Corporate activity in the food & beverage industry in 1Q20 was significantly impacted by COVID-19, with only four transactions announced compared to 11 in 1Q19, the latest review from Comet Line Consulting says.
Impact on the sector has been varied depending on the channel in question. Suppliers and distributors to foodservice have been dramatically affected by the closure of clubs and licensed premises while those servicing foodservices were reduced to takeaways and deliveries.
“The consumer demand dynamics are changing as consumers adjust to financial uncertainty,”
Suppliers and distributors to the foodservice channel were significantly impacted after the closure of clubs, licensed premises in hotels and pubs, casinos and night clubs and restaurants and cafes reduced to takeaways and deliveries.
Meanwhile, some retail suppliers experienced a spike in demand during a period of increased consumer demand witnessed in late February/March.
“Anecdotally, we understand that shorter shelf life categories have traded flat or experienced a reduction in demand in retail compared to longer shelf life categories,” it said.
Most of the 1Q transactions happened before closures were announced.
T&G Global acquired the fresh produce division of Freshmax NZ for $30 million (Food & Drink Business 14/02/2020).
Plant-based F&B business Soulfresh received a £26 million (A$50 million) investment from True, a UK-based retail and consumer sector investment specialist with funds under management of £200m. Robert Soros, the son of billionaire investor George Soros, committed additional capital to push the total investment to just over A$50 million. The capital raised would be used to grow the international operations of Soulfresh.
Retail Food Group disposed of the Hudson Pacific Food Service and Associated Food Service businesses to Hudson Food Group. Retail Food Group recognised impairment losses of $18.3 million (FY19) and $7.2 million (1HFY20) on the Manufacturing and Distribution division sold to Hudson Food Group. Retail Food Group acquired the Hudson Pacific business in August 2016 for $88 million settled through the issue of shares in Retail Food Group and a cash consideration.
New Zealand based Sealord Group acquired the remaining 50 per cent shareholding in Petuna Aquaculture from the Rockliff family. Petuna farms ocean trout and Tasmanian Atlantic salmon. Sealord acquired 50 per cent in 2010 and it will now be a wholly owned subsidiary of the group.
Fonterra sold the Dennington Processing plant to ProviCo Australia. ProviCo is the largest supplier of calf milk replacers, manufacturing a range of feed and vitamin fortified products for animals (Food & Drink Business 04/03/2020).
The ACCC approved the acquisition of Jewel Fine Foods by Coles. Jewel Fine Foods was placed under voluntary administration in April 2019. In September 2019, B&J City Kitchen’s acquisition attempt was blocked by the ACCC. “The acquisition of Jewel Fine Foods is in line with Coles’ strategy to improve its convenience offering,” Comet Line said (Food & Drink Business 25/03/2020, 10/09/2019).
Health food company Oliver’s Real Food received a takeover offer priced at $0.10 per share, valuing the equity of the company at $27 million. Shortly after receipt of the takeover offer, Oliver’s announced that it would suspend trading at all the company’s locations. The store closures are in response to the COVID19 outbreak and restrictions on travel in Australia. The impact of the store closures on the takeover offer is unclear, Comet Line said.
