Health and Nutrition M&A and Business Deals Grew 13% in 2016, NCN Reports

February 15, 2017

Food and beverage companies in particular are of high interest to investors, said NCN.

Investor interest in the nutrition and health & wellness markets is strong and growing, according to a new report by Nutrition Capital Network (NCN), an organization that helps to facilitate matches between companies and investors in the nutrition and wellness space. NCN says that the number of mergers and acquisitions, as well as equity financings, grew 13% in 2016 to reach 706 transactions-higher than 2015’s recorded 627 transactions.

“Top acquisitions reflect a diversity of trends like the potency of pills, the convenience of beverages, consumer interest in probiotics, and the value in the supply end of the industry,” said NCN cofounder and CEO Grant Ferrier in a press release. “They also reflect growing strategic and investment interest in the nutrition and health & wellness industry by the food and beverage, ingredients, and consumer products industries.”

Food and beverage companies in particular are of high interest to investors, said NCN. Like in 2015, investment in food and beverage businesses was high in 2016, totaling 102 equity financings-far higher than the average 26 food and beverage equity financings seen annually in the years 2010–2014.

In addition to high activity in food and beverage, NCN noted the following trends in 2016:

 

  • International activity continues to grow in dietary supplements and natural and organic foods in particular. NCN points to acquisitions by Chinese companies of North American brands like Iovate (MuscleTech and Hydroxycut sports nutrition brands) and dietary supplement brand Doctor’s Best. China aside, Coca-Cola acquired the leading soy-based beverage brand in Latin America, and the International Finance Corporation invested $40 million in Brazil’s WOW Nutrition brand.
  • Beverages are leading food and beverage M&A deals. Dr. Pepper’s purchased Bai for $1.7 billion, while PepsiCo acquired probiotic brand KeVita for $200 million. There were also investments in home cold-press juicing systems, high-end sodas, and kombucha and aloe products.
  • Plant-based ingredients, as well as alternative proteins, are still trending. Danone acquired WhiteWave Foods (maker of soymilk brand Silk) for $12.5 billion, Hormel Foods acquired Justin’s Nut Butter for $286 million, General Mills’ 301 venturing arm invested $18 million in nut-based milk and cheese firm Kite Hill, and Japanese firm Dentsu invested in cricket protein firm Exo.
  • Big food corporations continue to target this space and are creating dedicated venture-capital arms to focus exclusively on very small, promising companies that aren’t yet large enough to be acquisition targets. NCN noted that in 2016, Campbell Soup, Kellogg, Hain-Celestial, and Tyson Foods all “joined the growing pool of food & beverage multinationals with investment vehicles designed to provide capital and resources to nutrition industry entrepreneurs in return for exposure to new trends and growth opportunities.”
  • The valuation of the firms being acquired continues to rise, as evidenced by what NCN saw in 2016-specifically, that “the average multiple of sales at more than 3.0 in branded food & beverage for the first time since NCN started tracking valuation ratios in 2006.”

 

NCN also shared its list of top 10 nutrition and health & wellness industry financings in 2016:

 

 

 

 

 

 

Also read:

2016 Dietary Supplement Mergers & Acquisitions' Driving Forces

Key Dietary Supplement, Food Mergers and Acquisitions in 2015

 

 

Jennifer Grebow
Editor-in-Chief
Nutritional Outlook magazine
jennifer.grebow@ubm.com