Buyers rediscover appetite for food and drink manufacturing - BDO
The Food & Drink Manufacturing sector has bounced back after a 'tumultuous ' year, as consumer demand continues to drive growth in alternative markets.
That 's according to accountancy and business advisory firm, BDO LLP.
The UK market saw a 'prosperous ' return to form with M&A activity up by 20 pre cent in 2021 - only 10 per cent lower than pre-pandemic levels.
The BDO Food & Drink Manufacturing Review 2022 has revealed that deals increased in plant-based, free-from, low sugar and alcohol alternative subsectors during the last 12 months.
This included the cross-border acquisition of vegan and free-from brand Gosh! by Portugal-based Sonae for £64 million.
Roger Buckley (pictured), M&A partner at BDO, said: “The rise in M&A activity in 2021 can be attributed to a number of factors, including improving market sentiment, strategic positioning, pent-up demand following an uncertain year, and also rumoured changes to capital gains tax, driving deal completions.
“Whilst plant-based, free-from and sustainable food and drink have been upward trending for the past few years, it 's clear that this subsector is now entering a new stage of growth with volumes of M&A transactions rocketing in 2021.
“The issue of sustainability remains a priority for businesses, consumers and governments. Demand for British produce and environmentally friendly goods is on the rise and the emerging agritech subsector is at the forefront of delivering new technologies. ”
The M&A report reveals that agritech is 'booming ', with new investment into the global market soaring in 2021, with a record $10.5 billion injected into the subsector, representing a 42 per cent CAGR since 2010.
The UK continues to lead the European region, with the 2021 AgriFoodTech Investment Report reporting $1.1bn of investment and 164 deals recorded in 2020.
The Food & Drink Manufacturing Review 2022 also shows a dramatic increase in private equity investment in the market, representing 31 per cent of the deal volume last year - up from 19 per cent in 2018.
Private equity outfought international acquirers with cross border deals declining from a high of 52 per cent of transactions in 2020 to 45 per cent last year.