Over the past 10 years, the healthy foods market has transitioned from being a niche segment to a full-fledged sector. Euromonitor estimates the global healthy foods-related industry is worth over $1 trillion.
With lifestyle choices and a culture of wellness creating a change in consumption patterns, distribution channels have evolved to satisfy this new health-driven clientele. Specialised retailers have shown specific growth, and it has become increasingly common to find health-related food products in non-specialist retailers and among e-commerce sites.
As this sector continues to ripen, healthy food business will seek to increase market share and visibility through strategic M&A deals. Here are four key factors driving M&A growth.
First, internationalisation processes. The increase in demand for healthy food and beverage is not an isolated trend, with the sales of gluten-free, non-GMO and paleo products on the rise. To remain competitive on a global scale, health food and beverage firms must make strategic acquisitions of companies that mirror global trends and that will allow them to enter new markets.
Second, competition among new players. To rapidly gain mass and market share, companies have begun acquiring others who fit within their mandate to strengthen their own offering.
Third, the changing role of food and drink players. In developed countries, consumer demands have shifted towards an appreciation of local, organic and fresh foods. To meet this demand, large multinationals have been forced to rethink recipes, make new products and even acquire small health food companies consumers see as authentic.
Fourth, increased interest of retailers for this category. As the demand for healthy foods increases, retailers are responding by actively giving more space to new age players, including fresh food and prepared meals. In fact, research from England Marketing revealed that 39% of UK shoppers buy organic food on a weekly basis, while supermarket sales of organic are up 6.1%. With that level of growth, it’s no surprise Amazon paid $13.7bn for Whole Foods Market.
Jonathan Buxton is a partner and head of consumer and retail at Cavendish Corporate Finance
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