Food and beverage

Overseas investors’ appetite for F&B businesses grows

We have seen continued interest from overseas investors this quarter, which has been an increasing trend in the food and beverage sector in recent years. With the EU referendum result prompting the recent devaluation of sterling we have seen a further boost as the UK has become more price competitive and attractive to overseas investors.

Our latest edition of Bite Size, a quarterly overview of activity in the UK food and beverage (F&B) sector provides analysis of M&A activity in the third quarter of 2016 and looks ahead to the trends shaping the market in the coming year. Unsurprisingly, the UK’s decision to leave the European Union remains a dominant theme.

We also take a look at how companies can use forensic accounting to help protect against the risk of food fraud. In addition, we present a case study of Little Dish, founded by Hillary Graves, one of Grant Thornton’s Faces of a Vibrant Economy. Little Dish combines a strong social mission with an innovative commercial proposition in the market for healthy children’s food.

Download the report or read on for the highlights [ 757 kb ].

M&A activity

Given the uncertainty created by the Brexit vote, M&A activity in the food and beverage sector held up relatively well in Q3 2016. Given the typical length of a transaction from commencement to completion, most transactions would have been underway prior to the Brexit vote, it’s therefore too early to draw negative conclusions regarding the impact of Brexit on M&A.

Foreign workers exit after Brexit

Although Brexit negotiations haven’t commenced, the impact on the labour market is already being felt. The sector relies heavily on overseas labour and finding enough skilled workers is already challenging as the majority of domestic workers are reluctant to take on manual labour in the sector. If a significant number of EU workers leave the UK, then we will see an increased pressure on wage levels as labour shortages become even more acute.

Conclusions

Uncertainty surrounding Brexit will inevitably have an impact on M&A, causing some transactions to fail or be postponed, some acquisitive groups may put their M&A agenda on hold until there is greater clarity. However, Brexit negotiations may not be completed until late 2018 and both private owners and public companies cannot postpone their sale/acquisition plans for that long. Food and beverage is a defensive resilient sector and the underlying drivers of M&A are strong. We expect that any slowing in M&A activity may prove temporary.

Read Bite Size
Download PDF [ 757 kb ]