Investments & Acquisitions

UK F&B Sector Sees Increase in Mergers and Acquisitions, Plant-Based Shakeout Continues

According to a new report by corporate finance house Oghma Partners, there has been a significant increase in mergers and acquisitions (M&A) in the UK food and beverage sector over the past year. However, plant-based companies have continued to face difficulties.

In 2023, total deal volume increased to 116, up from 74 in 2022. Total deal value rose by around 20%, reaching £2,100 million. In the first half of the year, issues that had affected deals in 2022 — such as inflationary cost pressures, the cost of living crisis, and the increased cost of debt — continued to suppress higher-value deals. However, there was an increase in activity in the second half of the year, reflecting pent-up seller activity and businesses acquired out of administration; the latter made up 10% of deals.

“The long-term factors that drove excitement in the [plant-based] sector are unlikely to go away”

Plant-based companies had a particularly difficult year in 2023, with three notable businesses entering administration — Meatless Farm, Plant & Bean, and VBites. Meatless Farm was acquired by Vegan Food Group (formerly VFC) in June, and Plant&Bean was acquired by VBites the following month — only for VBites itself to enter administration in December. According to Oghma Partners, the difficulties faced by the sector have been driven by consumers buying fewer plant-based products due to inflation, along with cost inflation for businesses and investor reluctance to provide follow-on funding.

VFC acquires Meatless Farm
Image courtesy of VFC

Shakeout to continue

In 2023, 75% of deals had an estimated value of £10 million or less, up from 69% the previous year. Both years saw a high number of low-value deals compared to the average for the previous five years, which was 57%.

While plant-based businesses faced challenges, so did other sectors — around 25% of deals acquired out of administration were beer producers, driven by an oversaturated market and cost inflation.

“We suspect that the meat-free shake-out will continue this year,” said Mark Lynch, Partner at Oghma Partners. “However, fewer players with greater scale should be able to provide a focused marketing effort to help re-engage the consumer and retailers in due course. The long-term factors that drove excitement in the sector in the first place are unlikely to go away, those businesses and brands that survive this shakeout will emerge the winners over the longer term in our view.”

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