B G L C O . C O M M A R C H | 2 0 1 9

2

3

1 1

M A C R O E N V I R O N M E N T

F O O D & B E V E R AG E

A B O U T U S

TA B L E O F C O N T E N T SJOHN R. TILSONCONSUMER GROUP HEAD312.658.1600JTILSON@BGLCO.COM

DANIEL J. GOMEZFOOD & BEVERAGE312.658.4789DGOMEZ@BGLCO.COM

REBECCA A. DICKENSCHEIDTDIRECTOR OF RESEARCH312-513-7476RDICKENSCHEIDT@BGLCO.COM

CONSUMER

INSIDER

CONSUMER CONFIDENCE POSITIVE

The University of Michigan Surveys of Consumers reported a February reading of 93.8 in the sentiment index, reflecting a 2.9 percent gain from 91.2 recorded in January. Chief Economist Richard Curtin cited the end of the partial government shutdown and the Fed’s pause in raising interest rates as drivers. Personal consumption expenditures are forecasted to remain strong with 2.6 percent growth in 2019 versus 2.2 percent growth in GDP.

2 C O N S U M E R | M A C R O E N V I R O N M E N T

SENTIMENT POSITIVE

MONITOR

Consumer Sentiment

Unemployment

Housing Starts (SAAR in 000s)1

Existing Home Sales (SAAR in 000s)

Mortgage Rate (30-year)

J a n - 1 9 J a n - 1 8

9 1 . 2 9 5 . 7

4 . 0 % 4 . 1 %

1 , 0 7 8 1 , 2 1 0

4 , 9 4 0 5 , 4 0 0

4 . 4 6 % 4 . 0 3 %

3

1 Data as of December 2018.

Unemployment

Consumer Confidence

Housing Starts

Source: The University of Michigan.

Source: U.S. Census Bureau. Source: U.S. Census Bureau.

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

Jan-

05

May

-07

Sep-

09

Jan-

12

May

-14

Sep-

16

Jan-

19

50

60

70

80

90

100

110

Jan-

05

May

-07

Sep-

09

Jan-

12

May

-14

Sep-

16

Jan-

19

0

500

1,000

1,500

2,000

2,500

Jan

-05

Jan

-07

De

c-0

8

De

c-1

0

De

c-1

2

De

c-1

4

De

c-1

6

De

c-1

8

(In

Th

ou

san

ds)

Total In Structures with 1 Unit In Structures with 5 Units or More

1,078

758

302

FOOD & BEVERAGE

3 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N

FOOD DISTRIBUTION

The Food Distribution industry is undergoing transformation. Evolving consumer preferences are driving a market shift in which innovation and personalization trump “one size fits all” in food choices. Changing demographics are reshaping demand for product healthfulness (e.g., natural, organic, clean label), variety (e.g., ethnic, craft/artisan), and sourcing (e.g., fresh, local, sustainable). Purchasing behavior is favoring premiumization and authenticity over cost, and more consumers are spending on food outside the home. Technology and eCommerce are blurring traditional channels, fueling growth in new delivery methods. Food distributors are refining offerings to capture on-trend products and capitalize on changing market dynamics, accelerating acquisition-driven growth.

Food Distribution is a large and fragmented industry that has benefited from a growing economy, strong labor market, and rising consumer confidence, which is reflected in steady sales growth and margin expansion. Consumer spending is expected to remain strong with gains in personal consumption expenditures, forecasted at 2.6 percent in 2019, projected to outpace GDP growth of 2.2 percent.

The U.S. Food Retail Distribution industry serves the $1.2 trillion U.S Food Retail market, comprised of multiple channels with traditional supermarkets and supercenters accounting for the largest share at 36.2 percent and 18.8 percent of sales, respectively. eCommerce and alternative formats such as fresh format and limited assortment stores are experiencing rapid growth as health and convenience assume a greater role in purchasing decisions.

The U.S. Foodservice Distribution industry, sized at $289 billion, is projected to reach $313 billion in 2022. The competitive landscape is comprised largely of regional and local distributors and only a limited number of large, national players. While the industry has undergone consolidation over the past 15 years, the five largest players still only account for approximately one-third (~35 percent) of industry sales, with the remaining share distributed across 11-15,000+ regional and local operators.

Broadliners typically carry a vast array of SKUs while specialty distributors focus on niche markets, such as fresh (produce, protein), natural and organic, and ethnic products. Market segmentation underscores the high level of fragmentation with industry players seeking consolidation opportunities to fill in product gaps and geographic footprint and achieve synergies through scale.

FOODSERVICE DISTRIBUTION MARKET$ billions$ billions

Source: Inmar Willard Bishop Analytics. Source: Sysco from Technomic (June 2018).

