leading the way to results for fresh food marketing
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PRODUCE REPORT: M&A, Investment Activity and Key Trends in the Produce Industry
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By Eric Bosveld
As produce industry participants prepare to showcase their latest innovations and newest products at the PMA Fresh Summit in Orlando, we thought a quick update to our latest Produce Industry M&A Report was in order. For those that have read our earlier reports, you will know that the following pages of this report include a trend analysis of public companies participating in the produce industry and a data-driven analysis of M&A and private placement activity over the past several years. While this information is not intended to be all-inclusive, it is meant to offer a picture of key trends and activity in the industry that may be relevant to your business.
While the level of M&A activity may have slowed from earlier in the year, we believe the level of interest has not waned, as industry participants try to jockey their competitive positioning and aim to fill gaps in product lines, secure supply and access new markets. Furthermore, private equity groups (PEGs) that have developed an “investment thesis” around healthy eating trends continue to have strong interest in acquiring well-run businesses in both the produce industry and the broader fresh food industry. Typically, PEGs are looking for businesses with solid growth prospects, a strong management team and decent EBITDA margins. While there can always be buyers for almost any business at the right price, high multiples continue to be paid by both strategic companies and PEGs when the business is marketed through a competitive process.
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In our inaugural Produce Report last year, we outlined the drivers below as the main strategies being deployed and the rationale for much of the M&A activity in the industry. These remain true today.
- Diversify operations & expand product lines
- Strengthen market leadership & supply reliability
- Accelerate growth & gain access to innovation
- Enter new regions and/or increase market penetration in existing markets
- Vertically integrate
- Enhance high-growth/margin segments
Trade Issues
With the NAFTA negotiations now completed, the industry can begin to remove one important variable creating uncertainty in the M&A marketplace, assuming the new USMCA is ratified by each of the three countries’ governments. On balanc the industry seems satisfied with the terms reached. According to spokespeople from the Produce Coalition for NAFTA, the CPMA and other industry pundits, the USMCA doesn’t change much for fresh produce marketers. The controversial seasonal anti-dumping provision was not included as some industry participants, such as the Florida Fruit and Vegetable Association, had pushed for.
However, as outlined in our summer report, the trade issues with China, and their impact on the produce industry, remain a major concern. Impacts are being felt across multiple commodities including citrus, apples and grapes.
Food Safety...
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In Season
PMA
As thePATH launched this Fall, we added a couple extra editions in the weeks leading up to the PMA Fresh Summit. Watch for our newsletter to return to its monthly format come October. Encourage your colleagues to subscribe to thePATH.
You can view past issues by clicking here.
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Xpert Update
Paul Grothe
View Press Release
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Paul Grothe has been around the fresh produce industry his entire life. His professional career has been in the Foodservice category for over 25 years. He developed the private label program for U.S. Foodservice, lead the Fresh Express foodservice business management team, and ran procurement for Subway Restaurants in North America. Paul’s passion is to share his experiences in fresh produce with those who have challenges understanding it.
Paul and his family are based in San Diego.
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Upcoming events
FreshXperts Anthony Totta, Eric Bosveld, and Paul Grothe will be at the PMA Fresh Summit convention in Orlando in October.
Contact Anthony, Eric, or Paul to schedule a time to meet up or email INFO@FreshXperts.com and they will contact you.
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Suggested Reading
Produce Retailer. Learn A Lesson (or two) from Aldi
The Produce Reporter. Blue Book Services. Is Blockchain Magic?
The Produce Reporter. Blue Book Services. Think Big at Fresh Summit 2018
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FreshXperts is a consortium of consultants in the fresh industry.
Experts in all aspects of the fresh industry–from Farm to Fork
Growers - Retailers - Distributors
Logistics - Foodservice - Start Ups & New Ventures
For more information about our member FreshXperts, visit our team page
http://freshxperts.com/overview/the-freshxperts/
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Anthony Totta: CEO; Business and Brand Development Specialist
Tim Vaux: Executive Leadership Specialist
Andrew Southwood: Project Management Specialist
Eric Bosveld: M&A; Agro-Economics Specialist
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Ron Pelger: Retail Operations Specialist
Jennifer Lawson: Administration, Information Design
Dean Fahselt: New Product Development Specialist
Paul Grothe: Foodservice Procurement Specialist
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