Meat Alternatives, Sustainability And E-Commerce Could Drive Food M&A In 2020, Says GlobalData

Mergers and acquisitions advisors have revealed the areas of packaged food they think could be hot spots for M&A in 2020 after a challenging year for deals amid a host of geopolitical risks, writes GlobalData.

GlobalData found acquisitions in the food segment were down 54% in the first nine months of 2019, at US$15bn worldwide, with the risk of a US recession and the machinations around Brexit key factors that could weigh on the M&A market in the New Year.

Simon Harvey, Food Correspondent at GlobalData, says: "It's perhaps no surprise that meat or dairy alternatives could again play a big part in packaged-food M&As as the categories continue to gain significant investor attention, particularly when the younger generation is becoming more vocal around sustainability and climate issues.

"However, with big food manufacturers eager to get in on the act, advisors say there just aren't enough start-ups in meat and dairy alternatives with sufficient scale and opportunity in which suitors can park their cash, and so many are turning in-house.

"As an extension to the sustainability theme, so-called purpose-led companies – those seeking to create broader values for society rather than just financial gain – were also identified as presenting M&A opportunities, especially in other on-trend categories such as health, wellness and nutrition, with healthy snacking a standout in that area.

"Players in the emerging direct-to-consumer (D2C) market, albeit a limited number in food at present, could find themselves the attention of large food producers as premiumization and personalization gain more prominence among consumers, with meal-kit firms seen as a side-step opportunity for both manufacturers and retailers.

"Consolidation is also likely to feature in M&A activity as large food companies tweak portfolios to encompass more on-trend growth categories, while disposing of ill-fitting brands, which creates deal opportunities for other players both small and large."