FOOD RETAIL MARKET

$1,179 $1,217 $1,317

2014 2016 2021

$268 $289$313

2012 2017 2022

S o u r c e s : C o m p a n y f i l i n g s , p u b l i c d a t a .

FOOD & BEVERAGE

4 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N

The $1.2 trillion U.S. Food Retail market is evolving with changing demographics, consumer purchasing behavior, and technological advancements. Alternative formats are gaining share, with eCommerce predicted to see rapid growth as consumers increasingly migrate online. Food retail distributors are implementing strategies to capitalize on these trends and drive growth.

Specialty Offerings. As consumer preferences are shifting in the pursuit of healthy living, consumer demand for specialty, better-for you, and sustainable food options is driving growth in these categories at retail. Food distributors are seeking ways to differentiate their services from competitors by expanding their product portfolios in specialty and fresh categories. In its 2018 Annual Report, SpartanNash identified the transformation of its SpartanNash fresh, fresh-prepared produce, and prepared meal solutions as a key area of growth to distinguish its offerings and increase market share. In addition, private equity firms are demonstrating strong interest in specialty distributors. Recent acquisitions include H.I.G. Capital’s acquisition of Lipari Foods, a perimeter of the store distributor in the Midwest; and Hammond, Kennedy, Whitney & Company’s acquisition of Fresh Direct Produce, a distributor of fresh, ethnic, tropical, organic, and specialty produce.

Private Brands. Food distributors serving the food retail channel are also focused on expanding their private brand portfolios to enhance growth and margins. Private brands are also a driver of customer retention. In its 2018 Annual Report, SpartanNash highlighted growth in private brand offerings as a strategic priority. The company recently launched the “Our Family” private brand in 2018 and expects to introduce approximately 350 new items through its private brand portfolio in 2019. During its January 2019 Investor Day, UNFI identified differentiated exclusive brands as a driver of future growth. Its private brand portfolio consists of over 6,000 SKUs offered across more than 100 categories.

Independent Retailers. Food distributors are focused on increasing market share with this customer base, as independent retailers pay a higher gross profit per case and represent another driver of margin expansion. SpartanNash offers a comprehensive menu of value-added services designed to assist independent retailers in becoming more profitable, efficient, competitive, and informed as a tool to drive customer acquisition and retention in this channel. UNFI’s acquisition of SuperValu expanded its share with independent retailers to 59 percent of sales post-acquisition—up from 26 percent.

eCommerce. eCommerce is blurring traditional channels with online sales projected to increase three-fold from $33 billion in 2016 to as high as $100 billion by 2025, when it is estimated that more than 70 percent of consumers will be buying groceries online, according to estimates presented by the Food Marketing Institute in its 2018 Midwinter Executive Conference.

Amazon’s 2017 acquisition of Whole Foods Market is a major catalyst behind the channel’s rapid transformation, setting the stage for a tech-driven future as online shopping gains an ever-increasing share of the consumer dollar.

FOOD DISTRIBUTION - Food Retail

Food distributors are adapting to a new world in which eTailers are emerging and traditional stores are expanding online offerings to provide a broader range of items beyond their shelves.

In 2017, UNFI announced plans to expand its eSolutions, including drop ship capabilities for both retailers and eTailers allowing for no minimum order size, same day shipping, and direct to location or blind drop shipping to the consumer’s door (retailer or eTailer label appears on products delivered). Additionally, the company is offering retailers with no online presence the option to pay UNFI a monthly fee to manage an online store through its partnership with Power eCommerce.

KeHE is taking a different approach with its BrandDriverTM platform, unveiled at its 2018 Summer Show, which is a new online tool that enables brands to engage, enable, and fulfill online orders via KeHE. The tool will help suppliers mitigate the ‘Amazon-impact,’ as it is a proven method to allow vendor partners to maintain brand and price integrity across channels, which, in turn, also helps KeHE’s brick and mortar retail partners. This tool with help KeHE bring on new vendors and further differentiate its product offering from competitors.

FOOD RETAILING INDUSTRY OUTLOOK 2022 FORMAT RANKING BY PROJECTED ANNUAL PERCENTAGE GROWTH/DECLINE

Source: 2018 Future of Food Retailing Webinar, Inmar Willard Bishop Analytics.

26.0%

6.4% 6.0%5.0%

3.1% 3.0% 3.0% 2.6% 2.0%0.5%

-1.0%-2.5%

-5.0%

eCommerce LimitedAssortment

Fresh Format Dollar WholesaleClub

SuperWarehouse

Supercenter Other SmallGrocery

ConvenienceStore

TraditionalSupermarkets Drug

Mass

Military

eCommerce is expected to capture nearly 20 percent of food retail sales across all channels by 2022—up from 4 percent in 2017.

