FOOD AND BEVERAGE INDUSTRY UPDATE │ JANUARY 2018 www.harriswilliams.com Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. 0 FOOD AND BEVERAGE INDUSTRY UPDATE │ JANUARY 2018 WHAT WE’RE SEEING CONTENTS MARKET UPDATE . INDUSTRY VITAL SIGNS . EQUITY MARKET OVERVIEW . M&A MARKET OVERVIEW The food & beverage M&A market remains active through January, with several . DEBT MARKET OVERVIEW . RECENT M&A ACTIVITY notable transactions. Ferrero entered into an agreement to acquire Nestlé's U.S. EARNINGS CALENDAR confectionary business, which includes more than 20 brands, for $2.8 billion. GROUP OVERVIEW Harris Williams & Co. is a leading Campbell Soup Company also entered into an agreement to acquire Snyder’s advisor to the food and beverage market. Our significant Lance for $4.9 billion in cash. The acquisition will expand Campbell’s business in the experience covers a broad range of end markets, industries, and business models. This particular faster-growing snacking category. report focuses on trends and metrics in the following areas: . Agribusiness . Bakery HAT E VE EEN OING . Beverages W W ’ B D . Branded and Private Label . Dairy CLOSED HW&CO. TRANSACTIONS . Distribution . Ingredients . Meat and Protein . Natural and Organic a division of . Processing Established the a partnership of Burger King UK . Produce Mater Franchise Restaurant and Retail PizzaRev & . a has been acquired by a portfolio company of Founders . Snacks has been acquired by has been acquired by has been acquired by CONTACTS Tim Alexander Managing Director [email protected] +1 (612) 359-2716 Ryan Budlong The Soup & Infant Feeding Business of Managing Director [email protected] a portfolio company of a portfolio company of a portfolio company of +1 (415) 217-3409 and Brant Cash Director has been acquired by has been acquired by has been acquired by has been acquired by [email protected] +1 (612) 359-2709 Ryan Freeman Director [email protected] +1 (612) 359-2703 Andy Warczak Vice President [email protected] +1 (612) 359-2714 a portfolio company of a portfolio company of a subsidiary of a portfolio company of Brant Wilczek Vice President [email protected] has been acquired by has been acquired by has been acquired by has been acquired by +1 (612) 359-2732 PAGE | 1 FOOD AND BEVERAGE INDUSTRY UPDATE │ JANUARY 2018 WHAT WE’VE BEEN READING PREPARED FOODS ARE THE HOT NEW ITEM Prepared foods are making a comeback. As grocery store operators consider ways to drive traffic and differentiate themselves, hot bars and stations have become a critical section of the store. Consumers are constantly searching for convenient solutions during mealtime, and made-to-order offerings represent a time-saving alternative to dining at home. Access the full article here. FOOD MADE FROM 'UGLY' PRODUCE COULD BE A BEAUTIFUL BUSINESS OPPORTUNITY Rather than throwing produce out, grocery stores have begun selling "ugly" over-ripe bananas, bruised apples and weirdly-shaped carrots at reduced prices. The majority of consumers reject fruits and vegetables that are irregular, contributing to the world's $1 trillion food waste crisis — last year, 6.7 billion pounds of fruits and vegetables went unharvested or unsold by growers. Still, consumers are growing more comfortable with the concept of ugly produce. According to a survey by the Harris Poll, 62% of Americans said they would be "somewhat comfortable" eating less- than-perfect fruits and vegetables. Access the full article here. PROTEIN TO REMAIN ON TREND IN 2018 Recent new product introductions highlight the range of protein-based ingredients being utilized by food manufacturers. As consumers shift to plant-based products, food manufacturers see additional opportunities to market alternative products that are traditionally formulated with animal-sourced proteins. Access the full article here. VITAL SIGNS COMMODITY PRICE INDICES1 120 Soybeans: 100 (38.3%) 80 Crude Oil: 60 (41.9%) Wheat: 40 (46.5%) Commodity PriceIndex Commodity 20 Corn: Jan-13 