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. Certication and conrmation 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 beer and cider producer - Carlton Asahi and CUB mega deal is in F&B industry and during last & United Breweries 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 Eastern Europe 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-prole 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.