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1 NEWSLETTER FOOD & BEVERAGE www.globalma.com

N E W S L E T T E R

January 2020 www.globalma.com

Food & Beverage

He a lt h a n d W e lln e s s

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C O N T E N T S

The Health and Wellness (H&W) market is both dynamic and flourishing with an importance placed on healthy living through nutrition. Growing consumer awareness and empowerment to purchase healthy, premium products, coupled with increased manufacturing investment in technology to deliver higher-quality offerings, has fueled an accelerating level of M&A activity in the industry.

Our Global Food and Beverage Team provides extensive sector-specific expertise and close relationships with global buyers and sellers, both within your local market and throughout the world. Many of our advisory transactions are cross-border.

M&A Activity8 22

Health and Wellness Sector1 04

Growth Drivers2 07

On-Trends3 09

Off-Trends4 12

Challenges5 14

Regulations6 15

Segment Review7 17

Fortified/Functional

Naturally Healthy

Better-for-You

Food Intolerance/Free-From

Organic

17

18

19

20

21

Peer Trading Analysis9 30

Global M&A Partners –Food and Beverage Team

10 37



Key Insights

The Health and Wellness (H&W) sector within the Food & Beverage industry is seeing rapid growth, driven by a global wave of health-conscious consumers that are influencing food preferences and purchasing decisions.

• Clean and natural foods are trending as consumers seek a more holistic approach to diet and nutrition. Demand for processed products has rapidly declined while there is a burgeoning market for free-from foods.

• The millennial generation is commanding attention as an influential demographic that expects transparency and seeks naturally healthy, organic, locally sourced, and sustainable foods.

• The regulatory environment is stimulating demand for wholesome products. Governments are establishing dietary guidelines and enacting new laws governing nutritional requirements to help consumers make more informed food choices and combat obesity and the rising incidence of lifestyle diseases.

• Amid rising concerns over food safety, the need to innovate and ensure a safe and traceable supply chain will be critical for manufacturers to remain competitive in a dynamic and rapidly changing marketplace.

These market drivers are expected to support high single-digit to double-digit growth. The H&W industry was estimated at $755.5 billion in 2018 and projected to reach $942.4 billion by 2022, representing a CAGR of 5.7%. Naturally Healthy is the largest H&W market with roughly a 35% share, followed by the Fortified/Functional and Better-for-You categories with 34% and 19%, respectively, where growth is being driven by increased consumption of natural, sustainable, and plant-based food and beverages.

We expect investment activity in the sector to remain robust with healthful brands becoming sought-after targets as companies look to accelerate market penetration in trending categories. Large food and beverage companies are pursuing strategic partnerships, acquisitions, and repositioning brands to maintain leadership. Hershey, Campbell Soup Company, Conagra Brands, Danone, and Keurig Dr Pepper have each completed acquisitions in the H&W space. Financial sponsors are equally active as they continue to deploy capital into better-for-you brands and are building growth platforms to capitalize on these consumer trends. PAI Partners, Butterfly Equity, Hong Leong Financial Group, Anchor Equity Partners, The Riverside Company, Stripes Group, Sun Pacific, and Ambrosia Investments Limited are among the investors to make recent investments in the market.



Health And Wellness Sector

1

The global Health and Wellness sector within the Food & Beverage industry is experiencing a ‘healthy’ boom that is shaping the market like never before. Consumers are increasingly developing food sensitivities and adopting healthier and more active lifestyles, leading them to pursue more wholesome nutrition options and eat fresh and organic food.

The Health and Wellness sector has grown substantially in developing regions and emerging markets. With today’s emphasis on living a better life through healthier eating and exercise, H&W is expected to be the next rising sector over the next few decades. In addition to promoting health and wellness, products are aimed at preventing diseases, aiding weight loss, and improving health management.

The sector can be classified into the following segments: Fortified/Functional, Naturally Healthy, Better-for-You, Food Intolerance/Free-From, and Organic. The industry is served by large global food manufacturers as well as small- to-mid-sized companies and startups.

Danone, Hershey, Conagra, and PepsiCo are among the large players in the Health and Wellness market. Other key participants include Amy’s Kitchen, NBTY (backed by KKR), Compagnie Biodiversité, Triballat Noyal, HiPP, and Alnatura.

Health and Wellness Sector Segments

$942.4 billion

Projected size of global Health and Wellness sector in 2022, representing a 4-year CAGR of 5.7%

Source: Euromonitor

Health and Wellness IndustryFortified/Functional

Functional foods are medicinal foods that contain biologically-active ingredients such as antioxidants, phytonutrients, enzymes, or live cultures. Food enrichment or fortification is the process of making food more nutritious by adding vitamins and minerals.

Naturally Healthy

Natural food and drinks are minimally processed and free from artificial sweeteners, colors, and flavors. These are classified into fruits, vegetables, meat, fish, poultry, dairy products, non-dairy beverages, coffee, tea, beer, wine, and others.

Better-for-You

Better-for-you (BFY) foods are low in salt and sugar, high in fiber, or have added vitamins. Driven by younger, health-consciousconsumers, the better-for-you trend is focused on packaged food that can be a combination snack or meal replacement option such as nutrition bars, fruit snacks, and healthy chips with simple and clear labeling of ingredients.

Food Intolerance

Food intolerance, also referred to as ‘free from foods’, are products in which the term ‘free’ suggests that the food should contain no detectable residues. Gluten-free, lactose-free, and diabetic foods are recommended for overcoming food intolerances from food ingredients such as gluten, lactose, and sugar, respectively.Organic

Organically grown fruits and vegetables have a high nutritional value and are free from man-made fertilizers, pesticides, growth regulators, and livestock feed additives. Organic fruits, organic vegetables, and natural dairy products are some of examples.

For a more detailed overview of each segment within the Health and Wellness sector, see the “Segment Review” section on pages 17-21.



Health and Wellness Sector

Health and Wellness Market Size by Segment, 2018

The Naturally Healthy segment held the largest sector share (based on retail sales) at 35.6% driven by growing consumption of natural foods over processed foods, followed by the Fortified/Functional and Better-for-You segments with 34.4% and 19.2%, respectively. Organic and Food Intolerance/Free-From are expected to be the fastest-growing categories with CAGRs of 7.4% and 7.1%, respectively, between 2018-2022.

Consumers are more aware of what is included in their food and beverage products than ever before. This awareness is influencing purchasing decisions as they seek minimally processed and more natural foods and beverages, in line with the clean label trend that is boosting sales.


$259.8 billion

Organic

$43.8 billion

Naturally Healthy

$268.5 billion


$38.6 billion

Better-for-You

$144.8 billion

Health and Wellness Sector, 2018

$755.5 billion

Source: Euromonitor



Health and Wellness Sector

Health and Wellness Product Market Positioning

Energy is emerging as a key element of current health and wellness lifestyles. Consumers are adopting a more holistic approach to a healthy diet, moving away from the isolated weight management concept.

Consumers increasingly acknowledge an implicit connection between the energy they have and the foods consumed, which is driving growth of foods with an energy-boosting positioning.

Energy/nutrition bars are a key winner within this trend with players such as PepsiCo, Hershey, Mars, and Mondelēz acquiring brands in this category.

Natural energy from plant-based protein, derived from clean label ingredients such as nuts or peas, is another trend that is likely to continue to thrive as consumers seek natural snacks.

H&W Packaged Food by Prime Positioning: Market Size (2017) vs. CAGR (2017-2022)

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Market Size CAGR 2017-2022



2

Growth Drivers

An exclusive club of about two billion people, millennials now account for 27% of theglobal population and are the major driver behind the growth of the health and wellnesssector. Millennials demonstrate striking differences from previous generations in howthey view healthy eating, and in particular, healthy snacking. Millennials desiretransparency and look for naturally healthy, organic, locally sourced, and sustainablefoods, shying away from low-fat, low-calorie, and low-sugar foods and beverages. Theyalso tend to eat smaller meals more often, driving an explosion in snack options andeating occasions. Additionally, millennials’ brand agnostic approach to purchasing createsopportunity for small- to mid-sized companies with better-for-you offerings to competeagainst large brands established within the retail channel.

Rising Demand from Millennials

Chronic diseases, including cardiovascular disease, Type 2 diabetes, respiratory disease,and cancer are the leading causes of death and disability worldwide, and are on the riseglobally. According to the World Health Organization, chronic diseases are expected toaccount for 73% of deaths globally by 2020, up from roughly 60% in 2001. As ratescontinue to climb, the need for behavior changes related to diet are widely recognized.

Rise in Chronic Diseases

Food allergy rates are rising in developed countries worldwide, with food sensitivityinfluencing consumer preferences. Examples of foods that tend to cause allergic reactionsin sensitive people include dairy, eggs, wheat, nuts, and soy. Retail sales data has shownstrong growth for products catering to food sensitivities in the UK, Germany, and theUnited States.

Increasing Food Sensitivity

Demand for healthy food will continue to grow to combat obesity and the increasingprevalence of lifestyle diseases. Growth in the health and wellness sector is also led byincreasing use of diet plans, fitness-tracking apps, and health and fitness clubs, as well asgrowing education and awareness concerning obesity.

