Private Equity Activity in the Food and Beverage Sector

Irish M&A activity surged in 2021, breaking pre-pandemic levels. The food and beverage sector followed this trend with strong private equity investments and acquisitions. During 2021, we saw private equity firms not only invest in familiar brands, but also acquire them. The rate of return in the food and beverage sector remains strong and private equity houses appear to be attracted to the brand familiarity and scope for improvement and growth in the sector. For founders, the investment allows them to scale their brand to the next level, increasing awareness and to get their products on the shelves.

Despite the difficulties caused by COVID-19, demand in the sector has stayed buoyant and the sector seems to have avoided the worst impact of the pandemic. It is encouraging to see that private equity in the sector has grown, with investors recognising that people are continuing to buy their favourite brands, with consumption often increasing as people spent more time at home.

MHC acted on a number of significant transactions in 2021, including:

• The $55m investment by McCain Foods in Strong Roots, the Irish-founded plant-based frozen food company
• The Series B investment by Veronorte, a venture capital company based in Colombia, in Nuritas Limited, which uses AI technology in food to identify new protein supplements and drugs
• The sale of Carroll Meats to Eight Fifty Group, from Cardinal Carlisle

This deal flow evidences strong interest from a broad range of investors including venture capital and private equity houses and we expect this trend to continue in 2022.

As people return to work and footfall increases, the sector is facing some challenges including staff shortages, inflation and increased costs. However, we anticipate that the next 12 months will continue to deliver strong results in the sector, with private equity being particularly active in deli and plant-based companies. We are also noticing an increased focus on the ESG (Environmental, Social and Governance) agenda and sustainability with brands having robust ESG practices becoming more attractive targets. This sector is one of Ireland's biggest industries and there is potential for further growth. New technology is playing a significant role in the sector, bringing huge innovation and helping to adapt products to the evolving demands of consumers.

For more information, contact a member of our Food, Agriculture & Beverage team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.