NEW YORK July 19, 2011
Alongside the growing pressure on the leading multinational corporations to adopt ethical codes of practice, there exists a rising consumer demand for sustainable products. Unable to easily develop this organically, major food and drink manufacturers must look to acquire successful sustainable brands in order to gain a stake in this sector. This report analyzes current M&A trends in this industry.
Features and benefits
* Identify the driving forces behind the growth of sustainable brands.
* Examine a regional analysis of global M&A activity in the sustainable brands sector.
* Learn what makes an attractive target for leading food and drinks manufacturers and what features offer the best promise of continued success.
* Understand how a sustainable brand can continue to be successful after being acquired by a large-scale manufacturer.
* Study key examples of industry consolidation in this sector over the past three years.
Sustainable brands attempt to differentiate themselves using their ethical credibility. However, there are limits to the growth of sustainable brands because of restrictions associated with their scale and distribution network. Although deals with larger partners threaten their degree of independence, investment is required for growth.
Your key questions answered
* What are ‘sustainable brands’ and what has been their impact upon the consumer products industry over the past few years?
* Which companies has a history of acquiring sustainable brands and is there any apparent strategic direction in the pattern of acquisitions?
* How can companies learn from the evolution of the sustainability trend and previous M&A activity in this sector?
* Are certain regions more synonomous with this M&A activity than others and what factors are influencing this
* What has been the impact of the global financial crisis on M&A activity in the sustainable brands sector?
Pre- & post-merger strategies
About the author
Explanation of terms
Growth of sustainable brands
Sustainability as a marketing tool
Features of sustainable brands
Consumers feel a connection to the brand
Sustainable credentials are fundamentally linked to brand values
Sustainable brands are premium brands – at the moment
Sustainable companies are generally small companies
Sustainable brands – easier to buy than build
Barriers to developing an authentic brand narrative
Merger and acquisition activity 2008–2010
Small value transactions are the norm
US companies dominate
Types of acquirer
Small- or medium-sized manufacturers
Geographical breakdown of acquiring companies
North America Europe
The US dominates the market, with the UK a distant second
Geographical breakdown of target companies
North American and European companies are the most popular targets
US companies again at the forefront
Reported deal values and the average deal size are falling
Types of transactions
Pre and post merger strategies
Drivers for acquirers
Emerging niches – filling gaps in product portfolio
Buying innovation and an entrepreneurial approach
Buying expertise and enthusiasm
Access to a sustainable supply chain and contacts
The halo effect
Part of a wider sustainability strategy
Drivers for targets
Growth strategy – diversification of markets
Improving distribution networks
Capital backing for growth
What makes an attractive target?
A product that fits the mainstream
A history of strong growth
A defensible position
An open relationship between the two companies
Keeping key people incentivized post-acquisition
Predicting the future
Acquisition case studies
The Coca-Cola Company
Acquisition of Honest Tea, 2008 and 2011
Acquisition of a stake in Innocent Drinks, 2009 and 2010
The Hain Celestial Group
Acquisition of Plum Baby by Darwin Private Equity
Investment in O.N.E. Natural Experience by PepsiCo and Catterton Partners
A global focus on sustainability
Development of the middle class
The future of sustainable brands
Market growth will continue
Proliferation of brands in the short-term, fewer in the long-term
Sustainable claims will need to become more specific
Future trends in M&A
Innovative approaches to mergers and integration of acquisitions
More consolidation of brands
Creation of ever-larger conglomerates of sustainable brands
Private equity will remain a significant player
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