Weight Management and Obesity Market



Growth Drivers

Internet retailing is booming and challenging the dominance of modern grocery retailers,primarily in developed markets and China. According to Euromonitor, 45% of the globalpopulation used the internet in 2017. This digital connectivity is continuing to altermethods of doing business, with digitally-inspired models emerging rapidly, serving tobroaden consumer reach and enabling smaller brands to gain a foothold in developingretail channels. In addition, subscription meal boxes aimed at consumers looking fororganic and dairy/gluten-free offerings are booming in the Western world.

Internet Retailing and Subscription



3

On-Trends

The global non-alcoholic beverage market is projected to grow 5.8% annually between 2017 and 2025, according to Grand View Research, as rising health concerns, urbanization, and hectic schedules drive increased consumption of beverage options perceived to be healthier. Sparkling water, coconut water, coffee, tea, and smoothies are the highest trending categories driving the growth of this market.

Shift towards Natural Ingredients

Drinkable breakfasts and beverages as snacks are fueled by consumer interest in nutrition, as well as performance drinks that act as meal replacements and guilt-free snacks.

Demand for products containing probiotics will propel the market as their perceived health benefits attract consumers. Probiotics are an essential ingredient in digestive health food products, which is a key segment of functional food. Probiotic-rich products offer significant sources of vitamins, amino acids, and minerals, and the bacteria present are beneficial to the digestive system. Probiotics are used as functional ingredients in food categories such as yogurt and fruit juices. Some of the leading probiotic brands include Yakult, Activia, and Chobani.

Healthful Non-Alcoholic Beverages

Probiotics within Functional Food

Buckwheat: Buckwheat, a nutritional staple crop, has been widely used as a medicinal herb in Asian countries. It is recognized as a valuable raw material for functional food production due to the presence of essential amino acids, fatty acids, and vitamins. Additionally, researchers in Spain proved that buckwheat could also behave as a prebiotic. Modern buckwheat food products include buckwheat-dried noodles or vermicelli, instant noodles, spaghetti or macaroni, biscuits, breads, cakes, pastries, breakfast cereals and snacks, vinegar, and beverages. According to Persistence Market Research, the global buckwheat market stood at $1.1 billion in 2017 and is forecasted to exceed $1.8 billion by 2027.



On-Trends

Shift towards Natural Ingredients

Curcuma: Curcuma is one of the essential components derived from turmeric, most commonly found in Southeast Asia, Asia Pacific, and Western Africa, and is a widely used ingredient in food and medical products due to its therapeutic qualities. The global curcuma market was estimated at $44.2 million in 2016 and is projected to grow at a CAGR of 13.3% between 2018 and 2025.

Moringa: Moringa is called the ‘world’s most useful tree’ by some scientists due to its healing history in India, Chile, and Africa. It contains twice the amount of protein found in spinach and three times the amount of iron. Many food companies are adding moringa to products including nutrition bars, protein powders (Kuli Kuli), and juices (Pressed Juicery).

Many brands are now providing the ingredients to make your own protein bars, most of which are no-bake and can be completed in just three minutes. Companies are also introducing protein bar baking kits. Foodstirs, an organic baking company, offers kits in flavors such as chocolate sea salt, blueberry bliss, and chocolate almond. This trend is an extension of the popularity enjoyed by protein/nutrition bars for being healthy and wholesome snacks.

Do-it-Yourself Protein Bars

Today’s consumers are environmentally conscious and demanding that products be delivered using eco-friendly and sustainable packaging. In response, companies are implementing more sustainable packaging practices and launching new products in more environmentally-friendly packaging. Examples include beverage company Brew Dr. Kombucha, which will be releasing canned kombucha to replace glass bottles, and alkaline water company Flow Alkaline Spring Water, which has already adopted paper packaging.

Sustainable Packaging

Foods derived from plant proteins and engineered to mimic the taste and texture of meat have soared into the mainstream in conjunction with the rise of health-conscious consumerism. Plant-based proteins are gaining popularity in the mass market as established food players and growing startups are introducing plant-based meat products. Beyond Meat, a manufacturer of plant-based meats, saw its share price soar in the company’s April 2019 initial public offering. KFC announced it is formulating a chicken alternative to launch a new vegetarian option in 2019. In 2018, plant-based sales accounted for 20% of food and beverage dollars spent by Americans, with beef alternatives making up 44%. A recent survey found that most Americans are even willing to try lab-grown meat. Jackfruit and coconut, two of the fruits proving to be the best meat substitutes, are gaining popularity in this space, and many companies are developing new products using these ingredients.

Plant-Based Meat

Derived from Ayurvedic and traditional Chinese medicine, adaptogens are a trendy class of natural health products believed to control stress through hormonal regulation. Sales of ashwagandha, one of the most common adaptogen herbs, increased 57% to $9.5 million in 2018, signaling the entry of these products into the mainstream health market.

Adaptogens



South American: Mexican, Peruvian, and Brazilian food, along with Japanese-Mexican fusion, are trending now. Arepas (corn pizzas-come-muffins); chicha; fermented maize drink; and chulpecorn (used to make snacks) will be prevalent. Purple potatoes, white and purple corn, black quinoa, and kiwicha seeds are trending up, while quinoa and chia seeds have peaked.

Korean: Interest in Korean food and its perceived health benefits has significantly increased. Korean researchers and professors in the food and nutritional sciences have established cohesive definitions and concepts for the Korean diet (K-diet), which includes a proportionally high consumption of vegetables, moderate to high consumption of legumes and fish, and low consumption of red meat with the fermented vegetable kimchi.

African: Kola nuts and Cola nitida, two of the most widely consumed beverages in the world today, are based wholly or in part on plants ancient Africans domesticated.

Demand is growing for meals in convenient, snackable formats to accommodate busy lifestyles. Snacks are becoming more wholesome, satisfying, and nutritious. Nutritional content of snack foods is changing with added protein, fiber, vitamins, and minerals. Bowls have emerged as smart carriers for mixing and matching flavors and textures.

Increase in Mini Meals/Snacks

After trending chia seeds, goji berries, and kombucha, there will be a rise in traditional superfoods including:

• Hemp: Hemp is a protein-rich seed containing essential amino acids and is also a rich source of essential fats. It is used as a nutrient-rich additive to a range of foods including muffins, smoothies, and yogurt.

• Specialty Mushrooms: Specialty mushrooms such as shiitake, reishi, and maitake are used to treat numerous ailments.

• Algae Supplements: Algae is a nutrient-rich organism containing chlorophyll, long-chain omega 3 fats, and iodine.

• Apple Cider Vinegar: Apple cider vinegar, a type of vinegar made from apples, has been used for hundreds of years as a remedy for a range of ailments and for weight loss.

• Baobab: Baobab is a tree that grows in Africa, Australia, and the Middle East. Baobab fruit and dried baobab seed powder are rich in nutrients including vitamin C, potassium, carbohydrates, and phosphorus.

Superfoods

On-Trends

Regional Food Influence

Fermentation is making a comeback in Western markets, with growing demand supported by consumer perception that it is a natural and healthy food preservation method. Additionally, because fermentation is a natural process, it delivers on consumer expectations around ‘clean labeling’ and the desire to avoid synthetic additives and preservatives. Kefir (bacteria-laden yogurt-based beverage), kimchi (pickled and fermented vegetables), kraut (fermented and pickled cabbage), and kombucha (fermented beverage made with tea, sugar, bacteria, and yeast) are fermented foods and beverages offering the greatest health benefits.

Fermented Foods



4

Off-Trends

Better-for-You (BFY) is underperforming in most developed countries as it is considered heavily processed by health-conscious consumers due to its long ingredients list. According to Euromonitor, sales of BFY products in North America have slowed in recent years, with categories such as reduced fat packaged food and reduced sugar soft drinks declining more than 5%. Globally, consumers are moving away from processed foods towards products perceived as healthy and natural which has resulted in growing demand for organic, free-from, and naturally healthy products.

Better-for-You Food

Dairy milk consumption has been declining in recent years driven by factors such as an aging population, the rise of veganism, concerns about animal welfare, and preferences for other sources of protein. This is impacting dairy farms, which are struggling to survive in the face of reduced demand. According to Mintel, U.S. dairy milk sales are projected to decrease to $15.9 billion, an 11% decline between 2015 and 2020. According to the NPD Group, milk consumption represented a 15% share of all eating occasions in 1984 but only a 9% share in 2019. Conversely, sales of nondairy milks have risen 23% during the last four years, according to Nielsen.

Dairy

• According to the United States Department of Agriculture (USDA), annual per capita red meat consumption in the United States has declined 15% to 101 pounds in the past 10 years.

• British sales of sausages have decreased by 26% (1250 million kg) since 2008.

• Meat consumption in Germany is on a steady decline. In 2017, the average German citizen ate only 59.6 kilos of meat, which is 1.4 kilos less than the year before

• China announced plans in 2016 to cut meat consumption by 50%, which was lauded by climate change advocates. China’s Health Ministry recommended that the nation’s 1.3 billion population should consume between 40g to 75g of meat per person each day.

