Food & Beverage M&A Update – Q1 2023

Tamarack Partners is pleased to share its Food & Beverage M&A Update for Q1 2023. One key theme was that the mergers and acquisitions activity was steady even amid the period’s market uncertainty. Some key sector takeaways include:

• Recent cost inflation challenged smaller players’ ability to pass through price increases and many companies traded non-core business lines for high-growth, high-return opportunities.
• Silicon Valley Bank’s (SVB) failure in early March will have broader implications for food venture financing.
• Stricter lending requirements and a greater focus on free cash and profitability will further limit the ease with which small companies access capital and enter the industry.
• For 2022, total venture capital (VC) funding investment in the AgriFoodTech sector declined by nearly half — in line with global VC markets — to $29.6 billion.
• ESG (environmental, social and governance) impact continues to drive investor interest in alternative protein, vertical farming and food waste start-ups.

Read the rest of Food & Beverage M&A Update for Q1 2023

If you are considering a sale of your business and would like to discuss options, please contact Michael Kessler at Tamarack Partners.

M&A COMMENTARY

U.S. Food & Beverage M&A are in a state of uncertainty following a slowdown in dealmaking in 2022 after an active 2021. However, our experience has taught us that such times can be precisely when valuations become more attractive and opportunity knocks.

STUBBORN FOOD INFLATION

According to the most recent Consumer Price Index (CPI) for Food, we are about eight months past peak inflation. In February of 2023, food prices increased 9.5% year-over-year (YoY), decelerating from a 10.1% rise in January and a peak of 11.4% last August.

INDUSTRY INSIGHT: “THE PERMANNENT ABNORMAL” 

“In a world changed by the pandemic, “the new normal” has been replaced by “the permanent abnormal”. Despite the past few years’ challenges, adaptable food firms learned how to leverage strong demand and navigate complexities, emerging from the pandemic in solid financial shape.