S o u r c e s : C o m p a n y f i l i n g s , p u b l i c d a t a .

FOOD & BEVERAGE

5 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N

Restaurants represent the largest foodservice customer at $165 billion in estimated sales. Macro drivers, notably higher disposable income, healthy consumer sentiment, and record low unemployment have buoyed consumer spending, with more Americans eating outside the home. Restaurant Industry share of the food dollar has risen from 25 percent in 1955 to 48 percent in 2017, according to the National Restaurant Association.

Technomic Managing Principal Joe Pawlak, speaking at the recent Foodservice Technology Conference, revealed forecasts predicting fast-casual restaurants will lead with 8.3 percent growth in 2019, up from 8.0 percent in 2018, reported Restaurant Business. Independents (defined as restaurants with fewer than five locations by Restaurant Business) are predicted to lead segment growth as consumers seek more authentic experiences. Other segment highlights:

• Casual dining: 3.4 percent growth in 2019 (vs 3.2 percent in 2018)

• Fine-dining: 5.2 percent growth in 2019 (vs 5.0 percent in 2018)

• Midscale/family: 2.8 percent growth in 2019 (vs 2.9 percent in 2018)

Independent restaurants represent a growth market. In its annual Food Industry Universe analysis, Technomic identified this segment as one of the five fastest-growing channels. Public distributors all identify independent restaurants as a primary focus of their strategic growth initiatives. Performance Food Group (PFG) cited a “laser focus on faster-growing independent restaurants”.

Consumer preferences for a personalized customer experience and quality food and service are favoring independents over large chains, said US Foods in a recent investor presentation. In 2017, independent restaurants and mini-chains saw 3.2 percent growth vs. 0.9 percent for chains, and 4.5 percent growth vs. -0.4 percent, respectively, in 2016. Demographic trends are supporting segment growth, with diversity, increased demand for local and sustainable food options, a shift toward away-from-home spending on food, and technology among the key drivers.

With some 449,000 independents, customer acquisition and penetration represent sizable opportunities for foodservice distributors. US Foods quantified the opportunity, highlighting that approximately 30 percent of its independent restaurant customers buy less than 20 percent of their purchases from the

company. This implies that independents are using multiple distributors to supply their product offering.

Technology is also benefiting independents, illustrated by increasing adoption of personalized apps, home delivery, and meal kits. The use of automated order and delivery processes is only expected to grow, with convenience and speed being key influencers as consumers increasingly rely on restaurant technology, says Mintel.

FOOD DISTRIBUTION - Foodservice

CONSUMERS ARE INCREASINGLY EATING OUT

Source: Nielsen, U.S. Department of Agriculture Economic Research Service

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AT-HOME AWAY-FROM-HOME

AT HOME - $747B+58% since ‘03

AWAY FROM HOME - $869B+90% since ‘03

Tota

l Foo

d Ex

pend

itur

e (i

n $B

)

Spending on away-from-home eating topped $869 billion in 2017—up 90 percent since 2003. This compares to $747 billion on at-home eating, which increased only 58 percent over the same period.

0.00%

0.60%

1.20%

1.80%

2.40%

3.00%

3.60%

4.20%

4.80%

National ChainRestaurants

Foodservice Retail

Hospitality

Education(Colleges & Universities)

Regional ConceptsBusiness &Industry

Education(K-12)

Other

Healthcare

$78B

$71B$16B

$30B

$9B

$9B

$20B

$34B

$15B

$11B

IndependentRestaurants

EXPE

CTE

D 5

-YEA

R G

RO

WTH

BY C

UST

OM

ER T

YPE

FOODSERVICE DISTRIBUTOR ROLELOWER VALUE-ADDED SERVICES

HIGHER VALUE-ADDED SERVICES

Source: US Foods

FOODSERVICE MARKET DISTRIBUTOR SHAREHISTORICAL TREND

Rest ofMarket

Top 6-50

Top 5

69% 57%57%

7%

8% 8%

24%35% 35%

2002 2017

$172B3.5% CAGR $289B

Source: ID Magazine Top 50

S o u r c e s : C o m p a n y f i l i n g s , p u b l i c d a t a .