Meat-Based Products



Off-Trends

Cereal sales have slumped due to changing diets and nutritional needs and from increased sales of competing healthier breakfast options. The North American breakfast cereal market, valued at $12 billion in 2018, has seen sluggish growth. Kellogg, a leading cereal manufacturer, reported a 36.5% decline in profits during the first quarter of 2019, with sales in North America declining 1.8%. Consumer preferences for breakfast foods have changed in recent years with traditional cereal sales declining and other adult-focused cereal brands gaining share due to their perceived health and wellness benefits.

Cereal Consumption

Proponents of coconut oil tout its health benefits claiming that it boosts immunity and aids in weight loss, which have been challenged by nutritionists, reducing its popularity. Additionally, new research showing its effect on blood cholesterol has softened demand. Coconut oil usage in the United States has declined from 562,000 metric tons between 2014-2015 to 437,000 metric tons between 2017-2018.

At the same time, demand for alternative oils has grown, resulting in increased production of avocado oil, algae oil, animal fats, and specialty butters.

Coconut Oil Consumption

Frozen foods such as frozen dinners/entrees, pizzas, and side dishes are losing consumer appeal. According to Packaged Facts, sales of total U.S. frozen food fell by 0.1% in 2016 and are projected to decline 1.2% annually between 2016 and 2021. Factors driving the decline include increased snacking and heightened competition from fresh prepared foods due to perceived nutritional benefits. In addition, the convenience of frozen food options is starting to play a less important role for U.S. consumers.

Frozen Food



Challenges5

Need for Innovation

Manufacturers must continue to innovate in a dynamic and competitive marketplace. The product life cycle has contracted, requiring companies to stay ahead of rapidly changing consumer preferences or risk losing competitiveness.

Food Safety and Regulation

The clean label trend is stimulating consumer demand for minimally processed products containing natural ingredients. Food and beverage companies must adapt to changing preferences, despite facing continued pressure to maintain shelf life and comply with food safety standards. Reducing sugar intake is one of the key regulations endorsed by the FDA, which is lessening demand for products that contain natural or processed sugars. In addition, there are also growing concerns about the traceability of ingredients and products.

Maintaining a Safe Supply Chain

Maintaining a safe supply chain network is a critical challenge for healthy food companies. Food and beverage recalls are expected to increase, as the FDA, USDA, and Centers for Disease Control and Prevention respond to pressures from consumers. This requires companies to invest in meticulous record-keeping of plant maintenance and safety measures, along with quality checks and full transparency with all suppliers, especially those overseas.



6

Regulations

Local and national governments are reacting to health concerns by adopting new health guidelines and passing regulations to encourage consumers into considering nutritious food and beverage alternatives.

Encouraging H&W

The Scottish Government and local authorities have jointly committed to providing the healthiest food to children and young adults, with the goals to improve diet, strengthen healthy eating habits, and halve childhood obesity by 2030. Amendments to be implemented as part of a new initiative to make school food healthier include: inclusion of minimum prescribed portions of fruits and vegetables in school lunches and their full-time availability for purchase; maximum limit on consumption of red and processed red meat to help reduce exposure to nitrites; and removal of fruit juice and smoothies from primary and secondary schools to help reduce sugar intake. The regulations will take effect in the Fall of 2020 to allow councils time to plan their menus and supply chains.

India’s food regulator, the Food Safety and Standards Authority of India (FSSAI), released draft regulations in November 2019 proposing a complete ban on the sale of soft drinks and junk foods within 50 meters of school campuses; a ban on the sale of ‘high in fat, salt and sugar’ foods in school canteens, mess premises, or hostel kitchens; and the adoption comprehensive programs to promote healthy diets and safe foods within school campuses.

The Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, reauthorizes programs administered by the Food and Nutrition Service (FNS) through 2023, including WIC, Supplemental Nutrition Assistance Program (SNAP), and school meals. Examples include the Food Insecurity and Nutrition Initiative program (FINI), which helps to incentivize the purchase of fresh, local produce, and the Healthy Food Financing Initiative (HFFI), that offers grants and loans to help establish locally-owned healthy food retail outlets to advance health and wellness in low access areas. These are in addition to the Dietary Guidelines published by the Department of Agriculture (USDA) and the Department of Health and Human Services (HHS) and substantial targeted investments made for their implementation.

Sugar Taxes

Malaysia’s Ministry of Health is taking a rigorous stance on reducing obesity, recently announcing that it was considering a sugar-sweetened beverage (SSB) tax,which will increase the price of unhealthy products in order to make them less accessible. Obesity is an increasing trend in the country as nearly half of its citizens are overweight or obese.

Mexico introduced a sugar tax in 2014,which appears to be producing results. Purchases of sugar-sweetened beverages dropped 5.5% in the first year after the tax was introduced, followed by a 9.7% decline in the second year.



Regulations

Other Regulatory Changes

Consumers are increasingly seeking greater transparency in labeling, leading to more stringent regulatory requirements to help them make informed food choices.

In May 2016, the U.S. Food and Drug Administration (FDA) issued updated requirements for the labeling of nutrition and supplement facts to reflect new scientific information, including the link between diet and chronic diseases such as obesity and heart disease. The new law requires “added sugars” to be included; serving sizes to reflect actual amounts of foods and beverages being eaten; and the inclusion of both per serving and per package labeling of whether an item could be eaten in a single or in multiple sittings, among other changes. Food manufacturers with minimum annual sales of $10 million must comply with the new requirements by January 2020 and smaller companies by January 2021.

In April 2018, a new EU regulation set lower ‘benchmark values’ on acrylamide in product categories that include breakfast cereals; fine bakery goods such as cookies, biscuits, and cereal bars; coffee and coffee substitutes; and baby food. Acrylamide is a suspected carcinogen that forms when starchy foods are treated at high heat. The process of reducing acrylamide would involve reducing sugars and the amino acid asparagine from food ingredients.

The World Health Organization (WHO) issued guidelines recommending that adults and children reduce their daily intake of free sugars to no more than 10% of total energy intake and ideally to less than 5%. Global average per capita sugar consumption decreased to 22.6 kg in 2018 which compares to 22.9 kg in 2017 and 23.0 kg in 2016.

Chile’s Ministry of Health (MINSAL) enacted a Food Law to advance preventive measures for public health. Key provisions of the new regulatory framework include mandating nutritional labeling, which include warning labels on products for which sodium, saturated fats, or sugars exceed MINSAL limits and special labeling for all genetically modified foods; prohibiting the sale of foods to schools with a nutritional composition that exceeds MINSAL limits; and restricting advertising of non-compliant foods to children.

EUREGULATION U.S. FDA

MINSALWHO



7

Segment Review


Projected Value of Global Fortified/Functional Food Market in 2022

~$320 billion

Source: Euromonitor

Functional food, also known as nutraceuticals, have a targeted nutritional value and specific functional purpose, providing health benefits beyond the normal nutrition level. In addition to the nutritional characteristics, these foods have properties that positively affect one or more physiological functions.

Demand for functional food is higher in developed countries, but growth is also being driven by emerging nations. North America and Western Europe are expected to show slight declines in this category due to growing perception as a more artificial offering. However, consumers in emerging nations are increasingly turning to functional food and beverages to address perceived nutritional deficiencies. In particular, the APAC region is expected to demonstrate significant growth over the next five years as these offerings are a means of minimizing nutritional gaps.

Components of Fortified

Fortified/ Functional

• Dietary Supplements

• Folic Acid• Micronutrients• Oil

Components of Functional

• Omega 3 Fatty Acids

• Phytosterols• Vitamin D• Vitamin B12

• Carotenoids• Dietary Fiber • Fatty Acids• Minerals• Prebiotics & Probiotics• Vitamins



Segment Review

Fortification refers to the process of increasing micronutrient content by adding vitamins and minerals to food. Key vitamins and minerals such as iron, iodine, zinc, and vitamins A and D are added to staple foods such as rice, wheat, oil, milk, and salt to improve their nutritional content.

The global Fortified/Functional Food market is projected to grow at a CAGR of 5.3% between 2018 and 2022.

Source: Euromonitor

Otsuka, The Nature's Bounty Co., Glanbia, GNC, Pharmavite, Lifeway Foods, Triballat Noyal, and Chobani are some of the key players in Functional Food market.

“The Food and Agricultural Organization (FAO) and World Health Organization (WHO) have identified food fortification as one of the strategies to reduce the prevalence of malnutrition, particularly in underdeveloped countries.”

Naturally Healthy

Natural food and drinks refer to products that are manufactured without the use of hormones, antibiotics, sweeteners, food colorings, and flavorings. They contain naturally occurring nutrients such as vitamins, calcium, and fiber. This market possesses significant growth potential given growing consumer focus on health and wellness, food safety, and social impact and experience in food purchasing decisions. Traditional values such as convenience, price, and taste also have a positive impact.