Aug-13 Mar-14 Sep-14 Apr-15 Oct-15 May-16 Nov-16 Jun-17 Jan-18 (54.8%) Crude Oil Soybeans Wheat Corn PROTEIN PRICE INDICES1,2 130 120 Beef: 12.7% 110 Pork 100 (3.5%) 90 Protein PriceIndexProtein Poultry: 80 (8.0%) Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Beef Pork Poultry PAGE | 2 FOOD AND BEVERAGE INDUSTRY UPDATE │ JANUARY 2018 VITAL SIGNS RESTAURANT AND GROCERY STORE SALES INDICES3 130 Restaurant: 120 26.6% 110 Grocery: 100 15.0% 90 SalesIndex 80 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Restaurant Grocery CONSUMER FOOD PRICE INDEX INFLATION4 4.0 3.0 2.0 1.0 Infation(%) - (1.0) Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 PUBLIC EQUITY MARKET OVERVIEW KEY TRADING STATISTICS1 Stock Price % Change EV/EBITDA % Change Current Valuation Stats Net Debt / Industry and Segment 3 Month 1 Year 3 Month 1 Year Fwd PE LTM PE EV/EBITDA EBITDA Protein Processing 1.8% 13.6% 0.5% 0.6% 13.0x 15.3x 7.5x 3.2x Fruit and Vegetable 5.3% 18.4% 9.8% 42.8% 17.4x 21.2x 15.0x 0.7x Ingredients / Flavors 9.7% 29.8% 12.4% 25.7% 23.9x 29.3x 18.5x 1.4x Inputs Agribusiness 11.7% 11.6% 5.4% 14.1% 20.3x 26.1x 13.1x 2.9x Branded Processed Foods 3.2% (3.6%) 2.1% (2.5%) 19.2x 24.1x 12.5x 2.1x Private Label and Foodservice 16.1% 59.0% (16.3%) (13.6%) 21.8x 27.9x 9.2x 4.1x Natural / Organic Foods / BFY 13.5% 9.8% 1.0% (0.1%) 34.2x 52.6x 19.0x 7.2x Baked Goods 5.1% (1.7%) 8.1% 0.5% 20.2x 40.3x 12.6x 2.4x Dairy 2.6% 10.3% 4.0% 11.9% 19.0x 23.1x 14.7x 1.3x Non-Alcoholic Beverages 9.4% 37.0% 4.0% 15.9% 22.5x 25.1x 15.3x 1.7x Alcoholic Beverages 6.7% 42.8% 15.5% 17.2% 22.2x 26.4x 16.5x 2.6x Food and BeverageFood and Snacks 8.8% 16.8% 5.3% 8.6% 21.3x 27.9x 16.4x 2.4x Grocery Distribution 3.3% (27.0%) 2.6% (8.6%) 16.9x 19.1x 9.6x 2.5x Food Retail 19.7% (11.6%) 17.9% (11.0%) 14.2x 19.7x 7.1x 1.7x Foodservice Distribution 9.9% 24.4% 8.8% 10.9% 19.8x 28.9x 12.6x 4.5x Quick Service Restaurant 4.2% 23.7% (6.4%) 7.4% 22.8x 23.4x 13.9x 3.6x Fast Casual 15.0% (19.1%) 10.4% (18.7%) 44.6x 42.6x 14.6x 1.8x Differentiated Casual 17.9% (8.6%) 15.3% (3.4%) 23.2x 25.3x 8.8x 0.6x Casual Dining Restaurant 18.2% 15.7% 10.2% 2.1% 17.4x 28.2x 9.0x 2.6x Fine Dining 23.8% 0.9% 15.7% 20.3% 20.1x 24.4x 10.4x 1.2x Consumer and Retail and Consumer Pizza 1.3% 29.2% (2.3%) 14.7% 23.3x 32.3x 13.8x 3.7x Beverage / Snack Retail 12.2% 2.3% 11.9% 6.7% 23.9x 29.7x 17.1x 2.3x Family Restaurant 17.8% 9.5% 11.9% (11.9%) 21.5x 25.4x 11.0x 2.1x Overall Median 8.9% 8.1% 6.5% 5.5% 21.0x 25.4x 12.6x 2.3x PAGE | 3 FOOD AND BEVERAGE INDUSTRY UPDATE │ JANUARY 2018 PUBLIC EQUITY MARKET OVERVIEW PUBLIC COMPANY SECTOR PERFORMANCE (MEDIAN ONE YEAR CHANGE IN STOCK PRICE)1 Priv ate Label Alcoholic Bev erages Non-Alcoholic Bev erages Ingredients / Flav ors Pizza Foodserv ice Distribution Quick Serv ice Restaurant S&P Fruit and Vegetable Snacks Casual Dining Restaurant Protein Processing Agribusiness Dairy Natural / Organic / BFY Family Restaurant Bev erage / Snack Retail Fine Dining Baked Goods Branded Processed Foods Differentiated Casual Food Retail Fast Casual Grocery Distribution (40.0%) (30.0%) (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Inputs Food and Beverage Consumer and Retail RECENT EQUITY OFFERINGS5 Gross Proceeds Close Date Filing Date Issuer Ticker Transaction Type Use of Funds ($mm) General Corp. Purp. 1/19/18 09/25/17 Feronia Inc FRN Follow-On $19.8 Working Capital General Corp. Purp. 1/17/18 01/17/18 Tal Consolidated Inc TCL IPO - Reduce Indebtedness Secondary 1/3/18 01/03/18 Success Entertainment Group InternationalSEGN Inc Follow-On $59.2 Pay Fees & Expenses General Corp. Purp. 12/18/17 12/14/17 The Chefs Warehouse Inc CHEF Follow-On $34.2 Working Capital Pay Fees & Expenses 12/13/17 12/13/17 Ipic Entertainment Inc IPIC IPO $40.1 General Corp. Purp. General Corp. Purp. 12/6/17 10/20/17 Reed's Inc REED Follow-On $14.0 Reduce Indebtedness SecondaryMarketing & Sales 12/4/17 12/04/17 Performance Food Group Co PFGC Follow-On $188.2 Pay Fees & Expenses General Corp.