Food & Beverage Industry Update - MHT Partners · 2018-01-17 · Company has a diverse selection of both frozen and refrigerated handheld sandwiches, including the #1 selling Philly

Food & Beverage Industry Update | January 2018Morsels from the Middle

Food & Beverage Industry Update

Seller Advisory | Buyer Advisory | Corporate Finance

These materials were prepared from publicly available information and other sources without independent verification by MHT Partners, and therefore neither MHTPartners nor any of its partners, directors, officers, employees or affiliates warrants the accuracy or completeness of these materials, including without limitation theaccuracy or achievability of any valuations, projections, estimates or assumptions, all of which are necessarily preliminary and subject to further analysis. Actualresults may vary from such valuations, projections, estimates and assumptions, and such variations may be material.

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Q4 2017

Food & Beverage Industry Update | January 2018


MHT Partners is a leading national middle market investment bank with a high-performing team uniquely qualifiedto serve dynamic, growth-oriented companies. We are the preeminent advisor to innovative, niche market leadersin the middle market, so whether you’re selling a private company, seeking advice for the board of a publiccompany, raising private equity, valuing a company, buying a company, or looking for a read on the current state ofthe deal and capital markets, we are the partners you need when advice and insight matter most. Within theconsumer industry, the senior professionals of MHT Partners have completed over 100 deals, including numerousfood and beverage transactions. We bring these combined skill sets to bear in every engagement, creatingmaximum value for each client through thoughtful positioning and creative deal structuring.

About MHT Partners

Food and Beverage Team

Our Food & Beverage PracticeRecent MHT Partners Transaction

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www.mhtpartners.com | San Francisco | Dallas | Boston | BoulderSeller Advisory | Buyer Advisory | Corporate Finance

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Capital Raise


BioSan Laboratories, Inc.

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Corsicana Farma property of



Patrick CrockerManaging Director

[email protected]

Gavin DanielsPrincipal

[email protected]

Craig Lawson Managing Director

[email protected]

Chris NeilsPrincipal

[email protected]


Chris: Kitchentown is a unique and differentiated businessmodel in the food and beverage community. Can you walk usthrough your services and differentiators?

Spotlight

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Rusty Schwartz

Quarterly SpotlightRusty SchwartzCEO of KitchentownAn Interview by MHT’s Chris Neils

(Continued on Page 3)

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Rusty Schwartz is a lifelong entrepreneur and founder ofKitchentown, a food startup incubator that supports innovators andearly stage food companies by providing facilities to scale upproduction, industry expertise, and access to capital. Kitchentown’smission is to support positive change to the food system byempowering innovators and entrepreneurs through communitybuilding, strategic partnering, and steadfast determination.

Recently Rusty has led a major effort to redefine how food startupsand large food companies can benefit from collaborations toaccelerate product innovation and commercialization throughpartnering.


Rusty: At a high level, Kitchentown is a food startup incubator. We offer food startups production space, equipment,and the opportunity to interact with a community of like-minded peers, industry experts, and investors to help scaletheir businesses. Headquartered in San Mateo, California, and in a fast-growing food and beverage corner of theU.S., Kitchentown offers the necessary infrastructure for scaling food startups, including specialty prep areas, higher-capacity production equipment, walk-in refrigeration, and warehousing.

Chris: So if I’m a startup food company in the Bay Area and need some guidance on how to navigate thevarious challenges of running a business, can Kitchentown help guide me?Rusty: Yes, absolutely. In fact, Kitchentown offers a “Learning Lab” which provides programs for food startups, foodpolicymakers, and anyone who wants to learn more about food and the food industry. We bring together expertsfrom across the industry and put them together with interesting leaders from other sectors to create engaging andinformative workshops, events, classes, and mentorship programs.

Based at our new innovation center in the heart of San Francisco’s Mission District, the Learning Lab helps busy foodentrepreneurs navigate the many challenges of running a food business. Like everything at Kitchentown, we wantthe Learning Lab to be a space where people share expertise, deepen practical skills, experiment with new ideas,and reconnect with their passion for good food.