Key players include The Hain Celestial Group, Tea Too, Bob's Red Mill Natural Foods, Califia Farms, and Blue Diamond Growers.

Nuts, Fruits, and Seed Snacks is an important category in the Naturally Healthy segment. In contrast to most snacks that are typically fried, baked, or otherwise processed, nuts, fruit, and seeds possess a relatively natural image.

Cereal Bars are also considered to be a healthy alternative to other snacks, as they contain high protein and fiber content. Cereal Bars is the largest category and is projected to gain significant share due to the growing demand for healthy food options along with other benefits such as better taste, filling capacity, and portability.

Naturally Healthy Cereal Bars

Nuts, Seeds, and Trail Mixes

Dairy Products

Fruit Snacks

Non-Dairy Beverages

Mineral Water

Beer & Wine

Naturally Healthy

Natural DrinksNatural Food

Coffee & TeaHigh-Fiber Foods

The global Naturally Healthy Food Market is projected to grow at a CAGR of 6.2% between 2018-2022

to reach ~$342 billionSource: Euromonitor

The global Cereal Bar market is forecasted to grow 3.9% annually to reach $15.3 billion by 2023. The global Granola Bar market is projected to grow at a CAGR of 8.6% between 2017 and 2021.

Source: Research And Markets, Technavio



Naturally Healthy Bottled Water is a growing product within the Health and Wellness sector. It offers traceability, transparency, and natural minerals, which are desirable attributes as consumers are concerned about sugary drinks and are pursuing simple products with naturally healthy ingredients.

Coconut and Plant-Based Water is a naturally healthy hybrid between juice and water. Coconut water has no added sugar, no fat or cholesterol, and no preservatives and is seeing strong growth across several regions. According to Technavio, the global Packaged Coconut Water market has the potential to grow by $5.6 billion from 2019-2023.

Better-for-You

Better-for-You (BFY) is a combination of ‘lite’ and ‘good’ products. Lite products are foods and beverages that contain no, low, or reduced calories. Examples include packaged foods that contain fewer calories, such as a 100-calorie pack. Products are typically designated as diet, lite, and zero. ‘Good’ products are

Sources: Research and Markets; Technavio

Segment Review

The global Reduced Fat Packaged Food Market is projected to exceed $75 billion by 2022. The global Reduced Salt Packaged Food market is expected to reach $125 billion by 2022.

The global Sugar-Free Foods market is projected to grow 10.2% annually between 2017-2021.

The global BFY Market is expected

to grow to ~$171 billionbetween 2018-2022, representinga CAGR of 4.3%

Source: Euromonitor

generally considered wholesome, such as wholegrain products. They can also be traditional products that have been made healthier but do not fall under the ‘lite’ product category.

Consumers are becoming more conscious of what they eat to promote healthy lifestyles and are demanding more wholesome food products. Taste and quality remain paramount in their food choices, followed closely by ingredient content and nutritional value. The BFY opportunity appears to be in foods and beverages that deliver positive health benefits, taste, and convenience.

As with Fortified/Functional food, growth in this category will be driven by emerging markets. For North American and Western European consumers, this category has lost traction, showing declines over the last five years with the expectation of continued decline over the next five years. These consumers view the category as less healthy than organic, free-from, and naturally healthy alternatives. As nutritional awareness has improved, having salt, fat, and sugar actively removed from products is no longer a key driver of consumption for these consumers. However, despite the anticipated decline in this category for the Western world, the global market is expected to see growth over the next five years.

Better-for-You Foods and The Simply Good Foods Company are two major players offering reduced carb and sugar products.

Better-for-You is segmented into Reduced Fat, Reduced Salt, and Reduced Sugar.

Reduced Fat Packaged Food: Demand for reduced fat packaged food products is expected to remain high as health-conscious consumers seek healthier food options.

Reduced Salt Packaged Food: Growing awareness of the adverse health implications of high sodium intake is having a positive impact on the market as consumers demand food and beverage products with reduced salt content. Manufacturers are trying to replace or reduce salt by using more herbs and spices. They are also experimenting with salt substitutes such as potassium salt which occurs naturally in milk, fruits, vegetables, and grains.

Reduced Sugar Packaged Food: Consumers are looking to reduce sugar intake which is fueling demand for healthier low or no sugar alternatives. The market is categorized into reduced sugar confectionary, reduced sugar dairy-based yogurt, reduced sugar ice cream, reduced sugar spreads, reduced sugar sweet biscuits, and others.




The global market for food intolerance products has experienced significant growth, driven largely by the dramatic rise in food allergies and sensitivities worldwide. The market is segmented into diabetic food, gluten-free food, lactose-free food, allergen-free foods (includes soy, egg, peanut, and tree nut allergen-free products), trans-fat free food, and others.

The free-from beverage segment has been growing rapidly in recent years, with the lactose-free segment seeing strong growth in dairy products as awareness of lactose intolerance increases.

The global Free-From Food market is forecasted to grow from $38.6 billion to $50.7 billion between 2018-2022, representing a CAGR of 7.1%. It is the second fastest-growing Health and Wellness category.

Source: Euromonitor

It is estimated that 15% to 22% of consumers are intolerant or allergic to certain ingredients. The remainder consume free-from products because of their perceived health benefits rather than for medical reasons. Today’s consumers are educated about food intolerances caused by certain food ingredients. This growing awareness has created the perception that free-from foods are healthier and safer, which in turn is driving growth in the Free-From Food market.

Amy's Kitchen, Better for You Foods, Bob's Red Mill Natural Foods, Dr. Schär, Freedom Foods Group, Barr Necessities, and Canyon Bakehouse are some of the key players in Free-From Food market.

The global Lactose-Free Food Market is projected to grow 11.2% annually between 2016 and 2020.

According to Euromonitor, gluten-free products accounted for 16.6% of the global Free-From Food market in 2018 with a value of $6.4 billion. Global gluten- free product sales are forecasted to reach $8.7 billion by 2022, representing a 4-year CAGR of 8.2%.

Source: Euromonitor, Research and Markets

• By 2023, demand for free-from food is expected to be higher in Asia Pacific and Africa, as a large population of consumers with gluten and lactose sensitivities reside in these regions.

• Gluten-free and lactose-free products together hold the largest share of the Free-From Food Market. Europe is the largest market by revenue, followed by North America, Asia Pacific, South America, and Africa.

Source: Research and Markets

Segment Review



Organic

Organic foods and beverages are manufactured using organic-certified ingredients and contain no man-made additives, pesticides, fertilizers, or genetically modified organisms (GMO).

Source: Euromonitor

The global Organic market was estimated at $43.8 billion in 2018. It is the fastest-growing H&W category and is projected to reach $58.2 billion by 2022 with a projected CAGR of 7.4%.

Key players include Compagnie Biodiversité, Hipp, Alnatura, Horizon Organic, Amy's Kitchen, Eden Food, Yeo Valley, Green & Black's, Organic Valley, Organic India, and Arizona Beverages.

According to the Organic Trade Association (OTA), the following were the top-selling organic products in the U.S. in 2018:

Organic Fruits and Vegetables: Fruits and vegetables accounted for 36.3% of all organic food sales. Sales for this segment rose to $17.4 billion in 2018, increasing 5.6% over the previous year. Growing demand for plant-based options has made fruits and vegetables the top selling organic category in 2018. Popular choices in this segment included classics such as carrots, greens, apples, and bananas.

Organic Dairy and Eggs: Dairy and eggs is the second-largest organic category valued at $6.5 billion in 2018, up 0.8% from 2017. Although growth in the egg category slowed from the strong double-digit growth seen in the first part of this decade, the $858 million category still grew by a solid 9.3% in 2018. As more consumers shift to organic, demand for organic eggs is expected to continue growing.

The U.S. Organic market reached a record $52.5 billion in 2018, an increase of 6.3% from 2017, surpassing the $50 billion milestone for the first time.

Source: OTA

Segment Review

Organic Fruits & Vegetables

Organic DairyProducts

Organic Meat

Fish & Poultry

Organic Non-Dairy Products

Organic Beer, Wine, and Others

Organic Coffee & Tea

Organic

Organic Beverages Organic Food

Organic Frozen & Processed Foods



8

M&A Activity

Transaction volume has improved from 2014-2019 with major companies actively acquiring small and mid-sized businesses to either enter the segment, access new geographies, or complement their portfolios. Additionally, the growing segment is attracting interest from financial investors looking to capitalize on growth opportunities in the market.

M&A Activity (2014-2019)

M&A Activity (2014-2019)

Investor interest in the Health and Wellness sector has shown an uptick. Natural, Organic, and Functional Food are the trending categories that are generating attractive growth rates. Large companies are seeking to buy trusted brands in these on-trend categories rather than build them internally and are aggressively using acquisitions to establish a footprint and capitalize on changing consumer preferences.

