Food & Beverage

Food & Beverage

Food & Beverage is an everchanging sector and has most recently been defined by a move toward online retail. The most significant channel for the online sale of food and beverages are, at present, the online shops of the large supermarkets and warehouse stores or subscription services.

Market View

• The agriculture, food, and beverage industries are structured under complex and more dynamic business models. While the Agri, Food & Beverages industry remains largely fragmented, it has been able to consolidate more and more into large, integrated operations. Irrespective of sector, size, and type of operations, numerous forces are reshaping the global industry, leading to a spate of new business models, consolidation, and thus, M&A activity.
• The implementation of online retail in Food & Beverages has been lagging for two decades. However, it has finally taken off now, becoming the fastest-growing product category in eCommerce. The key challenges in this sector are facilitating the particularly fast delivery of perishable goods, solving the last mile problem, and reducing the high cost of flexible, same-day delivery. These factors keep entry barriers high. Thus, only the largest eCommerce market players like Alibaba and Amazon as well as established offline retailers can afford to conquer the Food & Beverages market through eCommerce.
• Strategic buyers continue to fuel M&A activity in the food and beverage industry (including companies primarily owned by private equity investors).
• Huge cash reserves held by strategic buyers, ample dry powder held by private equity funds, and low interest rates, mean the forecast for M&A activity is bright. In the short term, as pandemic limitations stay in place until vaccination uptake accelerates, we may witness persistent divergence of trends in the food and beverage industry. Businesses with a large focus on retail, e-commerce, or delivery should continue to experience strong demand fundamentals.

Market Outlook