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Chris: Your facility is most impressive, but describe for our readers what the layout looks like to give thema visual for what Kitchentown really does?Rusty: The original Kitchentown facility opened five years ago in San Mateo and at first blush it looks largely like abig commissary kitchen. It’s about 15,000 square feet and has a number of separate spaces for food preparation.What’s unique about Kitchentown, compared to other facilities is the specialized equipment designed for processingand packaging large batches of food. There is a sizable bakery space with large double rack ovens, 140 qt. mixers,rotary die dough formers, 60 qt. cutter mixers, volumetric piston fillers, and other specialty equipment. There is aseparate gluten-free prep room that is segregated from the rest of the bakery, as well as a temperature controlledroom for processing dairy free ice cream, cold pressed juices, and cold brew coffee and teas. There is also aseparate step out space from larger projects. Currently, we have the online grocery distributor FarmStead at thefacility, a great startup with unique ‘AI’ technology.

Chris: You hear about incubators all the time, especially in the Bay Area, for technology startups. Whatinspired you to start Kitchentown and focus on food and beverage startups?Rusty: Four years ago, the local food movement had caught on and early stage food companies were seeingsuccess. The “better for you” food movement was starting to experience a tipping point. The Impossible Burger andKite Hill had received large investments and plant-based and plant forward startups were beginning to pop up. Atthe same time new delivery companies, new technologies, including robotics and 3D printed foods, were beingdeveloped. I saw all this happening and realized that there was little in the way of infrastructure for foodentrepreneurs. There was no scale-up facility in the Bay Area, and I felt that this was a lynchpin for helping to driveearly food innovation.

Chris: What’s the end goal with Kitchentown? Where do you see the company in 3/5/10 years?Rusty: The market for new food innovations is only getting stronger. Kitchentown will continue to support foodentrepreneurs and innovators. We will open additional facilities for more specialized uses, and we will continue toexpand our role in optimizing early stage companies. You will likely see new Kitchentown facilities opening in othercities in Europe and Asia, and likely a fund to provide ready capital to high value challenger brands we discover.

Spotlight

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Quarterly Spotlight (Continued)


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Notable Q4 Transactions

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The Hershey Company acquires Amplify Snack Brands (December)The Hershey Company (NYSE:HSY) has agreed to acquire Amplify SnackBrands (NYSE:BETR) in an all-cash transaction for $1.5 billion. The strategicacquisition is expected to be accretive to Hershey’s financial targets given themargin structure and growth trajectory of Amplify’s key products. Amplify is anAustin-based international distributor of healthy snack foods, such as the SkinnyPop brand, which compete in many attractive and high-growth food categories.

Campbell Soup Company acquires Snyder’s-Lance, Inc. (December)

Campbell Soup Company (NYSE: CPB) has entered into a definitive agreementto acquire Snyder’s-Lance (NASDAQ:LNCE) for $6.0 billion in an all-cashtransaction. The acquisition will enable Campbell to expand its portfolio of bakedsnack brands, which generated roughly 31% of the company’s sales in fiscal2017. This is the latest activity in a string of acquisitions by Campbell, whichacquired beverage and vegetable company Bolthouse Farms in 2012 for $1.55billion, and Pacific Foods in 2016 for $700 million. The acquisition has beenapproved by the Board of Directors of both companies and is expected to close inthe first quarter of 2018.

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Unilever U.S. acquires TAZO Tea Company from Starbucks (December)Unilever (LSE:ULVR), a global leader in branded consumer products, has agreedto acquire the TAZO tea brand from Starbucks for $384 million. Founded in 1994,TAZO has a strong market position in Herbal, Specialty Black, and Green teas,products which are sold primarily in grocery, mass, and convenience channels inthe U.S. and Canada. The strategic acquisition marks Unilever’s entry into therapidly-growing specialty tea segment.

Utz Quality Foods acquires Inventure Foods (December)

Utz Quality Foods, the largest privately-held and family-managed branded saltysnack marketer and manufacturer in the U.S., has agreed to acquire InventureFoods (NASDAQ:SNAK), a leading specialty food manufacturer and marketer, inan all-cash transaction for $140 million. This transaction, which has beenapproved by both boards, will add a diverse set of brands to the Utz family,including Boulder Canyon Foods, TGI Fridays (packaged foods), Nathan’sFamous, and many others.