FOOD & BEVERAGE

6 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N

The same secular drivers underpinning market growth are influencing M&A strategies:

• Product line expansion through the addition of specialty offerings to access trending higher-margin growth segments

• Build private brand portfolios to drive margin expansion

• Customer acquisition with independents remaining a priority

• Geographic expansion to enter new markets

• Leverage scale efficiencies

Industry fragmentation is conducive to acquisitive growth, with industry participants speaking of active deal pipelines and citing M&A as integral to strategic initiatives:

• Marquee deals have set the stage for continued consolidation. Among the notable headline deals involving large corporate acquirers were United Natural Foods (SuperValu, $2.9 billion) in October 2018, US Foods (Services Group of America’s Food Group of Companies, $1.5 billion) in July 2017, and SuperValu (Unified Grocers, $372 million) in June 2017.

• Serial corporate buyers have been aggressively pursuing acquisitions to diversify portfolio offerings and geographic footprints, with PFG, US Foods, and Lipari Foods among some of the industry’s most active buyers.

• Private equity funds are equally active. Sponsors are drawn to the sector’s level of fragmentation and safety in the high free cash flow conversion characteristics of business models, which has attracted a significant level of outside capital investment. There is momentum in the market to create consolidation platforms on a regional and national scale.

FOOD DISTRIBUTION - Mergers & Acquisitions Activity

S o u r c e s : S & P C a p i t a l I Q , P i t c h B o o k , C o m p a n y f i l i n g s , p u b l i c d a t a .

I N D U S T R Y C O N S O L I DATO R S

S E L E C T E D AC Q U I S I T I O N AC T I V I T Y

P R I VAT E E Q U I T Y P L AT F O R M S

FOOD & BEVERAGE

7 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N

FOOD DISTRIBUTION - Key Drivers of Mergers & Acquisitions

DISTRIBUTORS ARE SEEKING INNOVATIVE WAYS TO PARTNER WITH CUSTOMERS AND ANTICIPATE FUTURE CONSUMER DEMAND.

PRIVATEBRANDS

SPECIALTY OFFERINGS

PRIVATE BRANDS

ACCESS TO INDEPENDENT RESTAURANTS

The addition of higher-margin, private brands promotes stickiness of customer relationships and enhances the value-add proposition of offerings.

PFG highlighted higher-margin exclusive brands in a September 2017 presentation to investors, citing its Bacio premium cheese line, which has seen 35 percent annual volume growth between 2012 and 2017, and Braveheart Black Angus Beef, which has grown 10 percent annually over the same period.

US Foods cited private brand growth as a crucial source of gross profit in its March 2018 Investor Day presentation. In July 2018, the company announced a clean label initiative across its top four Exclusive Brands—Metro Deli, Rykoff Sexton, Chef’s Line, and Stock Yards—to help independent restaurant

operators “make it” with innovative menu options that appeal to diner demand for clean, better-for-you foods. The move furthers US Foods’ Unpronounceable List initiative which eliminates artificial flavors, colors, and preservatives from product ingredients, building on its Great Food Made Easy strategy. “Forty-six percent of millennials would be more likely to buy a product with no artificial ingredients and we see this demand for simple, ‘back to the basics’ ingredients extending into the choices consumers make when dining out,” said Stacie Sopinka, Senior Vice President, Innovation and Quality at US Foods. “As diners increasingly make less-is-more food choices, we will continue to streamline and simplify our products by removing or replacing certain ingredients with preferred alternatives so what’s left is simply good food.”

Healthy living trends are impacting food choices, which is driving increased consumption of specialty and better-for-you options such as fresh, organic, natural, free-from, locally sourced, and sustainable products. Retailers are expanding their fresh and prepared offerings while center aisle canned and shelf-stable products are shrinking.

In its Annual Report of the Grocery Industry, Progressive Grocer highlighted merchandising trends which are catering to the discriminating and health-conscious consumer:

• Prepared foods (73.2 percent of respondents), signature products (72.6 percent), and locally sourced products (67.9 percent) were cited as the top three strategies deemed to be extremely important to brand enhancement by retailers surveyed.

• Produce, Deli/Prepared Foods, Organic, Gourmet/Specialty, and Ethnic were among the top ten most successful departments at driving traffic.

In response, distributors are broadening portfolios in-line with these consumer shifts. Recent acquisition activity is reflective of this strategy, illustrated by Lipari Foods, which completed three acquisitions of specialty distributors over the last 12 months.

TARGET

ACQUIRER

TARGET

ACQUIRER

The independent restaurant channel is a highly attractive market for foodservice distribution companies. Independent restaurants typically generate higher-margin sales because they receive more services, cost more to serve, and pay a higher gross profit per case than other customers. In addition, the market is highly fragmented, with more than 449,000 independent restaurants operating in the United States. As a result, foodservice distributors view acquisitions as an integral component of their strategy to accelerate growth with independent restaurants.

