GCG’s Q1 2021 Food & Beverage Industry Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples and the state of the middle-market M&A environment.

Key findings include the following:

• • Q1 2021 saw additional gains in the Food & Beverage (“F&B”) industry and the broader U.S. equity market as equities further advanced Q4’s recovery from the COVID-19 pandemic. The Restaurants segment was the strongest performing in Q1 2021 as the future outlook for the sector improved due to the progress made with COVID-19 vaccinations. For the 3-year period ending March 31, 2020, the S&P 500 index was up by 53.9%, extending its run from Q4. The F&B industry underperformed the broader market with the exception of the Restaurants and Food Retail segments.

• • In Q1 2021, the F&B sector saw a greater number of transactions and lower average deal value than in Q4 2020. There were 429 transactions in Q1 with an average deal value of $48.6 million. Strategic buyers continue to dominate overall deal activity and have sought acquisitions to offset slowing organic growth and to diversify their offerings. In Q1, financial buyers represented under 11% of all M&A activity in the industry.

• • The Packaged Foods and Meats category led activity, accounting for 30.8% of total F&B transaction volume. Restaurant companies proved to be attractive targets as well, comprising over 28% of transaction volume.

• • Based on a representative set of publicly traded companies across the F&B industry, public companies in F&B traded at an average multiple of 16.0x EBITDA and 3.2x revenue. Among the sectors disclosed on the previous page, the strongest trading multiples were observed in the Beverage and Restaurant sectors. The overall industry experienced a decrease in EBITDA multiples of 1.3% and an increase in revenue multiples of 6.7%.

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