pro le domestic production to compete acquisitions of craft breweries. with major imported energy drink brands Red Bull and V Energy. In May 2016, CCA acquired the Within the Australian market, Australian rights to Monster Craft Beer & Functional Beverages Some of the recent M&A deals Energy, previously Asahi's only are two current high-growth happened in the industry are: brand in the energy drinks segments. • Acquisition of Mornington segment. Peninsula by Tribe Brewery in 2018 Some of the recent M&A deals Craft Beer • Acquisition of Green Beacon happened in the industry are: Brewing Co by Asahi in 2019 • Acquisition of Organic & Raw Craft Beer Production has • Acquisition of Australian Trading Co, known for Mojo brand ourished with changing operations of Anheuser-Busch of kombucha tea, by Coca-Cola in consumer tastes in Australia, InBev by Asahi in 2019 2018 particularly the move towards • Acquisition of 45% minority premium , and a growing stake in Made Group by Coca-Cola emphasis on quality across liquor in 2018 retailing. Strong demand has Functional Beverages • Acquisition of Crankt Protein, a allowed the industry to expand manufacturer of nutrition over the past ve years, with craft The Functional Beverage products, including beverages and beer producers now operating in Production industry has grown snack bars, by Freedom Foods in every state and territory across steadily over the past ve years. 2018 the country. The players in the Increasing demand for functional Craft Beer Production industry beverages, particularly sports and brew a variety of beers which can energy drinks, has driven industry be broadly separated into ales, growth. Rising concerns about , and porters, and obesity and other health other beers. complications have increased consumer health consciousness, driving demand for these Products Segments products. Industry innovation has 4,2% 7,5% caused operators to expand their product ranges, with increasingly

20,7% sophisticated products performing well despite import

67,6% competition. The industry revenue is forecast to grow at an annualized 3.4% over the ve Alex Lagers Other Beers Stouts and porters years through 2024-25, to be worth USD 371+ million.

Overall, the industry revenue is Products Segments forecast to increase at an annualized 5.6% over the ve 18,2% years through 2023-24, to USD 475+ million. The industry is highly 54,5% fragmented, despite the presence 27,3% of major brewers such as Lion, Carlton and United Breweries (CUB) and Asahi. However, market Sports Drinks Energy Drinks Health Beverages share concentration has increased over the past ve years, The two major players, Coca-Cola as these multinational companies Amatil (CCA) and Asahi, increased

4 Molson Coors Brewing also became owner of biggest bear producer, Zagrebačka Pivovara. In Beverages market water bottling and sugary drinks production, Stanić Group acquired In recent years, Croatian F&B Jamnica`s brand Juicy in 2013 for market was highly affected by EUR 45,0m. Furthermore, in 2017 liquidity crisis in Agrokor, September 2016. Czech company holding company with interests in Kofola acquired water bottling retail, F&B and agriculture sector. company Studenac from Since then, F&B companies, Podravka, biggest Croatian F&B including beverage producers and Pharma company. In 2017. have diversi ed customers and Croatian producer of strong widened product range to meet alcoholic beverages, Badel 1862, requirements of quality and price was acquired by Meteor Grupa. sensitive consumers. In terms of revenues, biggest companies are Except transactions mentioned water bottling company Jamnica above, there are many other and beer producer Zagrebačka Croatian and regional companies Pivovara with 2018 revenues of which are big enough for cross EUR 172,7m and EUR 149,4m border transactions and attractive respectively. They are followed by enough as they are well rooted in producers of strong alcoholic the local market and have strong beverages Badel 1862 with EUR local brands and, secondly, have 39,2m and Maraska with EUR knowledge and capacities to serve 23,1m in revenues. EBITDA margin as private label producers for analysis of top 20 beverage larger beverages companies producers in Croatia shows that which need to grow constantly. median EBITDA margin in 2016 amounted to 10,7%, in 2017 to 11,9% and in 2018 median EBITDA margin was 9,8%.