All transaction values are reported in terms of enterprise value


Notable Q4 Transactions (Continued)



Keystone Natural acquires J.P. Veggies and Superior Tofu (November)Keystone Natural Holdings, a portfolio company of Keystone Capital, Inc., hasacquired J.P. Veggies (“VeggieLand”) and Superior Tofu for an undisclosedamount. VeggieLand is a leading New Jersey-based manufacturer and distributorof meatless veggie burgers and appetizers. Superior Tofu is a Vancouver-basedmanufacturer and supplier of tofu, soy milk, and other soy-based products. Thetwo companies join Nature Soy in Keystone Natural holding’s portfolio of leadingmanufactures of plant-based, healthy protein products.

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Premium Brands acquires Raybern Foods from TSG Consumer (November)

Ontario Teachers acquires Atlantic Aqua Farms from Encore (November)Ontario Teachers’ Pension Plan, Canada’s largest single-profession pensionplan, has acquired Atlantic Aqua Farms, a leading producer of branded shellfishfoods, from Encore Consumer Capital for an undisclosed amount. Atlantic AquaFarms is the largest grower and processor of the high-quality Prince EdwardIsland mussels under the brand names Canadian Cove and Confederation Cove,and also offers a wide selection of branded oysters, clams, and live lobster.

Premium Brands, a leading North American branded foods company, hasacquired Raybern Foods from TSG Consumer Partners. Founded in 1978,Raybern’s is a leading provider of branded heat-and-serve sandwiches. TheCompany has a diverse selection of both frozen and refrigerated handheldsandwiches, including the #1 selling Philly Cheesesteak Sandwich in the U.S.The strategic acquisition represents another addition to Premium Brands’ diverseproduct offerings, including foods sold under the Grimm’s, McSweeney’s, andFreybe brands.

Nestlé USA acquires Chameleon Cold Brew (November)Nestle (NESN.S), a global leader in consumer snack and drinks products, hasagreed to acquire Chameleon Cold Brew, a Texas-based producer of refrigeratedready-to-drink bottled coffees as well as concentrated cold brews, for anundisclosed amount. Nestle, which took a majority stake in Blue Bottle Coffee inSeptember, is snapping up small independent brands that appeal to youngerconsumers in an effort to reignite slowing sales. This represents the most recentin a series of coffee-company acquisitions for Nestle, which is seeking to bolsterits global coffee portfolio that includes notable brands such as Nescafe andNespresso.



Notable Q4 Transactions (Continued)



Freiberger USA acquires Richelieu Foods (November)

Freiberger USA, Inc., a subsidiary of German-based Südzucker Group, hasagreed to acquire Richelieu Foods Inc., a branded and private label frozen anddeli pizza manufacturer and distributor, in a transaction valued at $435 million. Inaddition to pizza, Richelieu makes sauces and dressings for retail grocery andfood service customers across the United States. The company has nearly 900employees at five U.S. production sites, making approximately 105 million pizzasand nearly 9 million cases of pourable sauces and dressings a year.

Conagra Brands acquire Angie’s Artisan Treats from TPG Growth (October)

Conagra Brands, Inc. (NYSE: CAG), a branded foods company, has acquiredAngie's Artisan Treats, LLC, the maker of Angie's BOOMCHICKAPOP ready-to-eat popcorn, from TPG Growth for $250 million. The Angie's BOOMCHICKAPOPbrand was founded by husband and wife entrepreneurs Dan and Angie Bastian,who will continue to actively support the business as part of Conagra Brands.

Kellogg acquires Chicago Bar Company (October)

Kellogg (NYSE:K), a global leader in branded food products, has acquiredChicago Bar Company, the maker of RXBAR protein bars, for $600 million as theworld’s largest cereal maker looks to expand its portfolio of healthier foods andengage millennial customers. RXBAR manufactures and distributes a fast-growing line of egg and nut-based protein bars that were launched less than fouryears ago.

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Hormel Foods acquires Columbus Manufacturing from Arbor (November)

Hormel Foods Corporation (NYSE:HRL), a leading U.S. manufacturer anddistributor of meat and food products, has acquired Columbus Manufacturing, apremium deli meat and salami company, from Chicago-based Arbor Investmentsfor approximately $850 million. This strategic acquisition adds to Hormel’sgrowing list of strong deli brands such as Hormel, Jeanie-O, Applegate, and DiLusso. Columbus posted annual sales of approximately $300 million last year,and is expected to grow next year thanks to strong consumer demand for deliproducts.



