FOOD AND BEVERAGE INDUSTRY UPDATE │ DECEMBER 2016 www.harriswilliams.de Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan, authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins. 0 FOOD AND BEVERAGE INDUSTRY UPDATE │ DECEMBER 2016 WHAT WE’RE SEEING CONTENTS MARKET UPDATE . INDUSTRY VITAL SIGNS . EQUITY MARKET OVERVIEW . M&A MARKET OVERVIEW As 2016 comes to a close, HW&Co. is pleased to report a record year in food & . DEBT MARKET OVERVIEW . RECENT M&A ACTIVITY beverage M&A with nearly 600 closed transactions in the last twelve months. This . PUBLIC COMPARABLES . EARNINGS CALENDAR past year, HW&Co.’s food & beverage practice advised on numerous transactions GROUP OVERVIEW across a wide range of subsectors. Transactions of note were Mercer Foods, a Harris Williams & Co. is a leading advisor to the food and provider of better-for-you, freeze-dried snacks and ingredients; Idaho Pacific beverage market. Our significant experience covers a broad range Holdings, a provider of dehydrated potato ingredients; and PANOS brands, a of end markets, industries, and business models. This particular report focuses on trends and provider of better-for-you specialty foods. metrics in the following areas: . Agribusiness HAT E VE EEN OING . Baked and Prepared Goods W W ’ B D . Beverages . Branded and Private Label CLOSED HW&CO. TRANSACTIONS . Dairy . Distribution . Ingredients . Meat and Protein . Natural and Organic a portfolio company of a portfolio company of a portfolio company of a subsidiary of . Processing . Produce and . Restaurant and Retail has been acquired by has been acquired by has been acquired by has been acquired by . Snacks CONTACTS Glenn Gurtcheff Managing Director [email protected] +1 (612) 359-2702 Tim Alexander Managing Director a portfolio company of [email protected] a portfolio company of a portfolio company of +1 (612) 359-2716 has been acquired by Ryan Budlong has been acquired by Managing Director has been acquired by has been acquired by [email protected] A Private +1 (415) 217-3409 Investor Group Brant Cash Director [email protected] +1 (612) 359-2709 Ryan Freeman Director [email protected] +1 (612) 359-2703 a portfolio company of a portfolio company of a portfolio company of Andy Warczak has been acquired by Vice President has been acquired by has been acquired by [email protected] has been acquired by +1 (612) 359-2714 www.harriswilliams.de PAGE | 1 FOOD AND BEVERAGE INDUSTRY UPDATE │ DECEMBER 2016 WHAT WE’RE READING AMERICANS DON’T TRUST SCIENTISTS’ TAKE ON FOOD ISSUES A recent survey conducted by the Pew Research Center seems to upend many notions related to consumers’ changing tastes and preferences. In a surprising twist, consumers indicated that they seem to care less about GMOs than previously thought. Access the full article here. ARE FOOD ALLERGIES ON THE RISE? EXPERTS SAY THEY DON'T KNOW A new report by the National Academy of Sciences indicates that its nearly impossible to pinpoint the number of individuals suffering from food allergies in the U.S. The lack of an optimal diagnostic tool – and the rampant issue of misinformed self-diagnosis – is leading many to question the ultimate figure, making it difficult for consumers and food companies to react. Access the full article here. DR PEPPER, PEPSI SNAP UP ALTERNATIVE BEVERAGE MAKERS In a move reflecting consumers’ shift from sugary drinks, two of the largest U.S. soda makers have announced landmark acquisitions of start-ups focused on healthier beverages. Dr. Pepper and PepsiCo’s respective acquisitions of Bai Brands and KeVita come on the heels of Coca-Cola’s continued headway with acquisitions that have included Suja Life, Honest Tea, and Zico. Access the full article here. VITAL SIGNS COMMODITY PRICE INDICES1 120 Soybeans: 100 (36.6%) 80 Corn: 60 (52.6%) 40 Crude Oil: (52.3%) CommodityPriceIndex 20 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 Wheat: Corn Soybeans Wheat Crude Oil (61.5%) PROTEIN PRICE INDICES2,3 140 130 Beef: 120 22.0% 110 Pork 5.8% ProteinPriceIndex 100 Poultry: 90 1.0% Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Beef Pork Poultry PAGE | 2 FOOD AND BEVERAGE INDUSTRY UPDATE │ DECEMBER 2016 VITAL SIGNS RESTAURANT AND GROCERY STORE SALES INDICES4 140 Restaurant: 21.0% 120 Grocery: 100 11.1% SalesIndex 