The UK food and beverage sector saw a 'surge' in merger and acquisition activity last year, a new study by Oghma Partners has found, with 116 deals taking place, up from 74 deals in the previous year, a 57% increase.
Total deal value increased by around 20%, the data showed, coming in at £2.1 billion (€2.45 billion), compared to £1.7 billion (€1.98 billion) in 2022.
According to Oghma, some of the issues that impacted M&A activity in the food and beverage sector in 2022 spilled over into 2023, including inflationary cost pressures, the cost of living crisis and the increased cost of debt.
However, it added the increase in activity was due to 'pent up seller activity', as well as a number of businesses being acquired out of administration.
Oghma Partners added that UK plant-based food companies have 'particularly struggled' in 2023, with three businesses bring acquired out of administration – in June, June, Vegan Food Group acquired Meatless Farm, in July, Vbites acquired Plant and Bean, and in December, Vbites went into administration.
"The meat free industry has faced a triple whammy – a cost of living crisis turning consumers away from higher cost meat-free products, cost inflation and much reduced investor appetite to provide follow-on funding," commented Mark Lynch, partner at Oghma Partners.
Looking Ahead To 2024
Lynch added that the abating inflationary pressures that led to additional market opportunities for larger players in 2023 are likely to continue, although this year is unlikely to see a spike in activity.
"Looking into the rest of the year we would be surprised if deal volume changes much," he said. "However, we do expect to see a pick up in deal value. Financing terms have stabilised or are easing and valuation expectations have become more modest.
"The combination of these two aforementioned factors combined with an easing input cost environment should provide a more palatable cocktail for success in 2024.”