Sector Number of Companies

Median Enterprise

Value ($mm)

Stock Price Peformance*

Median Forward Ratios

Median LTM Multiples Median 2017E Multiples

1 Year 3 Years P/E PEG EV/Revenue EV/EBITDA EV/Revenue EV/EBITDA

Branded Processed Foods 12 $23,214 7% 13% 19.0x 2.3x 2.6x 13.8x 2.6x 13.0xNatural / Organic Foods 5 $1,498 7% -29% 24.5x 3.0x 1.0x 17.9x 1.0x 14.1xBaked Goods / Snack Foods 7 $5,351 0% 15% 25.6x 2.8x 1.2x 11.3x 1.2x 13.5xDairy 4 $4,046 -8% 21% 18.7x 2.3x 1.3x 14.6x 1.3x 13.6xNon-Alcoholic Beverages 10 $13,186 13% 27% 24.0x 2.2x 3.5x 15.9x 3.3x 14.1xAlcoholic Beverages 8 $51,516 17% 35% 24.3x 2.5x 5.4x 16.8x 5.3x 15.7xProtein Processing 5 $4,186 20% 68% 12.8x 2.7x 0.8x 8.0x 0.9x 7.4xProduce 3 $1,395 -6% 48% 23.0x - 0.7x 16.4x 1.0x 15.7xIngredients / Flavors 6 $13,011 25% 56% 25.5x 2.8x 3.3x 18.6x 3.1x 17.1xAgribusiness 6 $13,731 3% -23% 20.3x 1.5x 0.9x 11.3x 0.9x 11.1x

Food and Bev. Index 66 $13,664 12% 24% 21.9x 2.5x 2.3x 14.3x 2.4x 13.7x

Food & Beverage Company Performance

Public Company Sector Performance

Key Trading Statistics

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Note: Brand Processed Foods (LSE:ABF, NYSE:CPB, NYSE:CAG, NYSE:GIS, NYSE:HRL, NYSE:K, NYSE:MKC, NasdaqGS:MDLZ, SWX:NESN, NYSE:HSY, NYSE:SJM, NYSE:NOMD), Natural / Organic Foods (NYSE:BETR, NYSE:ANFI, TSX:SOY, NasdaqGS:HAIN, NasdaqGS:UNFI), Baked Goods / Snack Foods (SWX:ARYN, TSX:WN, BMV:BIMBO A, NasdaqGS:JJSF, NasdaqGS:JBSS, NasdaqGS:LANC, NasdaqGS:LNCE), Dairy (NYSE:DF, ISE:GL9, NasdaqGM:LWAY, TSX:SAP), Non-Alcoholic Beverages (LSE:BAG, TSX:BCB, NYSE:DPS, TSX:LAS.A, NasdaqGS:MNST, NasdaqGS:FIZZ, NYSE:PEP, NasdaqGS:SBUX, NYSE:KO), Alcoholic Beverages (ENXTBR:ABI, NYSE:BF.B, NYSE:STZ, LSE:DGE, ENXTAM:HEIA, TSE:2503, ENXTPA:RI, TSE:2501), Protein Processing (NasdaqGS:CALM, BOVESPA:JBSS3, NasdaqGS:SAFM, AMEX:SEB, NYSE:TSN), Produce (NasdaqGS:CVGW, NYSE:FDP, NasdaqGS:SENE.A), Ingredients / Flavors (SWX:GIVN, NYSE:IFF, ISE:KRZ, NYSE:SXT, XTRA:SY1, LSE:TATE), Agribusiness (NYSE:ADM, NYSE:BG, NYSE:DAR, NYSE:MON, NasdaqGS:ANDE, NYSE:MOS)


