Food & Beverage M&A Update — Q3 2023
Restaurant price inflation has increased pressure on QSRs. (Photo: Dribbble)
Tamarack Partners released its Q3 2023 Food & Beverage M&A Update. Moderating inflation and normalizing of supply chains encourage optimism for sector participants. Food inflation fell to a two-year low of 4.3% YOY in August, from 4.9% in July and a peak of 11.4% in August of 2022. Prices slowed down for food- at-home (FAH) and food-away-from-home (FAFH), though restaurant price inflation continues to outpace grocery prices as operators struggle with higher wages and input costs.
Certain plant-based meat and dairy manufacturers have closed their doors recently as the market reaches a crossroads. Plant-based meat sales peaked in 2020 but have stagnated or declined since then due to inflation as well as taste, texture issues and clean label concerns. Meanwhile, consumer interest in eating less meat is on the rise, with 47% of Americans defining themselves as “flexitarian” (Sprouts Farmers Market). Sustainability is still a top consumer priority, creating potential for business leaders with more realistic expectations.
Venture financing continues to accelerate in AgriFoodTech despite rising interest rates and cannabis capital, in particular, has faced some interesting ups and downs. In 2021, investors were bullish on cannabis, but by the end of 2022, the money had begun to dry up. Last year, cannabis investments grew in biotech/pharma, infused products and extracts. M&A of distressed assets are also in demand as well as ancillary businesses like cultivation and retail. These headwinds won’t last forever and projections for the cannabis market are still in the billions, particularly as states continue to pass “green legislation” at an unprecedented pace.
Also included in this report:
M&A commentary by sector and acquirer group
Insight from industry partner Barry Friends
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.
