Food and beverage

A niche opportunity with the F&B sector

Trefor Griffith Trefor Griffith

Consumer trends focused on wellbeing and the increasing importance of a brand’s ethics continues to fuel investor interest in niche products and brands

The UK ‘free from’ market continues to grow at a pace and is expected to be worth £673 million by 2020. The PE community is clearly aware of this potential - a standout deal in Q3 was Mayfair Private Equity’s acquisition of a majority stake in Promise Gluten Free. The Donegal-based company exports its gluten-free loaves to over 1,000 stores in Australia and 10,000 outlets in the US and Canada, as well as supplying Tesco, Sainsbury’s and Marks & Spencer in the UK.

Separately, the Soil Association has said that the sale of organic products is due to reach a record £2.2 billion in the UK by end of this year. Unilever jumped in on that trend last quarter adding organic herbal tea business, Pukka Herbs, to its portfolio. Unilever has vowed to adhere to Pukka’s ethical heritage whilst helping it expand its global footprint as demand for upmarket organic beverages increases.

At the smaller end of the scale, Pembroke VCT made a further investment in cold-pressed juice producer Plenish. Life Health Foods UK, owner of breakfast brands Up & Go and Nutri-Brex, added premium breakfast smoothie, Nosh, to its growing portfolio.  

It was also interesting to see Diageo, the world’s largest distiller, take a minority stake in Seedlip, a British company which produces non-alcoholic distilled drinks. The investment was made via Distill Ventures, the company’s funded accelerator programme for entrepreneurs. With the number of drinkers in the UK falling and millions of people taking part in initiatives such as ‘Dry January’ and Macmillan Cancer Support’s ‘Go Sober for October’, it wouldn’t be surprising to see more drinks brands moving into this area.

It’s not only humans fuelling interest in more niche ranges and brands. The continued ‘humanisation’ of pets, which sees consumers opting for premium and natural food offerings for their four-legged friends, led to a number of deals over the summer. PE firm Endless’ SME fund, Enact, invested in Kennelpak, a wholesale supplier of own-brand and third party branded pet food and associated pet products. The quarter also saw Rutland Partners acquire Armitage, a leading manufacturer and supplier of premium branded pet treats and accessories. Interest in the premium end of this market was also evident on our TV screens, with Dragons Den’s Jenny Campbell and Tej Lalvani investing £50k in Huxley Hound’s organic and vegetarian pet treats.  

For further information, please contact Trefor Griffith.

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