Public foodservice distributors have stated goals to grow share with independent restaurants and acquire distributors who serve the independent restaurant channel. During the 2019 CAGNY Conference, PFG indicated plans to acquire large broadline distributors serving independents and is focused on increasing share with independent restaurants. Independent case growth is a key driver of margin improvement for these distributors. In 2018, PFG reported 5.3 percent growth in independent cases; US Foods, 3.8 percent (with acquisitions contributing more than 25 percent); and Sysco, 3.6 percent.

S o u r c e s : C o m p a n y f i l i n g s , p u b l i c d a t a .

TARGET

ACQUIRER

Food Group of Companies

M&

A T

RA

NS

AC

TIO

NS

R AT I O N A L EDAT E TA R G E T B U Y E R D E A L S TAT S

Enterprise Value (EV): $340M

Enterprise Value (EV): $1.27BEV/Revenue: .60xEV/EBITDA: 15.6x

8 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N | I N D U S T R Y M E T R I C S

S o u r c e s : S & P C a p i t a l I Q , P i t c h B o o k , E q u i t y R e s e a r c h , p u b l i c d a t a .N o t e s : 1 E V d e f i n e d a s E n t e r p r i s e Va l u e .

R AT I O N A L EDAT E TA R G E T B U Y E R

SELECT RECENT FOOD DISTRIBUTION M&A ACTIVITY

J a n - 1 9

J a n - 1 9

J a n - 1 9

D e c - 1 8

D e c - 1 8

N o v - 1 8

O c t - 1 8EV: $2.9BEV/Revenue: .19xEV/EBITDA: 7.48x

O c t - 1 8

A u g - 1 8

J u l - 1 8

M a y - 1 8

M a r - 1 8

A p r - 1 8Golden Harvest

Wholesale Business

Pe n d i n gEV: $1.54BEV/Revenue: .56xEV/EBITDA: 12.5x

Food Group of Companies

M a y - 1 8

Pe n d i n g

Acquisition expands cheese manufacturing capabilities.

Platform investment with stated plans to expand distribution and manufacturing platform through organic and acquisition-driven growth. Lipari is a perimeter of the store distributor to small and mid-sized grocery chains, convenience stores, pharmacies, and large food retail chains in the Midwest.

Acquisition expands service footprint in Central Illinois and adds strong base of independent operators. Waugh has $40 million in annual foodservice distribution sales.

Distributor of premium cheese products will expand private brand portfolio with addition of Hautly branded cheese. Product will be distributed in eastern Missouri, Illinois, and Iowa.

Platform acquisition in food distribution. Fresh Direct Produce distributes fresh, ethnic, tropical, organic, and specialty produce.

Platform acquisition in food distribution. Quirch is a distributor of protein and Hispanic food products. Palladium stated plans to pursue product line and geographic expansion through organic initiatives and acquisitions.

Acquisition expands specialty deli product offerings and grows geographic footprint in Eastern Pennsylvania.

Acquisition expands geographic reach and customer base, including across more retail channels, while broadening fresh perimeter offerings such as meat and produce.

Acquisition of Mediterranean and Middle Eastern food distributor expands Lipari’s ethnic food offerings, establishing a full ethnic food division.

Acquisition establishes platform in foodservice distribution. Investors stated goal to expand the platform through organic growth, product line expansion, and acquisitions.

Platform acquisition in food distribution. Highview stated plans to pursue organic initiatives and strategic acquisitions to fuel expansion into new markets. GoodSource is a specialized distributor focusing on center-of-plate offerings.

Platform acquisition in foodservice distribution. Ferraro distributes food products for Italian restaurants and pizzerias.

Acquisition expands fresh produce offering and footprint in Southern Maine.

Acquisition enhances scale, expands service footprint in the Northeast, and adds a strong base of independent operators. Independent restaurants account for approximately 40 pecent of SGA’s net sales base.

Distributor of protein products to foodservice and retail customers.

Acquisition of full-service grocery wholesaler expands reach to independent food retail and convenience stores throughout New York, Pennsylvania, and Northeast Ohio.

P R O D U C TP O R T F O L I O

Broadline

Specialty

Specialty

Specialty

Specialty

Specialty

Broadline

Specialty

Broadline

Broadline

Specialty

Specialty

Specialty

Broadline

Specialty

Broadline

P R I VAT E B R A N D S C H A N N E L

No Retail

Yes Foodservice

No Foodservice

Yes Retail

Yes Retail

No Retail

Yes Retail

Yes Retail

No Retail

Yes Retail

Yes Foodservice

Yes Foodservice

Yes Foodservice

YesRetail/ Foodservice

No Foodservice

Yes Retail

TA R G E T AT T R I B U T E SD E A LM E T R I C S 1

R AT I O N A L EDAT E TA R G E T B U Y E R D E A L S TAT S

Enterprise Value (EV): $340M

Enterprise Value (EV): $1.27BEV/Revenue: .60xEV/EBITDA: 15.6x

M&

A T

RA

NS

AC

TIO

NS

9 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N | I N D U S T R Y M E T R I C S

S o u r c e s : S & P C a p i t a l I Q , P i t c h B o o k , E q u i t y R e s e a r c h , p u b l i c d a t a .N o t e s : 1 E V d e f i n e d a s E n t e r p r i s e Va l u e .

