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SEPTEMBER 15, 2023

Please see below for a listing of what the North Point Food & Beverage Team has been tracking this week. We hope that you find the content insightful and a nice way to summarize the most noteworthy Food & Beverage events of the week.


Have a nice weekend!

Glen Clarke

Head of Food & Beverage

DEAL-RELATED NEWS

Heartisan (Ronin) buys North Country Packaging.

  • Heartisan Foods, a Wisconsin based manufacturer of specialty and flavored cheese, acquired cheese maker North Country Packaging, also based in Wisconsin
  • The acquisition will triple Heartisan’s manufacturing capacity and enable Heartisan’s expansion into new product offerings

Source: MergerMarket

J.M. Smucker to buy Twinkies-maker Hostess Brands for $5.6B.

  • J.M. Smucker acquired Hostess Brands for $5.6 billion in a cash and stock transaction, further strengthening Smucker’s position as a leading player in convenient, indulgent snacks

Source: Food Dive

Online grocery firm Instacart seeks up to $9.3 billion valuation in IPO.

  • Instacart reports that it will set an offer price for its upcoming IPO between $26-$28 per share, valuing the Company at a potential size of $9.3 billion on a fully diluted basis

Source: CNBC

U.S. food companies go deal hunting as pandemic growth fades.

  • Packaged food companies are primed for a highly acquisitive Q4’2023, and potentially Q1’2024, despite the strained lending environment
  • The food industry experienced an uptick in M&A during the first half of 2023, and while deal value trended down, deal volume jumped up 17.5% compared to 2022 as of September 1

Source: Reuters

Dearborn Sausage acquires four additional meat brands.

  • Dearborn Sausage bought four Great Lakes regional protein brands: Butcher Boy, Virginia Davis Brand, Brookside Brand and Farmer Peet

Source: Meat + Poultry

Bacardi buys Ilegal to capture premium mezcal market.

  • Bacardi acquired its first mezcal brand in its purchase of Ilegal amidst fast-growing consumer interest in the beverage

Source: Food Dive

Molson Coors boosts its investment in Zoa Energy.

  • Molson Coors will expand its investment in Zoa Energy, a better-for-you energy drink brand, assisting with the Company’s plans to double its marketing spend in 2024

Source: Food Dive

FOOD AND BEVERAGE MUSINGS

Eat Just’s Good Meat division fails to pay $30M worth of invoices.

  • Eat Just’s cultivated meat division, Good Meat, failed to pay $30 million in invoices to ABEC, a bioreactor specialist firm assisting Good Meat on establishing California and Singapore facilities
  • The ongoing litigation is a poor omen for Eat Just’s goal of achieving profitability and there is speculation that Good Meat is critically undercapitalized

Source: Food Dive

Holiday Retail Sales Growth Predicted to Be Sluggish.

  • As a result of inflation, consumers are expected to constrain spending this holiday season
  • Real sales are projected to grow at the lowest rate since the financial crisis, at about 1%, as shoppers are expected to allocate their dollars to more costly nondiscretionary spending

Source: Progressive Grocer

India reduces tariff on U.S. turkeys.

  • The National Turkey Federation and the USA Poultry & Egg Export Council announced that India will eliminate a retaliatory tariff on U.S. frozen whole turkeys and frozen turkey parts
  • The trade agreement reduced basic tariffs on those products from 30% to 5%
  • This change creates an important new market for U.S. turkey producers, as tariffs previously overpriced U.S. turkey products in the Indian market and prevented American players from participating

Source: Meat + Poultry

OSU to host Rural Economic Outlook.

  • The Oklahoma State University Department of Agricultural Economics is holding the annual Rural Economic Outlook Conference on October 11
  • Key topics will include the upcoming Farm Bill, market conditions and an informed outlook on the agriculture industry
  • Notable speakers include Bart Fischer, co-director of the Agricultural & Food Policy Center and research assistant professor at Texas A&M University, and Brian Bledsoe, chief meteorologist, KKTV 11 News in Colorado Springs

Source: Meat + Poultry

Pack Expo opens with details on packaging, processing industry update.

  • Pack Expo was held this week in Las Vegas from September 11-13
  • The packaging and processing industry grew at a rate greater than 10% in 2021 and 2022 with expansion expected to continue at a slower pace moving forward, at a rate under 5%
  • Large industry equipment backlogs caused by high demand and supply chain issues are easing
  • Labor shortages, especially of service technicians, remains a major challenge in the industry

Source: Meat + Poultry

Producer Price Indexes – August 2023.

  • The Producer Price Index for final demand rose 0.7% in August, the highest monthly jump in over a year
  • The rise in the metric is largely attributable to the increase in the index for final demand goods (including food), which rose 2.0%, while the index for final demand services rose only 0.2%

Source: Bureau of Labor Statistics

Kroger Says Supermarket Sales Are Under Pressure as Shoppers Pull Back.

  • In response to inflation, consumers, particularly those shopping on a budget, are expected to tighten spending across the next six months
  • Kroger expects a resulting decline in supermarket sales, adding additional pressure to the company’s efforts to merge with Albertsons, a proposed transaction which remains under review by the FTC

Source: WSJ

The Top 5 Food as Medicine Functional Ingredients.

  • Certain foods have established medical benefits and such functional ingredients have recently gained momentum in the market
  • The most popular food ingredients in 2023 include: pre- and probiotics, mushrooms, adaptogenic herbs, golden milk and omega-3s

Source: The Food Institute

What Can Supermarkets Learn from the Success of ‘Extreme Value’ Retailers?

  • Discount grocers are recording strong growth as continued economic pressure drives consumers to be more price conscious
  • Demographics of value shoppers are shifting to include a growing proportion of higher-earning consumers in addition to lower-income consumers in light of market conditions

Source: The Food Institute

Olymel closing pork and poultry plants.

  • Canadian meat processor and distributor Olymel will close its pork and poultry plants in Q4 this year
  • The decision was made as a result of both plants operating below capacity, necessitating a need for consolidation in the eyes of Olymel

Source: Meat + Poultry

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