Ingredients sector tops food and drink M&A

By Flora Southey contact

- Last updated on GMT

Image source: GettyImages/z_wei
Image source: GettyImages/z_wei

Related tags: Investment, M&A, Ingredients, Cbd, vertical farming

An average of 15 food and drink acquisitions were recorded every week of 2019, according to Zenith Global. The ingredients sector was the most active, with 65 transactions listed worldwide.

Mergers and acquisitions in the food and drink industry are on the rise. According to Zenith Global, 2019 saw another record broken, with 789 transactions recording on its M&A database​.

This marks a 12-deal increase from 2018 figures, and up 41% compared to 2014. In fact, the number has increased every year since a dip in 2013.

The most active sector was ingredients, with 65 transactions recorded for the year. This figure is up by three from 2018. Dairy, soft drinks, packaging, and beer round out the top five sectors.

Ingredients M&A

One of the most noteworthy mergers for the year took place in late 2019, when DuPont Nutrition & Biosciences and International Flavors & Fragrances (IFF) joined forces​ to create a €40bn nutrition and flavour business.

The firms had combined estimated revenue of over $11bn (€9.8bn) in 2019, with an EBITDA of $2.6bn. According to the firms, the ‘complementary’ portfolios will give the new operation strongholds in multiple key markets including nutrition, probiotics, enzymes, taste, texture, scent, cultures, and soy proteins.

At the time, IFF CEO Andreas Fibig, who will also head up the new company, described the merger as a ‘pivotal moment’. “Together, we will create a leading ingredients and solutions provider with a broader set of capabilities to meet our customers’ evolving needs.”

zenith
Global food and drink acquisitions 2014-19 ©Zenith Global

In January 2019, another significant M&A deal took place when agri-food giant Avril purchased German lecithin and phospholipids producer Lecico​.

According to the purchase agreement, the Avril Group was to integrate Lecico – which supplies non-GMO lecithin, made out of soya, sunflower and rapeseed, as well as phospholipids – into its Oil & Ingredients Solutions (OIS) platform.

“It brings new opportunities with sunflower sourcing and a significant size to help Lecico develop its product portfolio and customer reach,” ​an Avril spokesperson told FoodNavigator last year.

Other noteworthy transactions in 2019 include Firmenich’s 17% stake in French fragrance and flavour supplier Robertet in September, and Givaudan’s purchase of US-based fragrance and flavour house Ungerer in November.

Newcomers: Vertical farming and CBD

The top 15 sectors of 2018 again featured in 2019’s top spots, with the exception of confectionery – replaced by cannabidiol (CBD). Nineteen transactions were recorded for CBD, predominantly in the US and Canada.

vertical farming Andrew Linscott
©GettyImages/Andrew Linscott

Another newcomer, vertical farming, entered the database with eight transactions recorded for the year. Transactions of note include UK retailer Ocado’s two investments in vertical farming​.

The company’s venture arm signed a three-way joint venture deal with 80 Acres Farms and Priva Holding to create a new venture: Infinite Acres.

Of the joint venture, CEO of 80 Acres said: “With Priva’s and 80 Acres Farms’ extensive horticulture, engineering, operational, and food industry expertise, along with Ocado’s predictive analytics, automation and comprehensive system development, the partnership will provide its customers with everything from state-of-the-art facilities with uniquely developed crop recipes and the right unit economics, to an option for facility management with yield guarantees, product packaging, branding, marketing, and distribution.”

In the same year, Ocado also acquired a majority stake (58%) in Europe’s largest vertical farm operator, Jones Food Company (JFC). The leafy greens and herbs producer has the ability to produce consistent crop yields throughout the year, with more than 5,000 square metres of production area and 12 kilometres of LED lights.

“JFC is delighted that Ocado has chosen to partner and invest with us,” ​said JFC CEO James Lloyd-Jones at the time. “We are certain that the combination of their world leading logistics and automation systems coupled with our advanced growing technology with transform the way customers experience fresh produce – delivered fresh to their door a matter of hours from ordering.” 

zenith 2
Top 10 global food and drink transactions in 2019 ©Zenith Global

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