Consumer products and retail quarterly update Q1 2021 Deloitte Corporate Finance LLC | www.investmentbanking.deloitte.com Quarterly update | Q1 2021 | Consumer Products and Retail Consumer products and retail trends In this update 1 Supply chain resilience Go-to-market recalibration2 • Consumer trends Supply chain resilience has become The pandemic fundamentally shifted a key strategic focus as consumer consumer purchasing preferences • Economic outlook brands continue to strengthen their and behaviors, prompting • Industry analysis direct-to-consumer (“DTC”) businesses to reevaluate their go- • Select M&A transactions channels that support streamlined, to-market strategy for continued transparent supply chains. COVID- growth. Accelerating DTC and e- • Appendix related supply chain disruptions commerce sales are pressuring also demonstrated the importance companies to recalibrate their of maintaining flexible operations service models and adopt an This update will focus on capable of withstanding shocks and omnichannel approach for continued news and trends in the demand fluctuations. As a result, growth. For example, Unilever following areas: M&A targets with robust, resilient recently launched its “Ice Cream supply chains are expected to Now” campaign through Uber Eats unlock value for investors seeking to adapt to the post-pandemic shift • Food and beverages a platform that is scalable with towards e-commerce in the Food • Products and durables minimal risk. and Beverage subsector. • Restaurant and food Demand impacts supply chain3 CPG portfolio reshaping4 services Q1 2021 saw a spike in demand as Pandemic-related supply constraints • Specialty retail consumer products realized year- and consumer stockpiling has over-year growth of 8% with total prompted many consumer Who we are sales reaching $1.62 trillion packaged goods (“CPG”) companies annualized. The increase in demand to reevaluate their product mix and has contributed to a supply chain at overall portfolios long-term. Among Deloitte Corporate Finance its breaking point. For example, as companies looking to divest brands LLC is a leading global people were forced to work from are JM Smucker, Kraft Heinz, home, sales of computers and Mondelez, General Mills, and middle market M&A advisor. technology spiked which caused a Unilever. Furthermore, both Kraft The firm’s professionals shortage of semiconductors impacting Heinz and Mondelez are planning have extensive knowledge industries from toymakers to auto divestments of 20 – 25% of their of and transaction parts manufacturers. Meanwhile, the lowest performing SKUS in order to housing industry has been dealing simplify their supply chain and experience in the consumer with skyrocketing costs of lumber, improve collaboration with retail products and retail space. adding an average $24,000 to the and production partners. cost of building a home. Contacts In the news Lorin DeMordaunt January 5, 20215 – Mondelēz International (NASDAQ: MDLZ) announced Managing Director it has acquired Hu (as in “Human”) Master Holdings, the parent company [email protected] of Hu Products, a fast-growing US-based snacking company offering +1 (704) 333-0591 high-quality snacks made from simple ingredients. Mondelēz International made an initial minority investment in Hu in April 2019 through Matt Preece SnackFutures, its innovation and venture hub dedicated to unlocking emerging snacking opportunities. “This well-being brand platform provides Managing Director further growth opportunities in chocolate, cross-category potential in [email protected] crackers, as well as meaningful opportunities to expand distribution +1 (704) 731-7186 including in e-commerce and premium conventional retail,” said Glen Walter, EVP & President of Mondelēz International North America. Garett Poston February 11, 20216 – Hormel Foods Corporation (NYSE: HRL), a global branded food company, announced that it entered into a definitive Managing Director agreement to acquire the Planters snack nut portfolio from the Kraft Heinz [email protected] Company (Nasdaq: KHC) for $3.35 billion in cash. Jim Snee, Chairman of +1 (213) 593-4544 the Board, President and Chief Executive Officer of Hormel Foods said “the acquisition of the Planters business adds another $1 billion brand to our Rory Dineen portfolio and significantly expands our presence in the growing snacking space… and meaningfully broadens our scope for future acquisitions in the Managing Director snacking space." [email protected] +1 (704) 333-0495 www.investmentbanking.deloitte.com | Page 2 Quarterly update | Q1 2021 | Consumer Products and Retail MacroeconomicMacroeconomic