Main characteristics

Main characteristic of Croatian beverage industry is strong presence of local brands. Up until recent years, majority of them were under management of biggest Croatian companies. For instance, holding company Agrokor owned water bottling company Jamnica while Podravka, large Croatian food conglomerate, owned Studenac. Recent activities are affected by divestitures from core activities and entrance of multinationals. Biggest transaction occurred in beer production in 2012. With EUR 2,65b acquisition of StarBev, 5 focus on concept and individually critical mass under production to made special beer for restaurants, keep the prices on an acceptable companies and private level to the customers. This will Quantity to quality consumers. require more production on To illustrate the ongoing process demand in less badge sizes. The more than 30 new breweries breweries capabilities and The sale of mainstream, or you shows up yearly and the number of investments in solving this can call it "factory" beer has new Danish beers increased to the production issue might be the key decreased over the last few years highest level in 2018 with 1,832 factor to success. in Denmark, which mostly hit the from 197 breweries. The trend among the younger larger suppliers on their base generations, is more going in the products. The reason of the direction of drinks instead of decrease in sale of "factory" beers Where are we going beers. Especially gin is a high like , , score, which has caused a large Heineken etc. is to be found in a upcoming group of distilleries There is no doubt that individual change of trend from quantity to making all kind of gins. quality. A change initiated by all and healthy living, less alcoholic the small microbreweries founded and sustainable view is in focus. everywhere in Denmark from The breweries are already moving small islands to villages. They all towards this, and Carlsberg has Acquisitions brew their own beers with their successfully entered the market different taste. with their non-alcoholic beer Carlsberg Group has, as the third The large breweries as Carlsberg Nordic. Latest news is Carlsberg’s largest brewery in the world, made and Royal Unibrew looked across introduction of a paper bottle for several acquisitions. Since 2013 the Atlantic to the US and their beers, which has been tested for a Carlsberg has acquired eight craft beer trend and got inspired period and is ready to be released Chinese breweries, one UK, one to greater enjoyment and less to the market. From 2020 you Greek and partly takeover of a drunkenness. From 2017 and until might enjoy a non-alcoholic beer Portuguese brewery. Both now both Royal Unibrew and in paper bottle. Carlsberg and Royal Unibrew have, Carlsberg has made large At the individual side we expect to and are still, acquiring several investments in Denmark in new see even more different types of microbreweries to ful ll their production facilities and product beers, with focus on non and less strategy of quick move to development. Carlsberg made the alcoholic types during the years to "non-factory" beer. new brand and special beer come. The back side of having a product line - Crafted By with brought product portfolio, is to get

Number of new beers introduced in Denmark 2000

1800 1832

1600 1622

1400 1424 1298 1200 1108 1000 927 800 756 647 600 604 590 616 556 506 400

200 234 0 15 21 30 54 82 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 6 almonds, hazelnut, rice) are a new Food-Deals by ACTIVE M&A but dynamic segment. Alpro, Oatly Experts: and trade-brands are Beverage market in driving-forces. Also Innocent Germany (Coca-Cola) has entered this May 2019: “Snoooze GmbH” sold a market. minor stake to Bitburger Ventures. Consumers in Germany spend With 31,5 liter fruit-juice Snoooze® is a natural sleep drink around EUR 21.4 bn per year for consumption p.a. the Germans are with effective, natural herbs to non-alcohol and EUR 24.8 bn for world-champions. But the support natural sleep cycles and alcoholic beverages (2018; source category is stagnating. Fruit-juice help to fall asleep faster and stay Statista). Mineral-water is no 1 market-leader Eckes-Granini has asleep longer. Active M&A Experts with 154 litres per person p.a., acquired 35% of the supported the founder of Snoooze followed by soft drinks (123 l.) and smoothie-start-up True Fruits in this transaction. beer with 102 l. early 2018 to join this growing Beer-consumption has decreased segment. over the last years whereas mineral-water is on a steady growth path. Aging of the M&A activities in Germany population and growing health-consciousness are major drivers for this trend. “Near water Oct. 2019: German based drinks” (slightly aromatized) are Extrachem bought Horizon getting bigger share within the Specialties, the food color water-market. Smaller sizes, business from UK ingredient resource-ecient packaging, supplier Thew Arnott Group. The recyclable material for foils and divesture will enable Thew Arnott labels plays an increasingly to focus on its core business of important role. ingredients; Extrachem will Leading players in the beer increase its footprint in the EU industry are Radeberger-group and particular Germany. (part of Oetker-group), AB/InBev (i.e. Becks, Löwenbräu), June 2019: Five seasons Ventures Bitburger-Group, Oettinger and invested in Munich-based Krombacher. With nearly 1500 “YFood”; a start-up selling breweries in Germany the market well-balanced meal in a is still fragmented and convenient drink-format. regionalized. Beer-mix-drinks, alcohol-free beers, speciality-, Nov. 2018: Oetker-group gets a regional- and craft-beers are 60% stake in wine-selling growing categories. Cooperation online-platform “Belvini”. and joint-ventures along the Oktober 2018: German Capri-Sun value-chain (i.e. with delivery Group acquired 85% of Austrian services) are other measures to tea-drink start-up “all I need”. cope with the shrinking beer March 2018: Henkell market. (Oetker-group) become majority Spirits overall is a stable market shareholder of “Freixenet” / Spain; (5,4l) and Gin the growing product together they are the in this category together with world-largest sparkling wine spirit-mixes. business. In the soft-drinks market ice-teas, March 2018: Diageo completed the energy-drinks and bitter-drinks acquisition of “Belsazar”; a are growing. Plant-based milk German Premium-aperitif alternatives (based on i.e. oat, start-up.

