March 29, 2024

Private Equity Investments in Food Assets



Published May 25, 2023, 3:20 p.m. by Violet Harris


In recent years, private equity firms have been increasingly interested in investing in food assets. This is due to a number of factors, including the growing global population and the rise in middle class consumers in emerging markets.

According to Euromonitor International, the value of private equity investments in food and beverage companies reached a record US$25 billion in 2015, up from US$15 billion in 2014.

There are a number of reasons why private equity firms are attracted to food companies. Firstly, the food and beverage industry is relatively recession-proof. People will always need to eat, no matter what the economic conditions are.

Secondly, the industry is undergoing a period of consolidation. This means that there are many opportunities for private equity firms to buy companies and then sell them on at a profit.

Thirdly, the food industry is becoming increasingly globalised. This provides private equity firms with the opportunity to invest in companies that have a presence in multiple countries.

Finally, the rise of the middle class in emerging markets is creating new opportunities for growth in the food and beverage industry.

Private equity firms are attracted to food companies for a number of reasons. Firstly, the food and beverage industry is relatively recession-proof. Secondly, the industry is undergoing a period of consolidation. Thirdly, the food industry is becoming increasingly globalised. Finally, the rise of the middle class in emerging markets is creating new opportunities for growth in the food and beverage industry.

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although private equities have been

holding considerable assets in the

global packaged food market but the most

recent acquisition of heinz by berkshire

hathaway and 3g capital for 28 billion

u.s. dollars is by far the biggest scale

in the industry in the past private

equity funds have been investing in

iconic food brands and portfolios with

various aims and differing results for

example your plate currently the world's

third-largest yogurt label was invested

by a French private equity fund pai

partners back in 2002 with the aim to

aid international growth however not

having had a much impact on the brand's

international expansion in nine years in

2011 the fund sold its fifty percent

stake to industry player General Mills

based on 2012 preliminary results so far

yo plates international growth has not

picked up strongly and continues to face

a strong competition from activia and

yogurt or pai partners again is one of

the private equity owners of the uk's

leading biscuit manufacturer united

biscuits which has been up for sale

since 2010 however despite a long line

of high-profile suitors which included

the likes of Kellogg's campbell soup or

China's bright foods and wahaha group no

offer was accepted so in the summer of

two thousand twelve the owners of the

business divided it into two units salty

snacks and sweet biscuits by the end of

2012 and the salty snacks unit was sold

to an industry player inter snacks but

it's very likely that the remaining

sweet biscuits division and will find an

owner very soon also in 2012 Lion

Capital the private equity owner of the

UK cereal manufacturer weetabix limited

sold a sixty percent stake in the

business too bright foods China one of

the top ten

these food and drink manufacturers now

Heinz in the world 13th largest food

manufacturer is under the ownership of

Warren Buffett founder and chief

executive of Berkshire Hathaway and he

has the reputation and history of

investing into iconic global brands with

a long-term vision he owns stakes in

companies from coca-cola to IBM to

General Motors under this new ownership

Heinz will not benefit from the

operational synergies in the same way

then as if it was acquired by an

industry player but it could get a

significant financial boost to make a

large-scale acquisition into entering

new markets and categories and realize

some of its long-standing ambitions for

example to become a major player in

global baby food given the reputation of

its new owners and the company's

consistently positive financial

performance it is unlikely that Heinz

will face the same fate than for example

united biscuits of being sliced up and

sold separately

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