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Food and beverage companies are unlikely to attack billions of dollars of transformative M&A deals this year, with giants like Kraft Heinz and Molson Coors focusing on small acquisitions that keep their finances under control while exposing them in categories like better grandmas and functional drinks.
Food space has moved significantly in recent years to so-called “bolt-on” transactions as companies adopted a more disciplined approach after several large transactions in the 2010s failed to meet their optimistic goals and left companies with billions of dollars in debt.
Molson Coors CFO Tracey Joubert said last month that the consumer analyst group at the annual conference in New York (Cagny) last month the beer giant will continue its “string of pearls” strategy to prioritize brands that prioritize brands that play in categories that lack or have a limited presence. The transaction must also be large enough that Molson Coors can use its weight to expand their business.
Molson Coors in January Minority shares of non-alcohol carbonated mixer thermal treethe latest deal to build on a strategy of increasing exposure beyond beer. The transaction took place two months after Molson Coors I bought a large portion of Zoaa better energy drink co-founded by Dwayne “The Rock” Johnson.
Over the past few years, food makers have been engaged in billions of transactions, but in almost every case they use a single company or brand that fills the gaps in their already burgeoning portfolio.
Last year, Campbell’s company concluded a $2.7 billion deal for Rao’s sauce maker Sobos brandPepsiCo has given up $1.2 billion for a Mexican-American food maker SIETE FOODS. And Hershee I bought a sour stripA sour candy brand with a strong presence on social media.
Cagny executives said they are looking for opportunities to improve their balance sheets and restructure or improve their portfolio.
“When it comes to portfolio management, our priority is to have a bias against bolt-on and M&A to strengthen and accelerate organic growth strategies,” Kraftheinz CFO Andre Maciel told analysts.
In recent years, few companies have been as active as Hershey. Reese’s and Kisses Maker used M&A to build a $1.1 billion Salty Snacks portfolio. Dot pretzel, Skinnypop popcorn and Pirate booty puff.
“M&A has played a key role in growth over the years, but we have actually reached that best portfolio because it all starts with competing with having the right portfolio,” Hershey CEO Michele Buck told Cagny. “We will continue to use M&A as a way to expand our portfolio.”
Billy Roberts, senior food and beverage analyst at Cobank, said he hopes Dive will pick up the deal earlier this year. Last year, on average there were less than 500 cases per quarter, down nearly 40% from 2021 to 2023. Cooperative Banks was listed in their November report last year..
He predicted that M&A would accelerate due to lower interest rates, fewer external distractions for companies, and the need to improve margins and growth, as consumers withstand inflation are not tolerant of price increases.
“There are quite a few opportunities for M&A activities,” Roberts said. Some small entities can actually be featured in several different categories, such as snacks and plant-based alternatives.”