7 ITALY architecture. • The Caffo group (Amaro del Capo brand) has acquired • The French group Pernod Mangilli - Cantine and M&A activity in the Food and Ricard has announced the Distillerie Friulane, a historic Beverage sector is still acquisition of the Italian winery active since the end of predominately driven by strategic high-end gin brand Malfy, the 1800s and famous for its rich buyers (including companies currently owned by the assortment of ne Friuli primarily owned by private equity American Biggar & Leith. grappas and wines investors). The beverage sector continues to be an active space • Quadrivio Fund has created • The Marzotto family invests for M&A. In average the Multiples "Made in Italy Fund" to create a ve million euros and insures are: in alcoholic drinks (x16,5) and premium-end wine hub, which 50% of Holy Industries, a non alcoholic drinks (x15). can already count on the company that produces Drink participation of two wineries Holy, a detox drink so far The International expansion will Torrevento and Collalbrigo. The distributed in extreme niche continue to drive Italian fund aims for a turnover of EUR channels such as luxury resorts, corporates’ acquisitions in terms 100 million. trendy bars in big cities. of: (i) premium products and (ii) penetration in new markets, to • Davide Campari-Milan reinforce their positioning among S.p.A. has announced that it the global sector leaders. has entered into exclusive The E-commerce channel is negotiations with the company identi ed as an opportunity to: (i) Financière Chevrillon with the increase revenues and (ii) reach aim of acquiring the French new countries/markets. company Rhumantilles SAS (Ultra)premium Wine and ("Target"), which owns 96.5% of Sparkling Wine brands will garner the Bellonnie & Bourdillon interest from both Private Equity Successeurs company based in funds and Financial investors due Martinique. Net sales at value to the attractive margins. Soft reported by Target in 2018 amounted to € 24.1 million. drinks M&A activity will be driven by the pursuit of targets offering excellence in terms of product • Campari Group acquired the quality. Consumption of beer majority of Licorera Ancho appears to be declining, except for Reyes y Cia S.A.P.I. de C.V the premium/craft segment, that (producer of the spicy liqueur will continue to attract the Ancho Reches) and Casa interest of large players. Montelobos S.A.P.I. de C.V. (producer of Montelobos Mezcal)

• Refresco Italia has signed Italy - Deals 2019 an agreement to purchase The Belté brand from the San • Coca-Cola HBC is to buy Pellegrino Group, which will be Italian bottled water company operational from 1 December Acque Minerali (Lurisia Brand), 2019. Refresco Italia is one of a private natural mineral water Italy's leading beverage and sparkling beverages manufacturers, with a product business, for EUR 88m. The portfolio that includes mineral company has been a pioneer in water, carbonated beverages, offering water products in tea and beverages sports and bell-shaped glass bottles, isotonic and fruit juices designed by the Italian

