Despite the various challenges presented by COVID-19, the Agribusiness, Food & Beverage industry has been a resilient capital markets performer with Aussie businesses achieving outstanding results in the domestic and global Mergers & Acquisitions and (IPO) markets.
Grant Thornton released its Bite Size Dealtracker 2021 taking a closer look at domestic and global trends of M&A and IPO activity for Agribusiness, Food & Beverage business.
The Bite Size Dealtracker 2021 reports run from 1 July 2020 to 30 June 2021.
Cameron Bacon, Partner – Corporate Finance & Victorian Industry Leader of Agribusiness, Food & Beverage at Grant Thornton had the following remarks on the survey.
“This year’s Dealtracker insights clearly showed the Australian Food & Beverage sector experienced a very strong rebound in transaction volumes and values since the impact of COVID-19 on the market in the first half of 2020.”
“This report explores which subsectors experienced the most growth in terms of deal volumes and values during FY21 demonstrating their dual popularity as both successful business ventures and trending growth in consumer demand.”
The following Agribusiness, Food & Beverage sectors demonstrated solid performance in the report and after a strong comeback in FY21 are predicted to continue throughout FY22:
Craft Beer
Over the past few years Aussie’s consumption in the craft brewery sector has continued to grow. The market has exploded over the last number of years with many new beers produced. As these products gain increasing acceptance more transactions are taking place.
The report found the number of transactions in the Australian brewery sub-sector currently makes up 4% of Australian deals and this number is expected to grow significantly in the next 12 months with a major contribution from craft breweries.
Pre-packaged meals
This year has seen an increase in the pre-packaged food trend.
It’s the return of the TV dinner, but not as we know it – gone are the fish fingers and soggy frozen vegetables, and instead Aussies are enjoying fresh vegetables, tender meats, healthy sides, and a variety of sauces from a range of cuisines in a pre-packed and convenient serve.
Pre-packaged meals make up a component of the packaged foods and meats subsector which continued to account for the majority of deals, and is expected to continue in FY22.
Innovative agricultural products
With the increasing emergence of new technology for all sectors, Food and Beverage producers are proactively integrating them into their operational and production processes.
Despite the composition of deals for this subsector staying consistent with the historical period, the size of Agricultural Product deals has seen an increase due to the push for innovation in the Subsector to reduce costs, increase yields and reduce emissions.
Agricultural Products accounted for 30% of the Australian top 10 deals monitored in the Dealtracker and this demand is expected to remain strong for the next year.
Carbon capture is also an evolving space in the Agricultural Products subsector that is expected to have a stronger M&A presence in future years.
Plant-based meats
Part of this innovation in agricultural products has seen a rise in the production of plant-based meat alternatives, consumers have in turn taken to these foods with great enthusiasm.
Many of these plant-based products are a result of agricultural innovation and are packed with nutritional value. Plant-based meat products offer options to consumers who want to try something new but don’t want to stray too far from their traditional meals.
Distillers & Vintners
The Dealtracker report discovered Distillers & Vintners accounted for 22% of all Aussie acquisition deals in FY21. Wineries who have done well during the lockdowns have undertaken creative direct marketing activities delivering boxes of wine to doorsteps.
In addition, the rise in the popularity of spirits including bespoke gins, whiskies and vodkas throughout the pandemic has given this subsector a huge boost over the last year. This trend is expected to continue into FY22 with a predicted rise in M&A activity.
Download Grant Thornton’s latest Bite Size Dealtracker 2021 report to learn more.
The report provides further details into the Agribusiness, Food & Beverage sector’s resilience when faced with changing market trends due to the pandemic, key areas of investment, and the factors leading to what will continue to be a strong year for activity in this sector.
