consumer products and retail quarterly update - deloitte · pdf fileconsumer products and...

Consumer Products and RetailQuarterly Update
Deloitte Corporate Finance LLC | www.investmentbanking.deloitte.com
Q1 2017

Quarterly Update | Q1 2017 | Consumer Products and Retail
Snacking has become more purpose-driven with consumers looking to fulfill nutrition, convenience, and/or indulgence needs, even replacing entire meals on occasion. 91% of consumers report snacking multiple times a day and 8% replace meals altogether with all-day snacking. Food producers should consider developing premium snacks to address the increasing need for nutritious, convenient, and tasty products on-the-go.
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Consumer Products and Retail Trends
Who We Are
Deloitte Corporate Finance LLC is a leading global middle market M&A advisor. The firms professionals have extensive knowledge of, and transaction experience in, the Consumer Products and Retail space.
Contacts
Lorin DeMordauntManaging [email protected]+1 (704) 333-0591
Matt PreeceManaging [email protected]+1 (704) 731-7186
In the News
February 21, 20175 Restaurant Brands International Inc. (NYSE:QSR) (RBI), global owner and franchisor of over 20,000 quick service restaurants (QSR), announced its acquisition of Popeyes Louisiana Kitchen, Inc. (Popeyes) for $1.8 billion in cash. Popeyes operates and franchises over 2,500 QSRs in the U.S. and 25 other countries, offering spicy chicken, chicken tenders, seafood, and other regional items. With the acquisition of Popeyes, RBI will expand its portfolio of QSRs with a successful, highly-regarded brand with strong customer loyalty.
February 10, 20176 Reckitt Benckiser Group plc (LSE:RB) (Reckitt Benckiser), a UK-based manufacturer and seller of health, hygiene, and home products, announced its acquisition of Mead Johnson Nutrition Company (NYSE:MJN) (MJN) for $17.9 billion in cash, representing a multiple of 17.4x 2016 non-GAAP EBITDA. U.S.-based MJN manufactures and distributes infant formula, childrens nutrition, and other nutritional products in over 50 markets. Rakesh Kapoor, Reckitt Benckisers Chief Executive Officer, noted that MJNs geographic footprint will significantly strengthen their position in developing markets.
In This Update
Consumer Trends Economic Outlook Industry Analysis Select M&A Transactions Appendix
This update will focus on news and trends in the following areas:
Beauty & Cosmetics Food & Beverages Products & Durables Restaurant & Food Services Specialty Retail
Snacking Becomes the Norm1 CPG Venture Funds2
Multicultural Millennials4Online Groceries3
As consumers shift toward online options and household shopping trips decline, many brick-and-mortar food retailers are expanding their digital presence and capabilities to remain competitive. Nielsen research forecasts e-commerce food sales to grow at a 12.2% compound annual growth rate (CAGR) from 2015 to 2020 compared to 1.9% for traditional supermarkets.
Consumer packaged goods (CPG) companies are creating venture funds to invest in experimental, innovative startups while reducing risks associated with developing technologies internally and full strategic acquisitions. For example, Tyson Foods recently announced the creation of a $150 million venture capital fund called Tyson New Ventures, which has already
invested in alternative meat start-up Beyond Meat.
Approximately 42% of the 75 million Millennials living in the U.S. are multicultural. Spending more than $65 million each year and influencing over $1 trillion in total consumer spending, multicultural Millennials represent significant opportunity for consumer products companies that are willing to connect to the cultural trends interwoven into all facets of their lives.

Macroeconomic and Consumer Products and Retail Sector Outlook

Consumer Products and Retail Sector Breakdown & Trading Statistics1
Public Comparables Three-Year Stock Market Performance2
Note: Data as of March 30th, 2017.
Footnote:(3) Consumer Index companies listed on pages 6 and 7 in the Appendix.
S&P 500 Index 25.31%NASDAQ Composite Index 38.51%Consumer Index3 14.72%
Last Twelve Months NTM
Sector (Number of Companies
Included)
Number of Companies
Median % of
52 Week High
Median Revenue CAGR
(3 Yr)
Median LTM EBITDA
($M)
Median EBITDA Margin
Median Enterprise Value ($M)
EV/Revenue
EV/EBITDA
EV/EBITDA
Beauty & Cosmetics (12) 12 89.9 % 2.8 % $715.8 16.1 % $10,859.5 2.3 x 14.3 x 12.3 x
Food & Beverages (10) 10 85.5 (1.4) 2,633.6 18.1 31,535.8 2.7 12.7 12.9
Products & Durables (10) 10 96.0 4.6 677.2 16.4 8,623.3 2.2 13.2 12.1
Restaurant & Food Services (19) 19 88.5 6.6 347.3 13.2 3,466.2 1.4 11.2 10.0
Specialty Retail (11) 11 70.4 1.7 320.8 13.5 3,569.3 1.3 9.8 9.1
Consumer Products Index 62 88.5 % 2.8 % $677.2 16.1 % $8,623.3 2.2 x 12.7 x 12.1 x
Note: Data as of March 30th, 2017.