DAT E TA R G E T B U Y E R

SELECT RECENT FOOD DISTRIBUTION M&A ACTIVITY

Fe b - 1 8Foodservice Distribution Business

N o v - 1 7

Fe b - 1 7

A p r - 1 7

J u n - 1 7

A u g - 1 7

J u n - 1 7

J u l - 1 7

M a r - 1 7

M a y - 1 7

Fe b - 1 7

J a n - 1 7

J a n - 1 7

J u n - 1 7

A u g - 1 7

EV: $372.5MEV/Revenue: .10x

EV: $50MEV/Revenue: .36x

EV: $45MEV/Revenue: .82x (2017E)

A u g - 1 7

R AT I O N A L E

Acquisition expands footprint of core business. Doerle’s service area includes Oklahoma, Texas, Arkansas, Louisiana, Mississippi, and Alabama. Doerle has $250 million in annual foodservice distribution sales.

Acquisition provides direct access to the growing Hawaiian market. HFM is the only foodservice distributor in the state with operations on all four major Hawaiian Islands and Guam. HFM has $290 million in annual sales.

Acquisition expands seafood offerings and strengthens focus on independent street business and specialty customers in the Florida market. Annual sales of $89 million.

Acquisition expands center of the plate offering to better serve customers throughout southern California. FirstClass specializes in custom processing and portion control cuts of beef, pork, lamb, veal, poultry, seafood and specialty products.Annual sales of $55 million.

Acquisition expands wholesale business. Unified Grocers is a grocery distributor that supplies independent retailers throughout the western United States.

Acquisition expands breadth of product portfolio with complementary local and national brands.

Louisiana-based regional food distributor catering to independent restaurants and small chains. Acquisition expands footprint in Louisiana, southern Mississippi, and parts of southern Alabama. F. Christiana had nearly $100 million in annual sales.

Acquisition expands Midwest footprint serving independent restaurant, school, grocery, and convenience store customers in seven states. The business had combined sales of $130 million.

Meat processor and distributor with annual sales of approximately $80 million.

Acquisition expands specialty offerings with distributor of Italian and pizza food products and accessories. Presto serves Italian restaurants, pizza shop operators, colleges, and universities.

Acquisition expands Northeast footprint and penetration with independent restaurants. All American serves Rhode Island, Massachusetts and Connecticut and generates annual sales of nearly $60 million.

Platform acquisition in foodservice distribution. Greco serves a national customer base across 15 states.

Platform acquisition of leading fresh foodservice distributor in the New England region.

Growth equity investment in Florida-based distributor of beef, pork, poultry, and seafood products.

Acquisition of specialty meat distributor expands processing capabilities and customer penetration to grow protein in the Northeast.

Platform investment in the produce distribution sector. RCP stated plans to expand product offerings through a combination of organic growth as well as potential acquisitions.

P R O D U C TP O R T F O L I O

Broadline

Broadline

Specialty

Specialty

Broadline

Specialty

Broadline

Broadline

Specialty

Specialty

Broadline

Specialty

Specialty

Specialty

Specialty

P R I VAT E B R A N D S C H A N N E L

No Foodservice

No Foodservice

Yes Foodservice

Yes Retail

Yes Retail

No Foodservice

No Foodservice

Yes Retail

Yes Retail

No Foodservice

Yes Foodservice

Yes Foodservice

No Foodservice

No Foodservice

No Foodservice

Yes Foodservice

Specialty

TA R G E T AT T R I B U T E SD E A LM E T R I C S 1

INDUSTRY METRICS

1 0 C O N S U M E R | F O O D & B E V E R A G E | F O O D D I S T R I B U T I O N | I N D U S T R Y M E T R I C S

PUBLIC COMPANY OPERATING METRICS

NOTE: (1) As of 3/4/2019.(2) Market Capitalization is the aggregate value of a �rm's outstanding common stock.(3) Enterprise Value is the total value of a �rm (including all debt and equity).Source: S&P Capital IQ.