and and Consumer consumer Productsproducts andand Retailretail sectorSector outlookOutlook US gross domestic product1 US treasury yield curve2 (nominal vs. real) $25.0 15.0% 3.0% 2.5% $20.0 10.0% PercentYoY Change 2.0% 1.5% $15.0 5.0% 1.0% 0.5% $10.0 0.0% 0.0% $ in $ Trillions -0.5% Interest Interest Rate $5.0 (5.0%) -1.0% -1.5% $0.0 (10.0%) -2.0% Nominal Yield (%) Real Yield (%) US unemployment rate3 ISM non-manufacturing index and consumer confidence index4 10.0% 2,200 145.00 65.00 2,000 Claims Jobless (Thousands) 9.0% 135.00 ISM Non 1,800 60.00 8.0% 1,600 125.00 1,400 55.00 - 7.0% 115.00 Manufacturing 1,200 6.0% 105.00 1,000 50.00 5.0% 800 95.00 % Unemployed 600 Consumer Confidence 45.00 4.0% 85.00 400 3.0% 200 75.00 40.00 Consumer Confidence ISM Non - Manufacturing US per capita disposable income5 Monthly total US retail sales6 $58.0 $650.0 $56.0 $600.0 $54.0 $52.0 $550.0 $50.0 $48.0 $500.0 $46.0 $450.0 $44.0 $42.0 $400.0 $40.0 in $ Billions $ in $ Thousands $38.0 $350.0 $36.0 $300.0 www.investmentbanking.deloitte.com | Page 3 Quarterly update | Q1 2021 | Consumer Products and Retail Consumer products and retail sector breakdown and trading statistics1 Last twelve months NTM % of 52 Median Median LTM Median Median Number of EV/ EV/ EV/ Sector Week revenue CAGR EBITDA EBITDA enterprise companies Revenue EBITDA EBITDA high (3 Yr) ($M) margin value ($M) Beauty & cosmetics 10 92.0 % 3.0 % $395.7 14.5 % $9,010.7 3.0 x 26.1 x 15.6 x Food & beverage 10 94.9 1.4 3,349.0 20.9 38,148.2 2.6 17.5 16.5 Home & garden 10 95.0 5.6 813.3 15.9 12,299.2 2.1 12.9 12.5 Restaurant & food services 17 93.4 (2.0) 217.8 8.0 5,342.5 2.3 23.1 16.3 Apparel & specialty retail 10 90.7 (7.4) 300.3 9.3 5,545.5 1.9 24.0 11.4 Consumer products index 57 93.1 % 0.4 % $434.2 13.8 % $9,925.5 2.4 x 18.5 x 14.8 x Public comparable three-year stock market performance2 S&P 500 Index 47.37% NASDAQ Composite Index 89.05% 110.0% Consumer Index* 43.79% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% (10.0%) (20.0%) S&P 500 NASDAQ Composite Index Consumer Index *Consumer Index companies listed on pages 6 and 7 in the Appendix. www.investmentbanking.deloitte.com | Page 4 Quarterly update | Q1 2021 | Consumer Products and Retail Select recent consumer products and retail M&A transactions1 Last Twelve Months Announce/ Close Enterprise EV/ Date Target/Acquiror Target Business Desciption Value ("EV") EBITDA March-21 Assets of NPC International, Inc. Operates a franchise of pizza restaurants. $816.0 N/A Wend American Group LLC March-21 Grenade UK Limited Produces and sells weight loss and sports nutrition products. N/A N/A Mondelez International, Inc. March-21 Pet Supplies Plus, LLC Retailer of pet food, toys, and other pet supplies. 700.0 N/A Franchise Group, LLC March-21 Essentia Water, LLC Manufactures, packages, and markets bottles alkaline and N/A N/A Nestle USA, Inc. electrolyzed water. February-21 Assets of Imerys Talc Am., Inc. Produces and processes industrial minerals. 223.0 N/A Magris Resource Canada Inc. February-21 Green Garden Products LLC Manufactures and sells non-GMO seeds and organic plant food. 571.0 N/A Central Garden & Pet Company February-21 KingsIsle Entertainment, Inc. Provides online entertainment offerings. 210.0 N/A Media and Games Invest plc February-21 Wholesome Sweeteners, Inc. Produces, packages, and supplies sweeteners and honey. 240.0 N/A Whole Earth Brands, Inc. February-21 DermStore, LLC Onlnie retailer of skincare and beauty cosmetics. 350.0 N/A THG Holdings plc January-21 QuickCheck Corporation Owns and operates chain of convienence stores. 645.0 N/A MMurphy USA Inc. January-21 Paul Masson Brandy (Constellation Br.) Producer and seller of Paul Masson Brandy. 265.0 N/A Sazerac Company, Inc. January-21 Fresh Direct, LLC Operates as an online fresh food grocer. 550.0 N/A Centerbridge Partners LP Annual consumer products and retail M&A transaction volume2 3,500 3,213 3,199 3,041 3,000 2,874 2,772 2,603 2,607 2,479 2,500 2,369 2,212 2,160 2,000 1,500 Number of Dealsof Number 1,000 632 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 2021 Undisclosed <$100M $100-$250M $250M-$500M $500M-$1,000M >$1,000M Deal Value www.investmentbanking.deloitte.com | Page 5 Quarterly update | Q1 2021 | Consumer Products and Retail Appendix Consumer products and retail trading multiples1 Last twelve months NTM % of 52 Week Enterprise EV/ EV/ EV/ Company (ticker) high LTM revenue LTM EBITDA EBITDA margin value ("EV") Revenue EBITDA EBITDA ($ in millions) Beauty & cosmetics (10) Colgate-Palmolive (India) Limited (BSE:500830) 93.1 % $661.7 $206.3 31.2 % $5,691.3 8.6 x 27.6 x 27.4 x Coty Inc.