23 21

1116

24 19

$6.2B

$8.4B

$14.0B

$12.9B $13.3B

$3.9B

0

2

4

6

8

10

12

14

16

0

10

20

30

40

50

2014 2015 2016 2017 2018 2019YTD

Deal V

alue ($B)D

eal C

ount

(#)

Source: Mergermarket, Industry Reports

Overview

2019



M&A Activity

The M&A outlook for the Health and Wellness sector is robust with significant growth expected as many food and beverage manufacturers shift their acquisition growth strategies to accelerate entry into new markets and product segments. Fast-growing startups and small- and mid-sized businesses with on-trend offerings are partnering with larger companies.

Large manufacturers have accelerated acquisition efforts, targeting startups and early-stage investments to rapidly gain market access and accelerate growth in innovative offerings

catering to specialized dietary requirements and eating habits.

PepsiCo acquired Health Warrior, a maker of trending plant-based products, and Kraft Heinz acquired Primal Nutrition, which offers all-natural, keto, and other specialty food items.

Startups and Innovation

Large food manufacturers are investing billions in healthy snack brands to penetrate and expand in the flourishing healthy snack market.

Notable 2019 acquisitions in this category include Ferrero, Mars, and Hometown Food Company. Ferrero acquired Denmark-based baked snack brand Kelson Group for $300 million; Mars acquired German nutritional snacks and drinks maker Foodspring; and Hometown Food Company acquired organic product companies SunSpire and Arrowhead Mills.

All Aboard the Healthy Snacks Train

Established consumer products companies are leveraging acquisitions to enter emerging H&W segments in developing regions.

In July 2019, PepsiCo acquired a 25.84% stake in China-based Natural Food International Holding Limited for $130 million. The transaction is expected to accelerate PepsiCo’s growth in the Chinese market as the company works on diversifying its product lines beyond beverages. Coca-Cola acquired Nigeria-based fruit and dairy drinks maker Chi to expand into new categories and grow its business in Africa.

Penetrating New Markets

Companies are choosing to expand trending and complementary offerings through acquisitions of established brands to increase their market presence.

Examples include PepsiCo’s acquisition of Health Warrior which offers trending plant-based products, and Industries Lassonde’s acquisition of Sun-Rype Products (juices and snacks)

which increases access to complementary products.

Developing a Strong Health and Wellness Portfolio

Private equity and venture capital investors continue to deploy more capital into the food and beverage sector as they seek to capitalize on increasing consumer demand for healthier food options, while building competitive portfolios.

Illustrating this trend is the ~$1.05 billion acquisition of Netherlands-based KoninklijkeWessanen. Food and consumer investor PAI Partners led the consortium, which plans to invest in strengthening the company’s position as a leader in the European organic food market.

Growing Interest from Financial Investors in the Health and Wellness Market

Protein has been a key focus area for weight watchers and health food enthusiasts due to its various health benefits. Taking cue from this trend, companies have been proactively building

product portfolios to include protein-rich products such as powders, snacks, and bars.

The Hershey Company acquired U.S.-based high-protein snack bar maker One Brands ($401 million) in September 2019 and Ireland-based protein bar maker Fulfil Nutrition in August

2019.

Protein-Driven Deals



Other Recent Notable Acquisitions

Healthy snack manufacturer Quest Nutrition strengthens Simply Good Foods’ market position by expanding its brand portfolio and product offerings with a broader consumer base and channel diversification.

CORE Nutrition expands Keurig Dr Pepper’s portfolio into the on-trend organic and functional food and beverage categories.

Stonyfield Organic diversified Lactalis’ global portfolio and increased its focus on the fast-growing yogurt segment.

Weight management and health improvement food product businesses SlimFast and Hyper Network Solutions of Florida help extend Glanbia’s performance nutrition portfolio to related consumer needs.

RXBAR expanded Kellogg’s portfolio in the on-trend clean-label snacking space.

White Wave increased Danone’s share, enabling the company to capture synergies while diversifying its portfolio in on-trend health-focused categories.

Recent Highly Acquisitive Consolidators

One Brands complements Hershey’s Oatmega business and provides a competitive offering of brands in the nutrition bar category.

Pirate Brands is expected to complement Hershey’s Amplify business.

Health Warrior expanded PepsiCo’s presence in the on-trend plant-based nutrition bar category.

CytoSport expanded PepsiCo’s presence in sport-oriented nutritional products.Fulfil Nutrition will generate opportunities in

new customer segments and markets.

KeVita, a leader in fermented probiotic and kombucha beverages, expanded PepsiCo’s health and wellness offerings.

Snyder’s-Lance enhanced Campbell’s better-for-you snack offering and accelerated access into the faster-growing convenience and natural channels.

Pacific Foods, a manufacturer of organic and natural soups and broths, added an authentic brand with a loyal customer following in the organic and functional foods segments.

The Pinnacle Foods acquisition creates the second-largest U.S. frozen foods company and expands Conagra’s presence in the snacking category.

Angie’s Artisan Treats, maker of Boomchickapop, modernized and expanded Conagra’s portfolio in the better-for-you snacking category.

Thanasi Foods, maker of Duke’s Meat snacks and BIGS Seeds, extends Conagra’s portfolio into more premium segments within on-trend categories.

M&A Activity



M&A Activity

Select M&A Transactions - Strategic (2018 to 2019)

EV/Revenue EBITDA

Median 1.6x 12.4xMean 1.5x 15.1x

Date TargetTarget Country

Target Description AcquirerAcquirer Country

EV ($M)

7-Dec-2019 Arivia GreeceProducer of and markets plant-based cheese across Europe for a healthy lactose free alternative

Upfield Netherlands -

15-Nov-2019 Planted Foods AG Germany Manufacturer of pea protein, fiber, and oils Blue Horizon Switzerland -

31-Oct-2019 Health Warrior USAUS-based producer of and markets plant-based products including nutrition bars and on-trend offerings

PepsiCo USA -

29-Oct-2019 Sun-Rype Products CanadaCanada based company engaged in manufacturing and marketing of fruit based juices and snacks

Industries Lassonde Canada 61.2

8-Oct-2019 SunSpire; Arrowhead Mills USAUS-based company that produces and sells natural and organic baked products; US-based maker of natural and organic chocolate products.

Hometown Food Company

USA 15.0

11-Sep-2019 Func Food Group FinlandFinland-based producer and distributor of sports nutrition and functional health foods

Celsius Holdings USA 24.2

2-Sep-2019 Yellow Chips; Kettle Foods United KingdomNetherlands-based manufacturer of vegetable and organic potato chips; UK-based company providing baked snacks

Valeo Foods GroupIreland (Republic)

79.8

27-Aug-2019 One Brands USA US-based high protein snack bar maker The Hershey Company USA 397.0

21-Aug-2019 Quest Nutrition USAUS-based developer and manufacturer of protein bars and other healthy snacks

The Simply Good Foods Company

USA 1,000.0

19-Aug-2019 Fulfil NutritionIreland (Republic)

Ireland-based company engaged in producing protein bars The Hershey Company USA -

26-Jul-2019Natural Food International Holding

China

China-based natural health food company that produces and distributes 90 types of products that are made of grains, beans, nuts, dried fruits and other natural ingredients

PepsiCo USA 426.8

4-Jul-2019 Bio-E Australia AustraliaAustralia-based natural health, food and beverage company

Star Combo Pharma Australia 42.2

27-Jun-2019 Foodspring GermanyGermany-based provider of nutritional products including supplements, vitamins, proteins, snacks, bars, and drinks

Mars, Incorporated USA -

19-Jun-2019 Perfect Bar USA US-based protein bar manufacturer Mondelēz International USA -

17-Jun-2019 Omniblend AustraliaAustralia-based company engaged in developing health and wellness powdered and UHT dairy based drinks

Keytone Dairy Corporation Limited

Australia 22.4

10-Jun-2019 Bounce Foods United Kingdom UK-based protein energy bars manufacturer Wholebake LimitedUnited Kingdom

-

28-May-2019 Fruity King Netherlands Netherlands-based fruit juice processor Fruity Line Netherlands -

17-Apr-2019

Think Products; Well Naturally; Power Super Foods; Systemax; Planet Food ; The Bar Counter

Australia

Australia-based manufacturer nutrition foods; Australia-based manufacturer of protein and low sugar bars; Australia-based manufacturer of healthy cooking and snacking options; Australia-based manufacturer of healthy juices and snacks ; Australia-based manufacturer of low sugar products; Australia-based producer of organic food

RiteBite Group Australia -

4-Apr-2019 Elvin Group South Africa South Africa-based manufacturer of fruit juicesLibstar Holdings Limited

South Africa -

1-Apr-2019The Remarkable Milk Company

AustraliaAustralia-based provider of organic and conventional fresh packed dairy and nutritional products

Wattle Health Australia Limited

Australia -

20-Mar-2019 Corporacion Inlaca VenezuelaVenezuela-based manufacturer and distributor of nutritious dairy and fruit juice products

Mirona FoodUnited Arab Emirates

-

19-Feb-2019 CytoSport USAUS-based company engaged in manufacturing sport-oriented nutritional products

PepsiCo, Inc. USA 465.0



M&A Activity

Source: Mergermarket, Industry ReportsNote: List is not exhaustive



EV ($M)

30-Jan-2019 Chi Limited NigeriaNigeria-based company engaged in producing fruit and dairy drinks

The Coca-Cola Company

USA -

15-Jan-2019 Verve Beverage USAUS-based company engaged in manufacturing of energy drinks

Weekend Unlimited Inc. Canada 6.3

20-Dec-2018 Woongjin Foods South KoreaSouth Korea-based producer and seller of beverages, food and health products

Uni-President Enterprises Corporation

Chinese Taipei

303.4

29-Nov-2018 Primal Nutrition USA

US-based provider of range of food and supplement products, including avocado oil mayonnaise, salad dressings, snack bars, protein powder, probiotics and omega vitamins

The Kraft Heinz Company

USA 200.0

9-Nov-2018 Go Natural Australia AustraliaAustralia-based company engaged in food products manufacturing like nut snacks, Protein, Grain Bars & Slices etc

PharmaCare Laboratories Pty Ltd

Australia -

11-Oct-2018SlimFast ; Hyper Network Solutions of Florida

USAUS-based company engaged in nutritional supplement business; US-based company that produces food products for weight management and health improvement

Glanbia PlcIreland (Republic)

350.0

9-Oct-2018Dreamcann Foods Private Limited

India India-based company that makes healthy eatablesHaldiram Snacks Pvt. Ltd.

