Investing in brand authenticity
There are many factors that have and are continuing to drive M&A activity in the FMCG industry, as consumers stay more focused in being healthier and staying active, changing in demographics, lifestyle behaviors and ageing population are impacting consumers’ wellness habits.
These new consumer concerns have impacted the product portfolios of large food & beverage conglomerates that aim to attend an increasing volume of choices with healthier products. Many private equity as well as corporate groups are seeking to invest in fast-growing, brand-driven consumer companies across a wide variety of consumer categories.
Financial sponsors are providing capital requirements to transform the size and scale of these platforms
Private equity will continue to be an active consolidator in the consumer space amid the plenty of activity registered. Financial sponsors are aware of the need of transforming the size and scale of the targeted companies to attract the interest of bigger trade buyers by a combination of organic and acquisition-led growth through complementary acquisitions, complementary products and brands.
Brand strategy, targeting value-added products and innovation are now key to defend and expand commercial presence away from commoditized products. As the consumer industry is suffering intense product commoditizing and mainstream categories are suffering from slim margins, brands are becoming the essence of a firm success.
Brands create emotional relationship with the consumers
When it comes to products and services, consumers want a simpler life and less confusing options so brands give consumers a safe harbor and puts them in a comfort zone on their choice. Many new product proposal have come with specific and focused brands that are easily identifiable today.
Brands have a distinctive advantage and present a clear proposition for consumers in a polarized and changing world
FMCG corporates have been very much aware of the new trends and the proposals offered by these new competitors and has been the catalyst for a very intense M&A activity not only for the size of the deals, but also what it represents for the future of the industry in terms of trends.
Branded products will continue to be one of the major catalysts for M&A
Some deals include financial sponsors as well as players already positioned at top level in their industries entering niche segments of product–focused groups such as craft-beer, food supplement processors, prebiotic drinks, healthy snacking, bio and natural products, healthy beverages, performance water, natural pet foods, organic nutrition brands, etc.
CÉSAR PARRA | Managing Director | Leader of Global Consumer & Retail M&A team