FOOD & BEVERAGE MARKET INSIGHTS
- After a year of uncertainty, Food & Beverage M&A activity is expected to rebound in 2021
- COVID-19 has established a new “normal” for consumer trends
- Food market prices saw the highest inflation in nearly a decade
In 2H20, when capital markets stabilized, reducing capital uncertainty, M&A activity rebounded, resulting in only a 13% decrease in total closed deals in 2020 compared to 2019. With significant available capital and low interest rates, the 2H20 rebound is expected to continue through 2021 as buyers pursue targets to build scale and broaden distribution reach.
COVID-19 has established a new paradigm for the consumer revolving around the home (eat at home, work from home, leisure at home) resulting in online grocery sales increasing over 22% from the same period last year. More than 55% of all consumers are eating at home more often since the pandemic began with many anticipating they will be dining out less in the future, driving growth for fresh food and prepared meals.
With increased consumer spending at grocery stores and restaurant closures, as of October 2020, retail food prices were 4% higher than the same time the prior year, the highest annual food-price inflation since 2011.