Food & Drink

The sector saw 25 deals in Q1 2023 which compares favourably with the same period last year (17), although we are still below Q1 2021 (35). Overall deals booked in 2022 totalled 66 which represented a decline of 21% versus 2021.

There were no large-scale deals booked in Q1 2023. Areas of recent M&A focus has centred on plant and free-from, meat and fish as well as beverages. Activity has typically been limited to complementary bolt-on acquisitions such as:

• Yorkshire Premier Meat (an Endless asset) acquiring poultry processor Smithfield Murray to create a broad-based pre-prepared meats group.
• Sykes Seafood acquiring The Big Prawn Co. to create a high volume European scaled shrimp business.

Deals activity in this low-margin sector have been influenced by:

• Significant cost inflation – especially with respect to ingredients, wages, distribution and packaging.
• A difficult environment for smaller producers to recover cost increases in grocer price negotiations - especially when discounters such as Aldi are dominant and buyers may be looking at range rationalisation. Larger International branded operators such as Nestle and Mondelez have fared much better.

Restructuring activity in the sector increased last year and we expect it to remain at an elevated level in 2023 as a result of these factors highlighted.