Page 8 - Food&Drink magazine July 2022

INDUSTRY REPORT
What makes your business valuable?
In the last two years, the Australian food and beverage sector has grown by an average of 4.3 per cent per year, with some sub-sectors posting highly variable growth rates. Senior advisor Mark Ostryn from Groves & Partners provides analysis on a competitive market and what it means for owners keen to sell, or acquire.
THE financial dream of most entrepreneurial food and beverage business owners is to be bought out by a large company.
A lucrative exit is seen as pay off for their vision, persistence, hard work, and overcoming supply and distribution challenges.
While only a small proportion of owners achieve this dream, there has, until quite recently, been an increase in business sales.
In 2020, there were more than 100 reported transactions in Australia, with large domestic and international food and beverage companies often paying a premium price for smaller food companies with quality assets or intellectual property.
However, with recent economic volatility, there are fears that food and beverage business sales volumes and values will shrink.
As with previous dips in
economic activity, those fears may well be unfounded as quality assets, smart people, and the capacity for future growth will always attract interested buyers. Private equity has shown little hesitation to pay premium prices for smaller food companies with quality assets.
In fact, a downturn in a trading environment may well propel larger businesses to acquire proven products, brands, or intellectual property rather than risking organic growth.
REPORTED TRANSACTIONS OF FOOD AND BEVERAGE COMPANIES IN 2020.
WHO ARE THE BUYERS?
Many business sales were by larger food companies and private equity. For example, Arnott’s Group (Diver Foods), Endeavour Group (Joseph Chromy Wines), JBS Australia (Rivalea, Huon Aquaculture), Lion (Fermentum Group, Bell’s Brewing), and Treasury Wine Estates (Frank Family Vineyards).
Private equity groups including Quadrant, TPG Capital, and Liverpool Partners looked to more niche markets, particularly in alternative proteins and food tech.
The largest number of transactions were in alcoholic beverages, snacks, food service distribution, plant-based food, and seafood.
Brands that conveyed positivity, particularly catering to active, health conscious millennial demographics drew a lot of interest.
There was also a strong
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