India 4.7

27-Sep-2018 Core Nutrition USAUS-based manufacturer of health-conscious beverages including water, fruit infused drinks, and energy drinks

Keurig Dr Pepper Inc. USA 525.0

12-Sep-2018 Pirate Brands USA US-based manufacturer of snacks The Hershey Company USA 420.0

13-Aug-2018Crankt Protein International

AustraliaAustralia-based manufacturer and retailer of protein snacks and shakes

Freedom Foods Group Limited

Australia 1.7

27-Jul-2018 BFIT Brands USAUS-based manufacturer and marketer of whey protein and energy drink.

Rocky Mountain High Brands, Inc.

USA 0.2

26-Jul-2018 Kiddylicious United KingdomUK-based snacking company bakes snacks for growing babies, toddlers and pre-schoolers

Lotus Bakeries NV Belgium 55.3

29-Jun-2018 Bev.Con ApS Denmark Denmark-based maker of ready to drink energy drinks Royal Unibrew A/S Denmark 54.7

27-Jun-2018 Pinnacle Foods USAUS-based manufacturer, marketer, and distributor of branded food products

ConAgra Brands, Inc. USA 10,777.9

3-May-2018 Davert GermanyGermany-based manufacturer and distributor of organic dry packaged food

Midsona AB Sweden 58.1

26-Apr-2018 Old Orchard Brands USAUS-based company engaged in the manufacture of fruit juices

Industries Lassonde inc. Canada 160.0

20-Apr-2018 Zespri Group New Zealand New Zealand kiwi fruit grower and exporterSeeka Kiwifruit Industries Limited

New Zealand -

22-Mar-2018ENZAFOODS New Zealand Limited

New Zealand

New Zealand-based manufacturer of fruit and vegetable products including apple, kiwifruit, pear and carrot juice concentrate and fruit ingredients for the local and international food and beverage industry

Cedenco Foods New Zealand Limited

New Zealand -

1-Mar-2018 Thurella SwitzerlandSwitzerland-based manufacturer of fruit and vegetable juices

Orior AG Switzerland -

20-Feb-2018 ConAgra Brands CanadaCanada-based Del Monte processed fruit and vegetable business of ConAgra Brands, Inc.

Bonduelle SA France 34.3

16-Feb-2018 Tamaya Gourmet Chile Chile-based manufacturer of fruit based juices Empresas IANSA S.A. Chile -

14-Feb-2018 Core Nutrition USAUS-based manufacturer of health-conscious beverages including water, fruit infused drinks, and energy drinks

Keurig Dr Pepper Inc USA -



M&A Activity

Source: Mergermarket

Top Strategic Buyers by Deal Count (2014-2019)

Strategic buyers have made a significant investment in the Health and Wellness sector over the last six years. The Hershey Company has completed five acquisitions, followed by PepsiCo and Glanbia at four each. Post Holdings, Lotus Bakeries, Conagra Brands, Hormel Foods, and WhiteWave Foods each completed three acquisitions over this timeframe.

Source: Mergermarket

Top Strategic Buyers by Deal Value (2014-2019)

Top strategic transactions include the $12.1 billion acquisition of WhiteWave Foods by Danone in 2016; Conagra’s acquisitions of Angie's Artisan Treats and Thanasi Foods in 2017 and Pinnacle Foods in 2018 (combined enterprise value of $11.2 billion); and Campbell Soup Company’s acquisition of Snyder's-Lance and Pacific Foods in 2017 (combined enterprise value of $6.6 billion).

5

4 4

3 3 3 3 3

0

1

2

3

4

5

The HersheyCompany

PepsiCo, Inc. Glanbia Plc Post Holdings,Inc.

Lotus BakeriesNV

Conagra Brands,Inc.

Hormel FoodsCorporation

The WhiteWaveFoods Company

No.

of D

eals

12.111.2

6.6

3.1 2.5 2.1 1.5 1.1 1.0 0.9

0

2

4

6

8

10

12

14

Dea

l Vau

e($

mn)



M&A Activity

Select Transactions by Financial Sponsors (2014-2019)

EV/

Revenue EBITDA

Median 1.5x 9.6x

Mean 2.2x 12.1x



EV ($M)

7-Nov-2019 Simple Mills USA Better-for-you baking mix, cracker, and cookie brand Vestar Capital Brands USA -

14-Aug-2019Beast Life (Beijing) Food Technology Co., Ltd.

ChinaChina-based company engaged in low-carb diets and healthy food

Beijing ZhonghaiInvestment Management

China -

22-Jul-2019 Health Balance South KoreaSouth Korea-based distributor and manufacturer of healthy drinks

Anchor Equity Partners South Korea -

4-Jul-2019 Labixiaoxin Snacks Group Hong Kong SARHong Kong-based HKEx-listed company that manufactures and sells jelly, confectionary, fruit and vegetable beverage, and other snack products

Qingdao YunzhiFengying Equity Investment Fund Partnership

China 196

28-Jun-2019Flormel Industria De Alimentos Ltda

Brazil Brazil-based provider of healthy snacksUnbox Capital Gestao de Recursos Financeiros

Brazil -

4-Jun-2019 La Galvanina ItalyItaly-based producer of premium private label and branded mineral water and traditional and organic soft drinks

The Riverside Company USA 90

22-Apr-2019Evolve Snacks Private Limited

India India-based company producing healthy snacking itemsITI Growth Opportunities Fund

India -

15-Apr-2019 Karl Karlo GermanyGermany-based company engaged in the making of of high caffeine, high protein Energy Balls

10X Innovation GmbH & Co. KG

Germany -

15-Apr-2019 Rakyan Beverages IndiaIndia-based company engaged in manufacturing fruit juices

FidelisWorld Asset Management

Mauritius -

12-Apr-2019 Wm. Bolthouse Farms USAUS-based food and beverage company focused on developing, manufacturing and marketing proprietary, natural, healthy products

Butterfly Equity USA 510

10-Apr-2019 Royal Wessanen NetherlandsNetherlands-based company engaged in organic food businesses

Consortium led by PAI Partners

France 1045

25-Mar-2019Sino Grandness Food Industry Group Limited

ChinaChina-based SGX-listed manufacturer and distributor of bottled juices as well as canned fruits and vegetables

JW Capital Group Limited

Hong Kong SAR

100

30-Nov-2018 Zone Brands USAUS-based producer and seller of fruit juice, vegetable juice and fortified water

Kainos Capital LP USA -

18-Oct-2018 EN-R-G Foods USAUS-based company that produces and markets honey-based nutritional food products

Factory USA -

17-Oct-2018 Natural F&P Corp South Korea Listed South Korea based healthy food maker MAGNA Investment South Korea 61

28-Sep-2018Manuka Health New Zealand Limited

New ZealandNew Zealand-based company engaged in developing natural health, wellbeing and wound care products

Hong Leong Financial Group Berhad

Malaysia 265

13-Sep-2018 Stryve Foods USA US-based protein snack companyMurano Group; Meaningful Partners

USA -

2-Jul-2018 Califia Farms USA US-based natural beverage companyStripes Group; Sun Pacific; Ambrosia Investments

Luxembourg -

20-Jun-2018 Feed. FranceFrance-based producer of gluten-GMO-lactose-free, vegan beverage, energy bars and shakers

Alven Capital Partners; Eutopia; FinanciereSaint James

France -

18-Oct-2017 ProNatura SAS FranceFrance-based company engaged distribution of organic fruits and vegetables

Cerea Partenaire France 176

7-Oct-2016 SunOpta, Inc. CanadaCanada-based company that focuses on natural, organic, and specialty foods products

Oaktree Capital Management LP

USA -

12-Jul-2016 Halo Foods Limited United Kingdom UK-based manufacturer of snack bars Nimbus BV Netherlands -