8 producers entered the market. Craft beer producers together with largest breweries is also Several years in a row we see a inuencing beer exports, which trend that sales of traditional are growing almost every year alcohol like wine, beer and vodka since 2007. Last year export of is decreasing while various beer grew by 5.3% to 8.6 non-alcoholic beverages has thousands of decalitres. tendency to grow. After the ban of alcohol advertising in Lithuania in 2018 various local alcohol M&A in beverages producers started producing and advertising non-alcohol versions One of the major investors for last of beer, cider and other premium couple of years in alcohol non-alcohol drinks. One of the beverages segment was MV Group largest retail chains in Lithuania owned by MG Baltic (Lithuania). Rimi (owned by ICA) con rms that They have entered this market in sales of non-alcohol beer and 2003 after privatization of cider grew by 20% this year Stumbras (vodka and other strong compared to sales of last year alcohol), afterwards they have (growth last year was even bigger acquired Alita (sparkling wine) in and over 80%). Previously almost 2014, nalized purchase of non-existent group in several Anykščių vynas (wine) in 2015 and years found its customers and bought Guberna (brewery) in that led to double increase of the 2017. assortment of non-alcohol beer, cider and wine in the shelves of We think that successfully shops. Despite that, beer is still operating and growing craft beer most popular drink among breweries would become Lithuanians with 77% market interesting targets for largest share of sold alcohol in shops and local and international players, restaurants. that would let them increase their market share and increase Split of alcohol drinks sold in shops and restaurants pro tability by utilizing synergies.

10% 1,0% 6,0%

6,0%

77,0% Largest Brewerries Turnover EUR millions Owner Specialty

Beer Fermented Drinks Wine Alcohol Cocktails Spirited Drinks Švyturys-Utena Group 86 Carslberg Group Beer

Kalnapilis-Tauras Group 59 Royal Unibrew Group Beer

Lithuanians have long lasting Volfas Engelman 43 Olvi Group Beer traditions of beer brewing. There Vilniaus alus 6 Private persons Beer are 3 largest breweries in Lithuania owned by international Gubern a 6 MV Group / MG Baltic Beer beer giants Carlsberg, Royal Largest Spirits producers Turnover EUR millions Owner Specialty

Unibrew and Olvi, but their local MV Group production 50 MV Group / MG Baltic Vodka market share is declining as number of small craft beer Vilniaus degtinė 21 Marie Brizard Wine and Spirits Vodka

Boslita ir Ko 45 Bosca S.p.A. Sparkling wine

Italiana LT 7 Private persons Sparkling wine 9 NETHERLANDS competing vigorously, they are 612 million. The other 50% still happy to accept that they can sell remains in the hands of the family. more specialty beers to their Alcoholic beverage market Non-alcoholic beverage catering channels. market The Netherlands is a major player Total consumption in the Netherlands in the production of alcoholic Source: Publication of the Dutch Associaton for Soft Drinks, Waters and Juices beverages, in particular beer. Major global players of Dutch Softdrinks Mineral waters & Flavoured waters Syrups Juices & Nectars 100 origin include Heineken and 99,6 95,9 Bavaria (Swinkels Home Brewers). 94,4 93,8 93,7 es This market is dominated by a few 75

