Food & Beverage M&A Update — Q3 2022
Walmart invests in rancher-owned Sustainable Beef LLC. (Photo: Getty)
Tamarack Partners released its Q3 2022 Food & Beverage M&A Update in collaboration with The Food Connector. Sector participants continue to face cost inflation, challenging smaller players’ ability to pass through price increases. At the same time, many companies are rationalizing non-core business lines and investing in high-growth, high-return opportunities. Finally, business operators that are able to maintain margins while absorbing higher costs are showing significant growth and may explore sale options to take advantage of their buoyed earnings.
Food Price Inflation Outlook
Economy-wide factors continued to inflate U.S. food prices in Q3 2022. In August, the Consumer Price Index (CPI) for all-food and food-at-home increased by 0.8% and 0.7%, respectively. These large increases followed similarly large changes in January through July. Notably, the energy index dropped 5% in August and gasoline prices fell 10.6% in the same period. In September, the Producer Price Index (PPI) forecast ranges for wholesale beef, wholesale pork, wholesale poultry, and wholesale fats and oils were revised downward. Because the CPI typically lags movements in the PPI, it can be reasonably assumed that the CPI may soon follow across these categories.
Recent declines in agricultural commodity and energy prices are expected to ease food price increases through the remainder of 2022. Operators with robust supply chains and vertical integration will continue to suffer the least, while the forecasted slowdown in food inflation in 2023 presents a favorable outlook for the sector.
Also included in this report:
M&A commentary by sector and acquirer group
Insight from industry expert Ed Zimmerman of The Food Connector
Spotlight on notable deals
Listed transactions
Tamarack Partners provides M&A advisory services to owners of lower middle market companies. For more information on this report or to speak with one of our transactional advisors about your business, Contact Us.
