Healthy Food

Healthy food: the season of acquisitions has started

To expand their market and widen the range of products to be submitted to consumers, there are more companies that develop new health lines or acquire specialized brands (from Mark Up n.269)

To understand the success of the healthy food sector, just take a tour of the grocery stores and supermarkets, where the shelves dedicated to organically grown fruit and vegetables, gluten-free and vegan foods are increasingly large and with an ever-growing assortment. Organic food is worth 3.5 billion euros and almost 3.5% of total food sales – a value that is fivefold compared to 2000. And even the Ismea data speak for themselves: in the first six months of last year, consumption increased by 10.3%, particularly in Northern Italy, where organic spending exceeds 65% with a particularly marked incidence in the sectors of honey (12.9%), eggs (12.9%), fruit ( 7.8%) and vegetables (5.6%). The rapidly growing product categories do not end here and also include organic chicken meat, which recorded a boom of 61% in terms of volume, and organic wine (+ 108%). Modern distribution, with its own sectors dedicated to organic products, continues to be the main distribution channel, eroding more and more market shares for specialized shops. And they help promote smaller businesses.

The healthy food sector has seen major changes recently, mainly driven by the push for increased M&A operations by a small circle of players who have initiated or accelerated exchanges to expand their market and range of products for consumers. Important companies in the food & beverage sector have developed new lines or acquired brands specialized in veg food: among these, even a giant like Amazon has invested 14 billion dollars to implement the natural food and organic products sector.

It is no coincidence that M&A transactions reached their peak during 2017: the combined effect of the strategic agenda of industry small and large entrepreneurs, traditional F&B giants and retailers will continue to push evolution of an industry that last year alone saw 103 agreements closed (+ 52% compared to 2016), of which about 90% in the American continent (mainly the United States) and in Europe, where the demand for more healthy and sustainable is stronger and more established among consumers. “The trend is certainly positive but in Italy there is still a long way to go – explains Marco Vismara, partner of the company specialized in M&A Oaklins Arietti and expert in the healthy food sector-. In other more advanced markets, organic is close to 10% of total sales in the food sector “.

But what factors are driving the surge in M&A operations in this sector? The answer, argue the main actors of change, lies in the natural evolution driven by competitive dynamics within the industry and along the value chain. The initial simplicity of organic products allowed the first companies to create business by outsourcing the production activity to focus on the development and sales channels – mainly chains and stores specialized in natural products – which helped them at first to reach more health-conscious customers, with limited advertising efforts and lower expenses. Focusing on the downstream stages of the value chain was enough to succeed in such a growing market, where rivalry was limited and margins comfortably high. An evident trend has been to gradually expand the product portfolio to include gluten and lactose-free and organic ones. Today the companies that have made organic history put all their specific weight on the plate: the year of foundation, the careful choice of raw materials, the positioning in the Italian supply chain (regional and local), the creation of dedicated factories become qualifying. exclusively to organic or gluten-free processing, the quality and methods of the craftsmanship of the ingredients, the sustainability of the entire production cycle, up to ecological packaging.

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