M&A Activity



EV ($M)

19-Aug-2015 Suja Life USAUS-based producer of cold pressed organic juices and smoothies

The Coca-Cola Company; Goldman Sachs Merchant Banking Division

USA 300

12-Feb-2015 Anhui Yanzhifang Food China China-based cereal product producerShenzhen EverbrightRuihua Opportunities Fund (L.P.）

China 116

2-Oct-2014 Spojene Farmy Czech RepublicCzech Republic-based operator of farmland and engaged in producing organic food products such as beef, chicken, and lamb

CPI Property Group Luxembourg 55

19-Aug-2014 Amplify Snack Brands USA US-based snack food companyTA Associates Management

USA -

17-Mar-2014 Hearthside Food Solutions USAUS-based company engaged in manufacturing and packaging of granola bars, croutons, cereals, popcorn and snack mixes

Goldman Sachs & Co.; Vestar Capital Partners

USA 1100

Source: MergermarketNote: List is not exhaustive



9

Peer Trading Analysis

Public Company Valuation Metrics

Margin (%) EV/

EBITDA EBIT Sales (x) EBITDA (x) EBIT (x)

Company NameMkt Cap

($mn)EV

($mn)LTM LTM LTM LTM LTM


Herbalife Nutrition Ltd. 6,480 7,768 14.4% 12.4% 1.6x 11.1x 12.9x

Glanbia plc 3,407 4,279 11.3% 8.2% 1.4x 12.5x 17.1x

Freedom Foods Group Limited 971 1,057 6.8% 4.4% 3.2x NM NM

V V Food & Beverage Co.,Ltd 701 1,027 6.3% 1.1% 1.4x 22.7x NM

Valsoia S.p.A. 143 120 12.1% 9.7% 1.3x 11.1x 13.8x

Enervit S.p.A. 67 78 6.0% 2.8% 1.1x 18.6x 40.2x

Lifeway Foods, Inc. 32 31 1.7% NM 0.3x 19.7x NM

Mean 8.4% 6.4% 1.5x 16.0x 21.0x

Median 6.8% 6.3% 1.4x 15.6x 15.5x

Naturally Healthy

Fresh Del Monte Produce Inc. 1,655 2,484 4.7% 2.5% 0.6x 11.7x 22.4x

Hortifrut S.A. 829 1,290 19.7% 11.4% 2.4x 12.3x 21.4x

Total Produce plc 621 1,178 2.6% 1.8% 0.3x 10.8x 15.1x

Costa Group Holdings Limited 703 1,141 6.7% 1.8% 1.6x 23.8x NM

John B. Sanfilippo & Son, Inc. 1,014 1,061 9.2% 7.2% 1.2x 13.0x 16.5x

Hokuto Corporation 577 853 16.6% 6.3% 1.3x 7.7x 20.4x

T&G Global Limited 239 416 2.9% 1.1% 0.6x 18.2x NM

Mehadrin Ltd. 132 238 1.8% 0.1% 0.6x 34.8x NM

Ichitan Group Public Company Limited 214 237 19.0% 7.6% 1.4x 7.6x 19.0x

Tipco Foods Public Company Limited 123 187 NM NM 1.4x NM NM

Yantai North Andre Juice Company Limited 241 146 18.9% 14.0% 1.1x 5.8x 7.9x

Malee Group Public Company Limited 62 139 NM NM 0.8x NM NM

Mean 10.2% 5.4% 1.1x 14.6x 17.5x

Median 7.9% 4.4% 1.2x 12.0x 19.0x

Source: S&P CapIQ as of 28 January 2020




Source: S&P CapIQ as of 28 January 2020Note: Under Diversified - Koninklijke Wessanen got acquired by a consortium led by PAI Partners in April 2019 and under Organic/Free-From Bellamy's Australia Limited was acquired by China Mengniu Dairy Company Limited in September 2019

Margin (%) EV/

EBITDA EBIT Sales (x) EBITDA (x) EBIT (x)

Company NameMkt Cap

($mn)EV

($mn)LTM LTM LTM LTM LTM

Organic/Free-From

The Hain Celestial Group, Inc. 2,629 3,022 7.2% 4.7% 1.3x 18.5x 28.7x

SunOpta Inc. 225 906 2.0% NM 0.7x 36.5x NM

Pulmuone Co., Ltd. 379 847 5.7% 1.5% 0.4x 7.6x 29.9x

Seneca Foods Corporation 372 711 0.8% NM 0.5x NM NM

Select Harvests Limited 550 570 33.2% 26.7% 2.8x 8.5x 10.6x

New Age Beverages Corporation 140 137 NM NM 0.6x NM NM

Carmit Candy Industries Ltd. 22 31 10.7% 6.3% 0.7x 6.7x 11.4x

GreenSpace Brands Inc. 6 21 NM NM 0.5x NM NM

Mean 9.9% 9.8% 0.9x 15.6x 20.2x

Median 6.5% 5.5% 0.6x 8.5x 20.0x

Diversified

The Hershey Company 30,076 34,521 26.0% 22.3% 4.3x 16.8x 19.6x

Conagra Brands, Inc. 16,366 26,644 20.6% 17.1% 2.3x 12.3x 14.8x

Post Holdings, Inc. 7,700 14,156 19.7% 13.1% 2.4x 12.7x 19.0xVietnam Dairy Products Joint Stock Company

8,844 8,567 25.6% 22.1% 3.6x 14.1x 16.4x

B&G Foods, Inc. 1,119 3,030 17.4% 13.9% 1.8x 10.6x 13.2x

The Simply Good Foods Company 2,656 2,580 17.5% 16.0% 4.9x 28.2x 30.7x

Raisio plc 609 500 14.2% 11.9% 1.9x 13.6x 16.2x

Midsona AB (publ) 343 492 8.1% 6.0% 1.6x 19.8x 26.7x

Taisun Enterprise Co., Ltd. 360 358 2.8% 1.7% 1.4x NM NM

Yaizu Suisankagaku Industry Co.,Ltd. 118 42 8.5% 5.8% 0.3x 3.2x 4.8x

Mean 16.0% 13.0% 2.5x 14.6x 17.9x

Median 17.4% 13.5% 2.2x 13.6x 16.4x

Overall Mean

11.5% 8.7% 1.5x 15.0x 18.7x

Overall Median

9.2% 6.8% 1.3x 12.6x 16.8x




The Health and Wellness sector has witnessed negative returns year-over-year. However, the market has shown positive long-term growth with the Organic/Free-From and Diversified segments appreciating by 45.7% and 96.8%, respectively.

The S&P Food & Beverage Select Industry Index (equities classified in the GICS Food & Beverage sub-industry of the S&P Total Market Index) has outperformed the Health and Wellness market, which implies that the larger diversified players are exhibiting stronger performance relative to the small-scaled players.

Herbalife Nutrition, which operates in the Fortified/Functional market, saw its stock price appreciate by 151.2% during the last five years, increasing from $18.8 in January 2015 to $47.2 in January 2020, primarily attributed to the growth of the Functional segment.

Beverage companies such as New Age Beverages, which specializes in organic beverages, appreciated by a relatively higher percentage over the five-year period, in line with shifting consumer preferences towards non-alcoholic and wholesome, healthy drinks.

(% change) 5Y 3Y 1Y 6m


Herbalife Nutrition 151.2% 96.1% (20.4%) 9.9%Lifeway Foods (88.5%) (82.4%) 2.5% (34.7%)V V Food & Beverage Co. Class A (47.9%) (55.5%) 3.4% (16.5%)Valsoia (27.8%) (19.9%) 4.1% 3.7%Enervit (9.2%) 37.0% 2.1% 2.3%Freedom Foods Group 32.5% 12.3% 9.4% 2.1%Glanbia (25.0%) (30.1%) (38.0%) (28.8%)Peer Average (2.1%) (1.0%) (11.9%) (2.4%)

Naturally Healthy

Ichitan Group Public Co. (72.9%) (42.3%) 78.1% (24.3%)John B. Sanfilippo & Son 116.6% 26.5% 61.9% 12.0%Malee Group Public Company (45.9%) (86.0%) (8.4%) (15.4%)Tipco Foods Public Co. 31.5% (33.8%) 14.5% (20.3%)Yantai North Andre Juice Co. Class H 91.8% 24.3% (9.0%) (11.0%)Costa Group Holdings na (29.0%) (65.1%) (39.4%)Fresh Del Monte Produce 2.4% (43.2%) 21.5% 28.4%Hokuto Corporation 9.5% 1.6% 3.6% 8.1%Hortifrut 56.2% (23.2%) (47.6%) (42.6%)Mehadrin 18.1% (14.0%) (15.2%) (30.9%)T&G Global 33.0% (12.2%) 1.9% 4.4%Total Produce 24.3% (22.3%) (3.5%) (3.4%)Peer Average 14.9% (28.1%) (5.7%) (12.6%)