larger players, including the two tion in lit r above. AB-Inbev is also very active 50 in this segment. Only 15% of beer 32,4 34,7 consumption is imported. 25 29 29,6 30 29,4 28,9 29,1 er capita consum p 27,7 26,4 27,1 P 25,4 23,7 These three brands have also 21,5 19,8 made various acquisitions in the 0 Netherlands and abroad in recent 2014 2015 2016 2017 2018 years. Acquisitions mainly relate to smaller (local) breweries in In terms of national alcoholic In the area of non-alcoholic order to increase market share. In consumption per capita, beer is beverages, a decrease in the addition, Asahi Holding, a the most popular drink with consumption of soft drinks (with a Japanese beer brewer, also roughly 70 liters of beer per lot of sugars) is observed. increased its market share in the capita. The publi perception of healthy Netherlands through the and sustainable consumption also acquisition of Grolsch (2016). has an effect on this sector. Due to pressure on margins, due to the Total pure alcohol consumption in the Netherlands changing consumer image with Source: Global status report on alcohol and health 2018, WHO regard to healthy food, further 4 Beer Wine Distilled consolidation is expected. es 3,42 3,36 This consolidation will not only 3 relate to competitors, but is tion in lit r expected to become visible at 2 chain level in the form of acquisitions and partnerships. 1 er capita consum p The largest soft drink producer in P the Netherlands is Refresco 0 Group, has also demonstrated this 2014 2015 2016 2017 2018 chain integration in recent years by taking over various bottlers. In AB-Inbev has announced in A number of internationally known addition to the consolidation August 2019 a large Dutch and less-known spirits haven effort to achieve further scaling beverage wholesaler Jac. Bongers Dutch origin and are still up and to be even closer to the end to be able to increase their own domestically sold and consumed. consumer, it is also expected that market share through this The most famous spirit from The exports will continue to increase, wholesaler. Netherlands is the so called with the United Kingdom as the Specialty beers have become very Jenever, of which the brands largest market. The vast majority popular among the general public Nolet and Bols has international (70%) of sales are alcoholic in recent years, which also entails fame. In 2008, Diageo acquired drinks. strong gross margins. The price 50% of Dutch family company per hectolitre on is falling Nolet, including one of their Vodka sharply, with the big players brands Ketel One for approx. EUR

10 looks less optimistic, it is estimated that their market share Main driver of M&A on the will decrease in the coming years. market: Beverages market review in Also the juice and nectar market is Poland characterized by lower than High consolidation pressure - the general growth dynamics, which beverage and bottled water market results in a decrease in the market Currently, the Polish non-alcoholic in Poland is very fragmented - share of this segment. beverages market is undergoing there are many medium-sized local major structural changes. The key companies. In the long run, these drivers of this market are companies need to merge to stay Functional drinks - consumers functional drinks, NFC, healthy on the market. lifestyle coupled with increasing are increasingly buying functional market consolidation drinks that contain such transactions. The value of the bene cial ingredients as turmeric, Polish non-alcoholic beverages activated carbon, matcha, Recent transactions: market is estimated to exceed melatonin and aloe. PLN 24.5 billion (approx. EUR 5.7 • Acquisition of Jurajska Sp. Z billion) in 2020. The market largely NFC - growing awareness and o.o. - well known bottled water depends on consumer moods and education makes consumers producer by HORTEX Sp. Z o.o. subjective feelings about the notice the health bene ts of NFC country's economic situation, juices, tea also the better taste of • Acquisition of Hoop Polska Sp. however, its value is not directly such drinks compared to z o.o. by ZMB Capital the owner of correlated with changes in GDP. concentrate juices is an important Ustronianka Sp. Z o.o. producer of The market is expected to grow growth factor. mineral waters and beverage. annually by 3.9% (CAGR 2019-2023). Germany is the largest Value for money - customers on • Acquisition of 45% minority importer of beverages produced the Polish market attach stake in OSHEE Polska sp. z o.o - in Poland.ma statistical importance to the price the leader on the functional drinks of the product, which is why they market in Poland, by Innova are looking for relatively high Capital. Expected market structure as at quality at the best price. 2020 (PLN million) • Acquisition of Rolmlecz - Texture - not only taste and co-owner of the Lacpol dairy 1204 company, by Polmlek - the largest 241 colour, but also texture is 1790 private company in the polish dairy 6287 becoming increasingly important in the beverage market. To industry. encourage consumers, drinks 6358 increasingly contain various types • Acquisition of Appol - of particles (e.g. fruit in the case manufacturer of NFC juices by the 8670 of juices). Chinese company SDIC Zhonglu

Bottled Water Carbonated Drinks Juices and nectars Energy Drinks Fruit Juice Co.Ltd Isotonic Drinks RTD Tea RTD Coffee Sustainable development - society interest in responsible Trends consumption is no longer limited to just reducing plastic The bottled water is the fastest consumption, nowadays people growing segment of non-alcoholic will pay more for products that beverages, which is mainly due to claim to be sustainable (not only the increasing consumer through packaging, but also awareness of a healthy lifestyle. through e.g. the method of The situation of the largest production and the source of segment - carbonated drinks obtaining the ingredients).

