Harris Williams investment bankers regularly attend industry conferences and events. On the flight home, they share three key takeaways to help shape your strategy.
Event: Anuga 2019
Report by: Brant Cash, managing director; Will Bain, managing director; and Andreas Poth, director, all of the Harris Williams Consumer Group
Event Overview: Held in Cologne, Germany, Anuga is the world’s largest trade fair for food and beverages.
Why is this an important event for professionals active in this industry?
Cash: Anuga is the world’s largest biannual trade fair for food and beverages, making it a must-attend event for our global team. It’s a great place to meet with international consolidators and discuss their global M&A strategies.
Bain: Young, dynamic brands with innovative products certainly played a prominent role at this year’s Anuga. It is really valuable for us to get up to speed on the latest innovations and see which trends are getting the most attention. In addition to new and innovative products, there was also a vast array of new packaging formats, designs and materials.
Which trends, companies or business models were top-of-mind at the event?
Poth: There were many companies offering innovative, environmentally friendly packaging, including decomposable materials, which we see as an increasing focus driven by consumers. Along the same lines, there was also a significant emphasis on social impact among many of these companies.
We also heard from several of the larger European bakeries that are looking to build global platforms. Consumer demand is strong for authentic European breads, pastries and desserts, and many markets are lacking local producers with the right expertise.
It definitely seems as if vegan and “free-from” products are now commonplace in Europe. While those categories have been growing, they were considered niches until recently. Based on what we saw at Anuga, the adoption levels we’ve witnessed in the U.S. are now reaching Europe. And while vegan used to be a synonym for meat replacement, the new definition encompasses many more sub-sectors, from snacking and confectionery to animal proteins and beverages. It’s not just startups focusing on vegan and free-from products—established market leaders are also shifting into these areas.
Cash: The ingredient suppliers at Anuga appear to be moving downstream and positioning themselves as turnkey solution providers for their clients. Being a supplier of ingredients, flavors and finished products is becoming more important as customers demand faster speed-to-market and more comprehensive solutions.
What opportunities are these dynamics creating for strategic buyers and private equity investors?
Cash: The food and beverage industry is rapidly changing and has become a key sector for private equity, family offices and other financial investors. Innovative, fast-growing brands and new consumer trends have disrupted the industry to its core, and companies that are able to adapt quickly will continue to benefit.
At the same time, large companies with “legacy” products don’t want to get left behind and are looking to rapidly reinvent themselves to address today’s consumers’ needs.
Bain: Also of note at this year’s show was the plethora of brands operating in the direct-to-consumer (DTC) channel. Owning the customer relationship has many significant benefits and enables brands to grow incredibly quickly and on their own terms. For private equity investors, DTC creates opportunities to accelerate growth in a way that was previously impossible. For strategic buyers, access to DTC expertise can provide significant distribution synergies. This is certainly one of the most exciting developments in the food and beverage space.
Published October 2019