Peer Average vs. S&P Food & Beverage Index





Peer Average vs S&P Food & Beverage Index (continued)(% change) 5Y 3Y 1Y 6m

Organic/Free-From

Carmit Candy Industries 102.7% 123.5% 75.2% 1.0%GreenSpace Brands na (92.2%) (73.8%) (65.7%)Hain Celestial Group (55.7%) (35.4%) 55.4% 16.3%New Age Beverages 442.4% (56.8%) (66.2%) (60.9%)Select Harvests 7.7% 20.4% 33.3% 15.2%Seneca Foods Class A 47.7% (0.4%) 39.3% 39.7%SunOpta (78.5%) (64.1%) (36.3%) (21.1%)Pulmuone Co. (1.7%) (16.1%) 43.2% (9.2%)Peer Average 45.7% (36.7%) (42.9%) (40.7%)

Diversified

B&G Foods (41.1%) (60.1%) (40.2%) (15.6%)Conagra Brands (6.1%) (15.0%) 57.7% 26.1%Hershey Company 38.8% 39.2% 36.5% 5.8%Midsona Class B 35.5% 8.9% (20.1%) 0.7%Post Holdings 154.7% 35.4% 21.1% 3.1%Raisio Oyj Class V (25.3%) 1.8% 42.1% 19.7%Simply Good Foods Co na 172.3% 47.3% 9.8%Taisun Enterprise Co. 96.0% 60.9% 26.5% 18.3%Vietnam Dairy Products 96.4% 10.5% (5.0%) (5.5%)Yaizu Suisankagaku Industry Co. 10.6% 1.8% 4.4% (5.9%)Peer Average 96.8% 24.5% (12.0%) (16.6%)

S&P Food and Beverage 33.6% 16.8% 18.8% 6.2%

Source: S&P CapIQ as of 28 January 2020Note: Under Diversified - Koninklijke Wessanen got acquired by a consortium led by PAI Partners in April 2019 and under Organic/Free-From Bellamy's Australia Limited was acquired by China Mengniu Dairy Company Limited in September 2019




Historical EV/NTM EBITDA Analysis

Note 1: Fortified/Functional: Herbalife Nutrition, Lifeway Foods, V V Food & Beverage Co. Class A, Valsoia, Enervit, Freedom Foods Group, Glanbia.Note 2: Naturally Healthy: Ichitan Group Public Co., John B. Sanfilippo & Son, Malee Group Public Company, Tipco Foods Public Co., Yantai North Andre Juice Co. Class H, Costa Group Holdings, Fresh Del Monte Produce, Hokuto Corporation, Hortifrut, Mehadrin, T&G Global, Total ProduceNote 3: Organic/Free-From: Carmit Candy Industries Ltd., GreenSpace Brands Inc., Hain Celestial Group, Inc., New Age Beverages Corp., Select Harvests Limited, Seneca Foods Corporation Class A, SunOpta Inc., Pulmuone Co., Ltd.Note 4: Diversified: B&G Foods, Conagra Brands, Hershey Company, Midsona Class B, Post Holdings, Raisio Oyj Class V, Simply Good Foods Co, Taisun Enterprise Co., Vietnam Dairy Products, Yaizu Suisankagaku Industry Co.

Peer Average vs S&P Food & Beverage

Note 1: Fortified/Functional: Herbalife Nutrition, Lifeway Foods, V V Food & Beverage Co. Class A, Valsoia, Enervit, Freedom Foods Group, Glanbia.Note 2: Naturally Healthy: Ichitan Group Public Co., John B. Sanfilippo & Son, Malee Group Public Company, Tipco Foods Public Co., Yantai North Andre Juice Co. Class H, Costa Group Holdings, Fresh Del Monte Produce, Hokuto Corporation, Hortifrut, Mehadrin, T&G Global, Total ProduceNote 3: Organic/Free-From: Carmit Candy Industries, GreenSpace Brands, Hain Celestial Group, New Age Beverages, Select Harvests, Seneca Foods Corporation Class A, SunOpta, Pulmuone Co.Note 4: Diversified: B&G Foods, Conagra Brands, Hershey Company, Midsona Class B, Post Holdings, Raisio Oyj Class V, Simply Good Foods Co, Taisun Enterprise Co., Vietnam Dairy Products, Yaizu Suisankagaku Industry Co.


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Fortified/Functional Peer Average¹ Naturally Healthy Peer Average²Organic / Free-From Peer Average³ Diversified Peer AverageS&P Food & Beverage




Total EV/LTM EBITDA vs EV/NTM EBITDA Comparison

Historical EV/LTM EBITDA Analysis

Note 1: Fortified/Functional: Herbalife Nutrition, Lifeway Foods, V V Food & Beverage Co., Class A, Valsoia, Enervit, Freedom Foods Group, Glanbia.Note 2: Naturally Healthy: Ichitan Group Public Co., John B. Sanfilippo & Son, Malee Group Public Company, Tipco Foods Public Co., Yantai North Andre Juice Co. Class H, Costa Group Holdings, Fresh Del Monte Produce, Hokuto Corporation, Hortifrut, Mehadrin, T&G Global, Total ProduceNote 3: Organic/Free-From: Carmit Candy Industries, GreenSpace Brands, Hain Celestial Group, New Age Beverages, Select Harvests, Seneca Foods Corporation Class A, SunOpta, Pulmuone Co.Note 4: Diversified: B&G Foods, Conagra Brands, Hershey Company, Midsona Class B, Post Holdings, Raisio Oyj Class V, Simply Good Foods Co, Taisun Enterprise Co., Vietnam Dairy Products, Yaizu Suisankagaku Industry Co.


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Average - Fortified/Functional¹ Average - Naturally Healthy²

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Select Financial Metrics

Note 1: Fortified/Functional: Herbalife Nutrition, Lifeway Foods, V V Food & Beverage Co., Class A, Valsoia, Enervit, Freedom Foods Group, Glanbia.Note 2: Naturally Healthy: Ichitan Group Public Co., John B. Sanfilippo & Son, Malee Group Public Company, Tipco Foods Public Co., Yantai North Andre Juice Co. Class H, Costa Group Holdings, Fresh Del Monte Produce, Hokuto Corporation, Hortifrut, Mehadrin, T&G Global, Total ProduceNote 3: Organic/Free-From: Carmit Candy Industries, GreenSpace Brands, Hain Celestial Group, New Age Beverages, Select Harvests, Seneca Foods Corporation Class A, SunOpta, Pulmuone Co.Note 4: Diversified: B&G Foods, Conagra Brands, Hershey Company, Midsona Class B, Post Holdings, Raisio Oyj Class V, Simply Good Foods Co, Taisun Enterprise Co., Vietnam Dairy Products, Yaizu Suisankagaku Industry Co.


(60.0%)

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2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Fortified/Functional Revenue Growth¹ Naturally Healthy Revenue Growth²Organic / Free-From Revenue Growth³ Diversified Revenue GrowthFortified/Functional EBITDA Margin Naturally Healthy EBITDA MarginOrganic / Free-From EBITDA Margin Diversified EBITDA Margin

4



10 Global M&A Partners –Food & Beverage Team

EUROPEMichael Petit* Managing Director

+33 6 30 80 71 [email protected]

FRANCE

Heike JandlManaging Director

+43 1 99 00 [email protected]

AUSTRIA

Philipp ElsenDirector

+49 211168 [email protected]

GERMANY

Pal FarkasPartner

+36 1 275 [email protected]

HUNGARY

Ivars PinkulisPartner

+371 [email protected]

LATVIA

Ronald van RijnPartner

+31 (0) 6 533 409 [email protected]

NETHERLANDS

Frederic de BoerPartner

+41 44 755 59 [email protected]

SWITZERLAND

AMERICASDaniel Gomez*Director


UNITED STATES

Esteban OliveraManaging Partner


ARGENTINA

Ian MacdonellManaging Director


CANADA

Luis OrtizPartner


MEXICO

Note: * Denotes Co-heads of the Food & Beverage team

Alex CerriPartner


BRAZIL

Paul McGloneDirector


UNITED KINGDOM

Ignacio Rodríguez Vice President


CHILE

Mónica ComPartner


PERU

REST OF THE WORLDBingyu ChenPartner


CHINA

Jacob WonPartner


SOUTH KOREA

Mihir ShahDirector


INDIA

10



About UsEstablished in 1999, Global M&A Partners is one of the major international M&A networks comprised of independentinvestment banking firms partnering to provide international scope and local market expertise to our clients. We operatein more than 30 countries across 4 continents and have completed over 1,500 transactions during the last five yearstypically ranging from €20 to €500 million.

Our Food & Beverage team is comprised of seasoned M&A professionals from more than 18 partner countries withextensive knowledge of the dynamics and innovative changes occurring globally and locally in the Food & Beverageindustry (e.g., changing consumer preferences, rapid food innovation, shifting supply chain, etc.).

Our M&A activity in the Food & Beverage sector is robust and includes many cross-border transactions, driven byinternational growth, strategic tuck-ins, and consolidation. Given our sector experience, transaction expertise, andunparalleled access to local decision makers, we can work together to offer customized M&A solutions and premiumvaluations for our clients.

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