11 POLAND looks less optimistic, it is 2019 the Vinarte’s winery in Buzau, registered a TO of EUR 373.4 estimated that their market share Main driver of M&A on the SE Romania and the Prince Matei million in 2017; +2% vs. 2016 and of will decrease in the coming years. market: wine brand, in a transaction EUR 396.8 million in 2018; +6% vs. Beverages market review in Also the juice and nectar market is Wine estimated at EUR 1-2 million. 2017. Poland characterized by lower than High consolidation pressure - the general growth dynamics, which In 2019 the -based The craft beer market in Romania beverage and bottled water market results in a decrease in the market sparkling wine producer Zarea has is in full expansion. Currently, Currently, the Polish non-alcoholic in Poland is very fragmented - share of this segment. taken over the Sange de Taur wine there are over 60 small producers beverages market is undergoing there are many medium-sized local brand from the local wine of craft beer in Romania. Most of major structural changes. The key companies. In the long run, these producer Domeniile Tohani. The them are young entities, drivers of this market are companies need to merge to stay Functional drinks - consumers Sange de Taur brand is the established during 2015 - 2019. functional drinks, NFC, healthy on the market. lifestyle coupled with increasing are increasingly buying functional top-selling red wine in Romania, market consolidation drinks that contain such according to Nielsen Audit retail Cider transactions. The value of the bene cial ingredients as turmeric, FM 2019. activated carbon, matcha, Recent transactions: Polish non-alcoholic beverages Cider is a relatively young melatonin and aloe. Alexandrion Group, the largest market is estimated to exceed sub-category on the Romanian • Acquisition of Jurajska Sp. Z spirits producer on the domestic PLN 24.5 billion (approx. EUR 5.7 market. Despite this fact, NFC - growing awareness and o.o. - well known bottled water market, has acquired in 2018 the billion) in 2020. The market largely according to a study made in May education makes consumers producer by HORTEX Sp. Z o.o. Halewood wine operations in depends on consumer moods and 2019 by the research agency notice the health bene ts of NFC Romania. subjective feelings about the Strategis for the Progresiv juices, tea also the better taste of • Acquisition of Hoop Polska Sp. country's economic situation, magazine, 50% of Romanians such drinks compared to z o.o. by ZMB Capital the owner of however, its value is not directly Beer have consumed cider in the last concentrate juices is an important Ustronianka Sp. Z o.o. producer of correlated with changes in GDP. year. The market is expected to grow growth factor. mineral waters and beverage. The Romanian wine production The Romanian beer market has annually by 3.9% (CAGR recorded 16.6 million hectolitres in According to the same study, the Value for money - customers on • Acquisition of 45% minority has exceeded 5 million hectolitres 2019-2023). Germany is the largest 2018, up by 3% compared to 2017, Romanians drink two bottles of the Polish market attach stake in OSHEE Polska sp. z o.o - in 2018, up by 18% compared to importer of beverages produced according to Brewers of Romania cider per occasion. The main cider statistical importance to the price the leader on the functional drinks 2017. Romania ranks 12th in the in Poland.ma Association. The beer selection criteria are: avour, of the product, which is why they market in Poland, by Innova world and 6th in Europe at the consumption per capita has price and brand awareness. In are looking for relatively high Capital. wine production. There are over reached 85 litres in Romania in 2015 Heineken has launched in quality at the best price. 180 wineries that produce bottled Expected market structure as at Romania the Strongbow cider • Acquisition of Rolmlecz - wine in Romania and their number 2018. According to Brewers of 2020 (PLN million) Romania Association, the produced in , thus Texture - not only taste and co-owner of the Lacpol dairy has recorded a growing trend in beer has recorded a share of creating a momentum to a niche colour, but also texture is company, by Polmlek - the largest the last years. Some of the main 93.61% in the Romanians’ segment that has proved very becoming increasingly important private company in the polish dairy wine producers in Romania are: preferences in 2018, followed by successful on the local market. in the beverage market. To industry. Cramele Recas, Jidvei, Cotnari, the specialties category (dark, encourage consumers, drinks Vincon, Crama Ceptura, Cramele unpasteurized, light, ale, red beer The cider sector in Romania is an increasingly contain various types • Acquisition of Appol - Halewood, Domeniile Viticole etc) with 2.25%, beer mixes and expanding and dynamic market, of particles (e.g. fruit in the case manufacturer of NFC juices by the Tohani, Vinexport Trade Mark, avoured beers with 2.27% and with signi cant growing potential. of juices). Chinese company SDIC Zhonglu Domeniul Coroanei Segarcea. In According to RetailZoom, the Fruit Juice Co.Ltd regards to dynamics, for example, non-alcoholic beer with 1.87%. sector is strongly concentrated, Sustainable development - Cramele Recas recorded a 97% of the beer sector in Romania with two beer producers society interest in responsible turnover of EUR 32.5 million in is represented by the domestic (Heineken and United Romanian consumption is no longer limited 2017; +22% vs. 2016 and of EUR Trends production. The beer production Breweries Bereprod) and one to just reducing plastic 38.9 million in 2018; +20% vs. 2017. is a driver of the Romanian sparkling wine producer (Zarea) consumption, nowadays people The bottled water is the fastest economy by generating, directly controlling 99% of the Romanian will pay more for products that growing segment of non-alcoholic and indirectly, over 85,000 jobs. market in 2018. claim to be sustainable (not only beverages, which is mainly due to Some of the recent M&A The number of brewers in through packaging, but also the increasing consumer transactions Romania has increased to 56 in through e.g. the method of awareness of a healthy lifestyle. 2018, compared to 39 in 2017. The The situation of the largest production and the source of The domestic wine producer most important beer producer in segment - carbonated drinks obtaining the ingredients). Sarica Niculitel has taken over in Romania is SA. It