* Stock performance figures are weighted by market capitalization

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Other Q4 Transactions


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$ in MillionsEnterprise

Date Target Acquirer Status Value Revenue EBITDA12/26/2017 Evans Brewing Company Inc. I-ON Communications Co., Ltd. Announced -- -- -- 12/20/2017 Galaxy Nutritional Foods, Inc. GreenSpace Brands Inc. Announced $18.3 1.1x -- 12/19/2017 Omega Protein Corporation Cooke Inc. Closed $487.7 1.4x 8.1x12/18/2017 Snyder's-Lance, Inc. Campbell Soup Company Announced $6,009.1 2.7x 21.3x12/18/2017 Amplify Snack Brands, Inc. The Hershey Company Announced $1,516.7 4.1x 18.4x12/13/2017 Tazo Tea Company Unilever United States, Inc. Closed $384.0 3.4x -- 12/13/2017 Inventure Foods, Inc. Utz Quality Foods, LLC Closed $140.5 0.5x 66.4x12/12/2017 Betin, Inc Saputo Inc. Closed $264.1 2.3x -- 12/8/2017 STIR Foods, LLC. Wind Point Partners Closed -- -- -- 12/6/2017 Telegraph Brewing Co., Inc. Epic Brewing Company, LLC Closed -- -- -- 12/1/2017 Swig Holdings, LLC Four Foods Group Holdings, LLC Closed -- -- -- 12/1/2017 Ferrara Candy Company, Inc. Group Ferrero Closed -- -- -- 11/30/2017 Beyond Meat, Inc. Blue Horizon Corporation Closed -- -- -- 11/30/2017 Field Roast Grain Meat Co., Inc. Maple Leaf Foods Inc. Announced $120.0 3.2x -- 11/29/2017 KIND LLC Mars, Incorporated Announced -- -- -- 11/28/2017 Standard Functional Foods Group, Inc. Hearthside Food Solutions LLC Closed -- -- -- 11/27/2017 Old Lyme Gourmet Company Arca Continental, S. A. B. de C. V. Closed -- -- -- 11/27/2017 Columbus Manufacturing, Inc. Hormel Foods Corporation Closed $850.0 2.8x -- 11/22/2017 Raybern Foods, LLC Premium Brands Holdings Corporation Closed -- -- -- 11/20/2017 Italian Rose Garlic Products, Inc. Blue Point Capital Partners Closed -- -- -- 11/17/2017 Atlantic Aqua Farms Partnership Ontario Teachers' Pension Plan Board Closed -- -- -- 11/17/2017 Victoria's Kitchen LLC Hispanica International Delights of America Closed -- -- -- 11/14/2017 Nonni's Foods LLC Vestar Capital Partners, Inc. Announced -- -- -- 11/13/2017 Original Philly Holdings, Inc. Tyson Foods, Inc. Closed -- -- -- 11/9/2017 Cambrooke Therapeutics, Inc. Ajinomoto North America, Inc. Closed $64.0 -- -- 11/7/2017 FMC Corporation, European Herbicide Portfolio Nufarm Limited Announced $90.0 -- -- 11/3/2017 Chameleon Cold Brew, LLC Nestlé USA, Inc. Closed -- -- -- 11/2/2017 Richelieu Foods Inc. Freiberger USA Inc. Announced $435.0 1.3x -- 11/2/2017 Cumberland Dairy, Inc Dairy Farmers of America, Inc. Closed -- -- -- 10/31/2017 J.P. Veggies Inc. nature soy, inc. Closed -- -- -- 10/27/2017 Chicago Bar Company LLC Kellogg Company Closed $600.0 -- -- 10/23/2017 Angie's Artisan Treats, LLC Conagra Brands, Inc. Closed $250.0 -- -- 10/16/2017 Avondale Brewing Company Good People Brewing Comoany, LLC Closed -- -- -- 9/30/2017 Stephan Vineyards, Inc. Champagne Alain Thienot SAS Closed -- -- -- 9/30/2017 Nurture, Inc. Danone Closed -- -- -- 8/21/2017 Virtue Cider Company Fulton Street Brewery, LLC Closed -- -- --

High: $6,009.1 4.1x 66.4xMean: $802.1 2.3x 28.5x

Median: $324.0 2.5x 19.9xLow: $18.3 0.5x 8.1x

Enterprise Value /

Documents

Food & Beverage Industry Update - MHT Partners · 2018-01-17 · Company has a diverse selection of both frozen and refrigerated handheld sandwiches, including the #1 selling Philly