Summary: Our Sole Focus is Food and Beverages
Insight Advisory Partners is a trusted adviser for food and beverage companies seeking to raise between $5 – $150 million of capital for growth, acquisitions and other value enhancing initiatives. We advise our clients on many aspects of corporate and financial strategy including strategic growth initiatives, capital raising strategies, acquisitions and divestitures. We also perform retained search, due diligence, pre-and post-merger integration, turnarounds and financial restructuring activities. Our partners bring both domestic and international experience.
Why You Need a Specialist Advisor
To an outsider, the food and beverage businesses appear well-established, dominated by big companies, perhaps even sleepy. Frequently we hear how stable the industries are, followed by the comments, “people always need to eat and drink” and “eating habits change slowly.” As an insider, you know the food and beverage industries are anything but sleepy: they’re intensely competitive; they engages consumers on emotional as well as functional levels; and they are more technically complex and dynamic than outsiders realize.
U.S. consumers spend over $1 trillion on food, with about 60% of that spent on food at home and 40% on food away from home. Each of these market segments has grown at roughly 4% over the past eight years. There are approximately one million restaurants in the U.S., 85 thousand grocery stores and 28 thousand food manufacturing locations. Low barriers to entry create a dynamic industry populated by small, agile companies that are meeting and shaping changing consumer behavior. New participants frequently educate consumers about previously unknown needs, which in turn increase demands on existing firms to serve those needs. With advances in technology and communications, the industry moves faster now than ever before; the pace of innovation will only increase as the retailer landscape continues to shift and consumer expectations evolve, fueled by a fragmented new media. On top of these pressures, consumers are pinching pennies on the demand side while commodity price volatility is dramatically impacting the supply side.
Strong Consumer Involvement
One constant in the business is the intense emotional connection that consumers have with food. What you eat drives not only how you feel emotionally (comfort food) and physically (sugar highs), it also impacts your long-term health (obesity and other wellness issues). As consumers have access to wider sources of information, the long-standing value of brands becomes more important in some cases: they are a trusted means to navigate information overload. Under other circumstances, such as when new claims emerge that a brand doesn’t address or another brand addresses better, brand is less relevant. And although food is very personal, there are now a host of interest groups and coalitions seeking to change the relationship between food consumers and the food industry.
Very Complex Businesses
In classic strategy companies can compete on price with a commodity product, differentiate their products in some way or combine the two strategies. In the food business, you also have to take into account a variety of groups other than the 3C’s (company, customer and competitors), and those other players increase the complexity of doing business exponentially. The government regulates food at many levels and continues to increase the scope of that influence (e.g. marketing restrictions, fat taxes, public school curriculum). Meanwhile, certain interest groups exist solely to influence what consumers eat (e.g. CSPI) while shifting trade regulations present consumers with more choice from more places than ever before. Healthcare providers and insurance companies also have perspectives and seek to influence consumer behavior. These circumstances create an ever-shifting environment that is more challenging for food companies to navigate than ever before.
Our View
The pace of change in the food sector won’t slow down; most likely it will increase, driven by faster technological change, changing consumer expectations and the increased flow of information. Consumers will continue to trade up to higher priced goods and services where they see benefit, while at the same time trading down in increasing numbers where they see lack of differentiation. Over the long term, consumers will be more health conscious as they age while also becoming more concerned about broad environmental concerns. These factors combine to create an imperative for food companies to step up their game, become more insightful and to apply those insights to their strategies and operations.