12 SPAIN which released three new brands in 2018 (Mahou Maestra Dunkel, San Miguel Radler and Mahou General overview Cinco Estrellas Radler) and has increased its stake in Avery The Food and Beverage industry in Brewing from 40% to 70%, Spain has managed to keep the thereby assuming the control of high investment ratios and being the local premium brand “Brutus”. attractive for Private Equity Other cases were Cervezas la investors. In 2018, its contribution Cibeles acquired by Heineken and to the economy represented 3% Rosita sold to Damm Group. of the Spanish GDP and a total production exceeding EUR Conclusion 116,000bn. Exports are EU-focused (66.3% in 2018), with , Italy, , UK and Germany being Craft and avored beer are some the main destinations. of the markets which are expected to continue with their steady growth in the next years. With the low entry barriers and the Beer market increasing demand for variety, this could be the right moment to The production of beer in Spain strengthen its position and grew up by 7% in 2018 up to EUR acquire a competitor, take 3.5bn (3.8bn litres). The prospects advantage of the well-known are optimistic, with an expected brands, idle production capacity CAGR of 3% for the next 4 years and distribution networks and and sales (4.4bn litres in 2023). lead the market consolidation.

Craft & avoured beer In addition to alcohol- and avoured beer, the large amount of new local and regional brands of craft beer is on the rise. Although it is still very small in percentage terms with respect to the overall beer market in Spain (1-2%), but it has grown dramatically in the last two years (by 44% in 2017 and by 33% in 2018), and so has the amount of breweries and microbreweries in Spain which are more than 1,200.

The shift in consumer demand, since beer-lovers are starting to shy away from the standard avours and tend to value taste and variety more than before, is creating the need to diversi cation and market protection strategies. Examples of this are Mahou San Miguel,