($ in millions, except per share data) Current % of Market Enterprise Total Debt/ TTMCompany Name Country Ticker Stock Price (1) 52W High Capitalization (2) Value (3) Revenue EBITDA EBITDA Revenue Gross EBITDA

TRADITIONAL GROCERY

United Natural Foods, Inc. NYSE:UNFI $15.14 30.6% $777 $4,688 0.3x 13.2x 9.1x $14,258 13.7% 2.5%

SpartanNash Company NasdaqGS:SPTN 18.42 68.2% 662 1,342 0.2x 6.8x 3.5x 8,065 13.8% 2.4%

Median $16.78 49.4% $720 $3,015 0.2x 10.0x 6.3x $11,162 13.8% 2.5%

Mean $16.78 49.4% $720 $3,015 0.2x 10.0x 6.3x $11,162 13.8% 2.5%

FOODSERVICE

Sysco Corporation NYSE:SYY $67.11 88.3% $34,458 $42,593 0.7x 12.8x 2.7x $59,646 18.9% 5.6%

US Foods Holding Corp. NYSE:USFD 34.60 84.6% 7,529 11,052 0.5x 10.9x 3.6x 24,175 17.8% 4.2%

Performance Food Group Company NYSE:PFGC 38.50 97.0% 3,996 5,287 0.3x 12.6x 3.1x 18,099 13.1% 2.3%

The Chefs' Warehouse, Inc. NasdaqGS:CHEF 32.14 81.9% 963 1,199 0.8x 17.2x 4.0x 1,445 25.4% 4.8%

Colabor Group Inc. TSX:GCL 0.37 74.2% 37 117 0.1x 8.7x 6.0x 883 1.5% 1.5%

Median $34.60 84.6% $3,996 $5,287 0.5x 12.6x 3.6x $18,099 17.8% 4.2%

Mean $34.54 85.2% $9,397 $12,050 0.5x 12.4x 3.9x $20,850 15.4% 3.7%

CONVENIENCE

Core-Mark Holding Company, Inc. NasdaqGS:CORE $37.12 92.5% $1,703 $2,071 0.1x 15.3x 3.5x $12,904 6.7% 0.9%

AMCON Distributing Company AMEX:DIT 92.50 88.1% 57 84 0.1x 7.5x 2.5x 979 8.1% 1.1%

Median $64.81 90.3% $880 $1,078 0.1x 11.4x 3.0x $6,941 7.4% 1.0%

Mean $64.81 90.3% $880 $1,078 0.1x 11.4x 3.0x $6,941 7.4% 1.0%

TTM MarginsEnterprise Value / TTM

GLOBAL CONSUMER

1 1 C O N S U M E R | A B O U T U S

FOCUS AREAS

• Outdoor Products

• Active Lifestyle

• Sporting Goods

• Performance Automotive Aftermarket

• Arts & Crafts

• Performance Apparel & Accessories

• Home Decor

• Lighting

• Kitchen & Bath

• Outdoor & Casual Furniture

• Ready-to-Assemble Furniture

• Ingredients

• Processing & Co-Manufacturing

• Fresh & Consumer Packaged Goods

• Supply Chain

WHO WE ARE

• Digitally Native Brands

• Omnichannel Retailers

• Brands with Rapidly-Evolving eCommerce Strategies

• Amazon-centric, FBA

• Independent investment banking advisory firm focused on the middle market since 1989

• Senior bankers with significant experience and tenure; partners average over 20 years of experience

• Offices in Chicago, Cleveland, and Philadelphia

• Founding member and U.S. partner of Global M&A Partners, Ltd., the world’s leading partnership of investment banking firms focusing on middle market transactions

• Deep industry experience across core sectors of focus, including: Consumer, Diversified Industrials, Environmental & Industrial Services, Healthcare & Life Sciences, Metals & Metals Processing, and Real Estate

Sell-Side Advisory

Acquisitions & Divestitures

Public & Private Mergers

Special Committee Advice

Strategic Partnerships & Joint Ventures

Fairness Opinions & Fair Value Opinions

All Tranches of

Debt & Equity Capital for:

