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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