13 UNITED KINGDOM Spirits have seen the biggest non-alcoholic sector. This has increase in revenue growth of been driven by market consolidation; both across market Despite Brexit uncertainty in the 8.0%, however, this is down from leaders such as Costa Coffee UK over the last year, there 10% growth the year before. Wine (acquired by Coca Cola) and Pret A remains a strong appetite for M&A and Cider, Perry & Rice Wine have Manger (acquired by JAB in the Beverage industry. With shown consistent increases in Holdings), and mid-size operators. shifts in consumer preferences revenue growth year-over-year. Growing trends for locally roasted and a plethora of new market coffee have led to an inundation of entrants, many larger Some of the recent M&A deals new market entrants, seeking to organizations are diversifying which have happened in the disrupt the already-established their product portfolios as a alcoholic beverages industry are: brands. There are no signs of means not to fall behind. activity slowing with people in the Furthermore, a cheaper pound is • Acquisition of Greene King UK said to drink 95 million cups of encouraging increasing levels of by CK Asset Holdings in August coffee per day. foreign investment. 2019 for cUSD3.4bn • Acquisition of Hopstuff M&A activity Alcoholic Beverages Brewery by Molson Coors Brewery in July 2019 for an Some of the recent M&A deals Over the last twelve months (LTM) undisclosed amount which have happened in the the UK beverage industry has seen non-alcoholic beverages industry 31 deals, of which 24 have been • Acquisition of Fuller, Smith are: within the alcohol segment of the & Turner by Asahi in April 2019 market. A rise in popularity of for cUSD313m • Acquisition of Seedlip by craft beer has led to increased Diageo in August 2019 for an brewery acquisitions, with 13 • Acquisition of Magic Rock undisclosed amount acquisitions made in 2019 (vs. 7 in Brewing Company by Lion in 2018). Global brewing companies April 2019 for an undisclosed • Acquisition of Costa Coffee such as Molson Coors, Asahi and amount by Coca-Cola in January 2019 for Lion have all made acquisitions in USD 5.1bn the UK over the LTM. Non-alcoholic Beverages UK Alcoholic Drinks Industry by Segment • Acquisition of Mars (Coffee 5% Global trends towards healthier business) by Luigi Lavazza in lifestyles have meant sales of October 2018 for USD 650m 39% non-alcoholic beers, wines and 35% spirits are at an all-time high. The • Acquisition of Pret A Manger non-alcoholic spirit segment is by JAB Holdings in May 2018 for just 3 years old but is already cUSD1.9bn valued at more than USD 6million.

21% With more and more of the

Beer Spirits younger generation choosing Wine Cider, Perry & Rice Wine alternate options to alcohol, large

Total revenue for the UK alcoholic alcohol companies have realized a drinks market topped USD 69 bn in need to diversify. This is typi ed 2019, up 5% from 2018. The market by the acquisition by Diageo of the majority shareholding in Seedlip, is expected to grow annually by 3.7% (CAGR 2019-2023). The the world’s rst distilled market’s largest segment is Beer non-alcoholic spirits brand in which has a market volume of August this year. cUSD27bn. Beer has seen a 5.6% Acquisitions of coffee companies increase in revenue growth, which in the UK are responsible for over is up from 3.1% in the year prior. 50% of the M&A activity in the

14 TEAM AND CONTACT

ARGENTINA BRAZIL Manuel Saman Luiz Guilherme [email protected] [email protected]

AUSTRALIACANADA ECUADOR AdrianDana Rennie Ness Daniel Steiner [email protected]@robbinex.com [email protected]

TEAMLEADER DENMARK Jens Moller EGYPT FINLAND [email protected] Hatem Mohamed El-Hady Markus Hämäläinen helhady@ ncorpinvestment.com markus.hamalainen@armatori.

FRANCE FRANCE Nicolas Bonnel Philippe Delecourt [email protected] [email protected]

IRELAND JAPAN Brian Barrett Yoshiyuki Numano [email protected] [email protected]

LITHUANIA UKNETHERLANDS Kristupas Kukarskas Bart Allers kristupas@con dentus.eu [email protected] CO-TEAMLEADER GERMANY Dr. Heinz H. Fischer [email protected] POLAND UK Piotr Dalak Neil Mitchell [email protected] [email protected]

In 2018 the members of M&A Worldwide closed 423 deals in for an aggregate value of over US$4.7 billion. M&A Worldwide is able to provide specialized M&A consultants in a variety of industries who are willing to share their knowledge and insights on various sectors.

For more information, please visit www.m-a-worldwide.com