Growth

Acquisitions

Recapitalizations

Dividends

General Financial & Strategic Advice

Balance Sheet

Restructurings

Sales of Non-Core Assets or Businesses

Section 363 Auctions

E-COMMERCE, B2B, AND DTC HOME ENVIRONMENT FOOD & BEVERAGEENTHUSIAST BRANDS

The information contained in this publication was derived from proprietary research conducted by a division or owned or affiliated entity of Brown Gibbons Lang & Company LLC. Any projections, estimates or other forward-looking statements contained in this publication involve numerous and significant subjective assumptions and are subject to risks, contingencies, and uncertainties that are outside of our control, which could and likely will cause actual results to differ materially. We do not expect to, and assume no obligation to update or otherwise revise this publication or any information contained herein. Neither Brown Gibbons Lang & Company LLC, nor any of its officers, directors, employees, affiliates, agents or representatives makes any representation or warranty, expressed or implied, as to the accuracy, completeness or fitness of any information contained in this publication, and no legal liability is assumed or is to be implied against any of the aforementioned with respect thereto. This publication does not constitute the giving of investment advice, nor a part of any advice on investment decisions and nothing in this publication is intended to be a recommendation of a specific security or company, nor is any of the information contained herein intended to constitute an analysis of any company or security reasonably sufficient to form the basis for any investment decision. Brown Gibbons Lang & Company LLC, its affiliates and their officers, directors, employees or affiliates, or members of their families, may have a beneficial interest in the securities of a specific company mentioned in this publication and may purchase or sell such securities in the open market or otherwise. Nothing contained in this publication constitutes an offer to buy or sell or the solicitation of an offer to buy or sell any security.

LEADING INDEPENDENT FIRM COMPREHENSIVE CAPABILITIES

M&A ADVISORY PRIVATE PLACEMENTS

FINANCIAL ADVISORY

For questions about content and circulation, please contact editor, Rebecca Dickenscheidt, at rdickenscheidt@bglco.com or 312-513-7476.

Primary Research

Industry Benchmarking

Operating Advisor Network

White Papers

Industry Surveys

RESEARCH

E - C O M M E R C E / D 2 C F O C U S

GLOBAL CONSUMER

1 2 C O N S U M E R | A B O U T U S

DEDICATED LEADERSHIP

J O H N T I L S O NConsumer Group Head • Leads BGL’s Consumer Products & Retail practice

• Over 25 years of investment banking and corporate finance experience

• Former Managing Director at Banc One Capital Markets (JP Morgan Chase)

• Former Managing Director at First Chicago Capital Markets, founding the Detroit office for the firm in 1996

• Serves on the National Board of Directors for the Gift of Adoption Fund

• B.S., University of Illinois

• M.B.A., Northwestern University Kellogg School of Management

• Eagle Scout

PROFESSIONAL EXPERIENCE EDUCATIONEDUCATION

DA N G O M E ZFood & Beverage

EDUCATIONEDUCATION

• Over 10 years of M&A and corporate finance experience

• Investment banking positions at Piper Jaffray and Deutsche Bank Securities

• Former Lieutenant Commander in the United States Navy as a designated Naval Aviator

PROFESSIONAL EXPERIENCE

• B.S., United States Naval Academy

• M.B.A., Northwestern University Kellogg School of Management

One Magnif icent Mile 980 N. Michigan Avenue Suite 1880 Chicago, IL 60611p. 312.658.1600

One Cleveland Center1375 East 9th StreetSuite 2500 Cleveland, OH 44114p. 216.241.2800

C H I C A G O C L E V E L A N D

One Liberty Place 1650 Market StreetSuite 3600 Philadelphia , PA 19103p. 610.941.2765

P H I L A D E L P H I A

EDUCATIONEDUCATIONB O B K E N TFinancial Sponsor Coverage

• Over 20 years of M&A and corporate finance experience

• Former Managing Director in the Financial Sponsors Group at Stifel Investment Banking

• Investment banking positions at Banc of America Securities in San Francisco and Charlotte and at Brown Brothers Harriman in New York

PROFESSIONAL EXPERIENCE

• A.B., Princeton University

• Diploma in Accounting and Finance from the London School of Economics

• M.B.A., Darden School of Business at the University of Virginia

• Chartered Financial Analyst

GLOBAL CONSUMER

1 3 C O N S U M E R | A B O U T U S

REPRESENTATIVE TRANSACTIONS

eCommerceAutomotiveAftemarket

Sell-Side

OutdoorEnthusiast

Brand

Sell-Side

eCommerceBranded

Health & Beauty

Sell-Side

eCommercePet

Pharmaceuticals

Sell-Side

BrandedOutdoorProducts

Sell-Side

BrandedeCommerce

Platform

Sell-Side

BrandedProtein

Company

Sell-Side

HealthySnack

Manufacturer

Sell-Side

PEN

DIN

GC

LOSE

D

One Magnif icent Mile 980 N. Michigan Avenue Suite 1880 Chicago, IL 60611p. 312.658.1600

One Cleveland Center1375 East 9th StreetSuite 2500 Cleveland, OH 44114p. 216.241.2800

C H I C A G O C L E V E L A N D

One Liberty Place 1650 Market StreetSuite 3600 Philadelphia , PA 19103p. 610.941.2765

P H I L A D E L P H I A