80 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 Restaurant Grocery CONSUMER FOOD PRICE INDEX INFLATION2 4.0 3.0 2.0 Inflation(%) 1.0 0.0 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 PUBLIC EQUITY MARKET OVERVIEW KEY TRADING STATISTICS5 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 (7.2%) 16.8% 4.9% 40.7% 11.9x 14.4x 6.7x 2.9x Fruit and Vegetable 8.9% 37.4% 10.7% (7.6%) 16.6x 21.8x 10.0x 0.6x Ingredients / Flavors (11.1%) (1.9%) (9.3%) 3.7% 20.6x 24.7x 15.0x 1.3x Inputs Agribusiness 12.8% 14.8% 0.0% 28.9% 19.1x 17.6x 10.7x 2.1x Branded Processed Foods (4.7%) 7.4% (10.9%) (6.9%) 20.3x 25.8x 13.3x 2.3x Private Label Foods and Beverages (17.7%) 3.9% 17.4% 0.3% 26.5x 25.2x 10.4x 3.3x Natural / Organic Foods / BFY 1.5% 8.5% 6.4% (0.6%) 19.1x 30.0x 16.0x 3.5x Baked Goods 5.9% (7.2%) (17.3%) (23.6%) 20.3x 30.0x 9.3x 2.1x Dairy (4.2%) 7.7% 8.8% 11.4% 19.7x 23.8x 12.9x 1.7x Non-Alcoholic Beverages (3.1%) 0.5% (8.3%) 4.4% 20.8x 23.2x 12.7x 1.8x Alcoholic Beverages (4.5%) (3.7%) (11.5%) (0.3%) 20.6x 24.9x 13.4x 2.6x Food and BeverageFood and Snacks 7.1% 11.0% (2.8%) 8.8% 23.1x 24.7x 15.3x 1.7x Grocery Distribution 7.6% 10.2% (0.4%) (2.2%) 17.6x 21.0x 8.9x 2.0x Food Retail 9.6% (6.4%) 0.4% (5.9%) 18.4x 20.1x 7.6x 2.0x Foodservice 27.6% 35.7% 10.3% 19.2% 21.7x 30.6x 11.9x 4.7x Quick Service Restaurant 11.2% 15.4% (1.0%) (5.0%) 23.0x 22.2x 11.8x 2.8x Fast Casual 6.5% (11.3%) 15.3% (2.6%) 43.3x 34.6x 14.0x 1.4x Differentiated Casual 12.3% 8.9% 3.3% (7.5%) 24.3x 28.1x 10.6x 0.9x Casual Dining Restaurant 12.6% 12.4% 6.2% (8.5%) 15.6x 23.4x 8.4x 2.3x Fine Dining 27.1% 16.9% 21.2% 12.7% 18.3x 20.6x 10.2x 2.6x Consumer and Retail and Consumer Pizza 8.9% 48.2% 12.9% 5.2% 31.7x 35.2x 18.3x 4.0x Beverage / Snack Retail 4.8% (11.0%) 0.8% (8.1%) 24.5x 31.2x 16.7x 2.7x Family Restaurant 18.4% 31.5% 7.8% 12.7% 21.8x 47.3x 11.6x 2.2x Overall Median 3.9% 6.5% (0.1%) 0.5% 21.0x 24.1x 11.3x 2.1x PAGE | 3 FOOD AND BEVERAGE INDUSTRY UPDATE │ DECEMBER 2016 PUBLIC EQUITY MARKET OVERVIEW PUBLIC COMPANY SECTOR PERFORMANCE (ONE YEAR CHANGE IN STOCK PRICE)5 Pizza Fruit and Vegetable Foodserv ice Family Restaurant Fine Dining Protein Processing Quick Serv ice Restaurant Agribusiness Casual Dining Restaurant S&P Snacks Grocery Distribution Differentiated Casual Natural / Organic / BFY Dairy Branded Processed Foods Priv ate Label Non-Alcoholic Bev erages Ingredients / Flav ors Alcoholic Bev erages Food Retail Baked Goods Bev erage / Snack Retail Fast Casual (30.0%) (15.0%) 0.0% 15.0% 30.0% 45.0% Inputs Food and Beverage Consumer and Retail RECENT EQUITY OFFERINGS6 Gross Proceeds Close Date Filing Date Issuer Ticker Transaction Type ($mm) Use of Funds 12/02/16 12/02/16 Diamond Estates Wines DWS Follow-On $6.0 Capital Expenditure 11/30/16 10/17/16 Bojangles' Inc BOJA Follow-On $119.0 Liquidity for Private Owners 11/24/16 11/21/16 Spot Coffee(Canada)Ltd SPP Follow-On $0.4 Capital Expenditure Working Capital 11/21/16 11/16/16 Hip Cuisine Inc N/A - $0.5 Working Capital 11/16/16 11/11/16 Performance Food Group Co PFGC Follow-On $228.5 Liquidity for Private Owners 11/15/16 10/10/16 Premium Brands Holdings Corp PBH Convertible $74.3 Debt Repayment Future Acquisitions 11/09/16 10/10/16 Saputo Inc SAP Follow-On $224.3 Liquidity for Private Owners 11/08/16 07/19/16 Naturally Splendid Entrp Ltd RCE.P Follow-On $3.0 Debt Repayment Working Capital 11/01/16 10/31/16 Wingstop Inc WING Follow-On $179.3 Liquidity for Private Owners 10/26/16 10/27/16 Chanticleer Holdings Inc HOTR Follow-On $13.5 Debt Repayment Working Capital 10/27/16 10/17/16 Kokos Group Inc - IPO $0.2 Pay Fees & Expenses 10/17/16 06/07/16 Spot Coffee(Canada)Ltd SPP Follow-On $0.4 Capital Expenditure Working Capital 10/14/16 10/03/16 Naturally Splendid Entrp Ltd RCE.P Follow-On $3.0 Debt Repayment Working Capital PAGE | 4 FOOD AND BEVERAGE INDUSTRY UPDATE │ DECEMBER 2016 PUBLIC COMPARABLES5 Price at As a % of Market Enterprise LTM Revenue Growth LTM Margins P/E EV / LTM EV / 2016E ($ in millions, except per share data) Ticker 12/14/16 52-wk High Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA Food and Beverage Branded Processed Foods Associated British Foods plc ABF-GB $34.44 66.2% $27,243 $27,623 $19,015 $2,171 (3.8%) (2.9%) 8.0% 11.4% 26.2x 1.45x 12.7x 1.58x 13.5x B&G Foods, Inc.