Select Recent Consumer Products and Retail M&A Transactions1
Annual Consumer Products and Retail M&A Transaction Volume2
Announce Date Target/Acquiror Target Business Description EnterpriseValue ("EV")
Mar-17 Kar Nut Products Company New York Private Equity Group
Produces and distributes trail mix and snack nut products throughout the United States.
NA NA x
Mar-17 Sealed Air Corporation, Two Divisions Bain Capital Private Equity
Offers cleaning products, tools, machines, services, and consulting for facilities, and food care and hygiene services.
3,200.0 10.5
Mar-17 Cheddar's Casual Caf Darden Restaurants
Operates a chain of restaurants under the brand name Cheddar's Scratch Kitchen.
780.0 NA
Mar-17 Checkers Drive-In Restaurants Oak Hill Capital Partners
Owns and operates a drive thru restaurant chain in the United States.
525.0 NA
Mar-17 Lifetime Brands, Inc. Mill Road Capital
Designs, sources, and sells branded kitchenware, tableware, and other products for use in the home in the United States and internationally.
399.0 8.9
Mar-17 Plumrose USA, Inc. JBS USA Food Company
Manufactures and supplies meat products to retail and food service trades in the United States.
230.0 NA
Feb-17 Ready Pac Produce, Inc. Bonduelle SA
Produces and distributes convenient fresh food and fresh-cut produce throughout the United States.
409.0 NA
Feb-17 Skip Hop, Inc. Carter's, Inc.
Manufactures and markets child care products for parents, babies, and toddlers.
150.0 NA
Feb-17 Lightlife Foods, Inc. Maple Leaf Foods Inc.
Produces vegetarian food. 140.0 NA
Feb-17 Popeyes Louisiana Kitchen, Inc. Restaurant Brands International Inc.
Develops, operates, and franchises quick-service restaurants under the Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits trade names.
1,815.5 20.5
Feb-17 Mead Johnson Nutrition Company Reckitt Benckiser Group plc
Manufactures, distributes, and sells infant formula, childrens nutrition, and other nutritional products.
17,872.2 17.7
Jan-17 Arctic Cat Inc. Textron Specialized Vehicles Inc.
Designs, engineers, manufactures, and markets snowmobiles and all-terrain vehicles (ATVs), and recreational off-highway vehicles under the Arctic Cat and MotorFist brand names.
313.4 NM
Jan-17 Bob Evans Restaurants Golden Gate Capital
Operates a chain of restaurants under the Bob Evan's brand name. 565.0 NA
EV/EBITDA

Appendix
Public Comparables Analysis1
Historical Last Twelve Months
Company (Ticker) % of 52
Week HighLTM
RevenueRevenue
CAGR (3 Yr)LTM
EBITDAEBITDA Margin
Enterprise Value ("EV")
($ in Millions)
Beauty & Cosmetics (12)Avon Products Inc. (NYSE:AVP) 64.1 % $5,578.8 (12.4) % $453.6 8.1 % $3,655.3 0.7 x 8.1 x 6.8 xCoty Inc. (NYSE:COTY) 57.4 5,403.2 5.8 843.3 15.6 19,204.1 3.6 22.8 12.3 L'Occitane International S.A. (SEHK:973) 92.2 1,372.5 7.4 227.5 16.6 2,634.8 1.9 11.6 10.4 L'Oreal SA (ENXTPA:OR) 99.4 27,539.0 5.3 5,806.4 21.1 106,776.6 3.9 18.4 16.5 Nu Skin Enterprises Inc. (NYSE:NUS) 83.4 2,207.8 (11.4) 334.9 15.2 2,958.7 1.3 8.8 8.4 Oriflame Holding AG (OM:ORI) 93.0 1,331.7 (3.9) 147.2 11.1 2,165.6 1.6 14.7 11.7 The Procter & Gamble Company (NYSE:PG) 98.3 65,231.0 (6.9) 17,770.0 27.2 248,801.0 3.8 14.0 14.1 Revlon, Inc. (NYSE:REV) 68.5 2,334.0 16.0 355.0 15.2 3,871.7 1.7 10.9 N/ASally Beauty Holdings Inc. (NYSE:SBH) 61.7 3,954.2 2.6 588.3 14.9 4,540.0 1.1 7.7 7.2 The Este Lauder Companies Inc. (NYSE:EL) 87.6 11,376.3 3.1 2,203.5 19.4 33,637.1 3.0 15.3 14.1 ULTA Salon, Cosmetics & Fragrance, Inc. (NasdaqGS:ULTA) 97.9 4,854.7 22.0 868.2 17.9 17,179.0 3.5 19.8 16.2 Unilever PLC (LSE:ULVR) 98.7 56,185.2 1.9 9,464.9 16.8 157,846.6 2.8 16.7 14.5
Median 89.9 % $5,129.0 2.8 % $715.8 16.1 % $10,859.5 2.4 x 14.4 x 12.3 x
Mean 83.5 % $15,614.0 2.5 % $3,255.2 16.6 % $50,272.5 2.4 x 14.1 x 12.0 x
Food & Beverages (11)The Coca-Cola Company (NYSE:KO) 92.4 % $41,863.0 (3.7) % $1

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