Food & Beverage Industry Update...share. Large strategic buyers that include AB InBev, Sapporo,...

Food & Beverage Industry Update | June 2018Morsels from the Middle

Food & Beverage Industry Update

Seller Advisory | Buyer Advisory | Corporate Finance

These materials were prepared from publicly available information and other sources without independent verification by MHT Partners, and therefore neither MHTPartners nor any of its partners, directors, officers, employees or affiliates warrants the accuracy or completeness of these materials, including without limitation theaccuracy or achievability of any valuations, projections, estimates or assumptions, all of which are necessarily preliminary and subject to further analysis. Actualresults may vary from such valuations, projections, estimates and assumptions, and such variations may be material.

www.mhtpartners.com | San Francisco | Dallas | Boston | Boulder

1H 2018

Food & Beverage Industry Update | June 2018


MHT Partners is a leading national middle market investment bank with a high-performing team uniquely qualifiedto serve dynamic, growth-oriented companies. We are the preeminent advisor to innovative, niche market leadersin the middle market, so whether you’re selling a private company, seeking advice for the board of a publiccompany, raising private equity, valuing a company, buying a company, or looking for a read on the current state ofthe deal and capital markets, we are the partners you need when advice and insight matter most. Within theconsumer industry, the senior professionals of MHT Partners have completed over 100 deals, including numerousfood and beverage transactions. We bring these combined skill sets to bear in every engagement, creatingmaximum value for each client through thoughtful positioning and creative deal structuring.

About MHT Partners

Food and Beverage Team

Patrick CrockerManaging Director

[email protected]

Gavin DanielsPrincipal

[email protected]

Our Food & Beverage PracticeRecent MHT Partners Transaction

Craig Lawson Managing Director

[email protected]

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Tom GotschSenior Associate

[email protected]

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www.mhtpartners.com | San Francisco | Dallas | Boston | BoulderSeller Advisory | Buyer Advisory | Corporate Finance

has been acquired by

Capital Raise


BioSan Laboratories, Inc.

has been acquired

Corsicana Farma property of




plant name is cannabis sativa and is an incredibly versatile and adaptable plant to grow. The plant requires littlewater or maintenance, needs less pesticides to guard from disease (helping farmers attain the more lucrativeorganic title), and has a negligible carbon footprint, all traits that make its cultivation an attractive prospect.

Why are Consumers Buying Hemp?

Hemp is trending among health-conscious consumers, and for good reason. This little seed boasts enormous healthbenefits as it contains all 20 amino acids, including the nine that our bodies cannot produce, has the highestbotanical source of essential fatty acids, is a rich source of phytonutrients, fiber, and antioxidants, and is gluten free.

Moreover, hemp is gaining popularity in the protein supplement space as consumers increasingly adopt plant-baseddiets and look for an alternative to previously market-dominant whey protein, which causes bloat and digestivedistress for many. Hemp boasts 11 grams of protein per 30 grams of hempseed, and is a complete protein source,which is a unique attribute among plant-based proteins. In fact, in 2016, U.S. retail sales of hemp-based foods andbeverages grew to $129 million, a surge of 44% from the previous year. The total hemp retail market, which includesfood and beverage, personal care, textiles, supplements, and industrial applications, among others, reached $688million in 2016 and is expected to grow at a robust 22% CAGR through 2021

Forward-Looking Trends

Private Equity groups and larger strategic companies have noticed the growing demand for hemp products amongconsumers and are increasingly entering the market in search of healthy returns. Notable news includes the recentacquisition of Manitoba Harvest, a well-known hemp brand that can be found in the likes of Whole Foods, byCompass Diversified Holdings. Among strategic companies, M&A activity includes acquisitions of AmericanNutritional Products (a producer of hemp capsules, gummies, and serums) by INCC, Full Sun (producer of hempseed oils) by Victory Hemp Foods, and CBD Pharmacy (manufacturer of consumable legal cannabis and hempproducts) by Real Brands, just to name a few. With strong product attributes, and macro tailwinds, we expect hemp-based products to continue to “grow like a weed!”

Spotlight

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Shop Talk – H1 2018Quarterly SpotlightSeeking High (Growth) from HempAn article by MHT’s Goldie Schupak


From raw seeds, to milks, oils, and protein powders, hemp has beenmaking its way onto store shelves and into consumers’ homes athigher rates than ever before. Hemp is increasingly praised for itsnumerous health benefits and is becoming one of the new ‘it’products.

What is Hemp? Let’s start off with what hemp is not—marijuana.Often confused with its shagadelic cousin, hemp is derived from thesame plant family as marijuana, but has less than 0.3% of THC, thepsychoactive chemical compound in marijuana.

Hemp is a dry fruit with a hard shell, similar to a sunflower seed. Its

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Spotlight

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Shop Talk – H1 2018

Quarterly SpotlightIs the Keg of Craft Beer M&A Tapped? An article by MHT’s Gavin Daniels and Mitchell Vashon


Over the last several years, large and already-consolidated brewerieshave gone on a craft beer shopping spree – scooping up smaller,trendier brands to help offset sagging sales and diminishing marketshare. Large strategic buyers that include AB InBev, Sapporo,Constellation Brands, and MillerCoors have acquired over 20 craftbreweries since 2014, representing a play by the stalwarts of theindustry to freshen up their brand portfolios and tap into craft, thefastest growing segment of the $100B+ U.S. beer market. Lagunitas(acquired by Heineken), Ballast Point (acquired by Constellation),Goose Island (acquired by AB InBev), Anchor Steam (acquired bySapporo), and Terrapin (acquired by MillerCoors), represent a few ofthe marquee acquisitions by the mass producers aimed at diversifying

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their beer offerings, expanding local presence, and integrating inventive brew masters.

However, craft beer M&A has slowed of late, likely due to a number of factors that include a slowdown in craftbeer segment sales growth, a shortage of viable “move-the-needle” targets, lack of bandwidth from largestrategics that have all made their craft brew bets and are preoccupied digesting / integrating acquisitions, andgreater pushback from still-independent brewers. Craft segment growth (5% in volume, 8% in dollars in 2017 vs.2016*), while still outpacing the non-craft segment, has slowed in recent years in part due to increased saturation/ brand proliferation. According to the Brewers Association, the number of U.S. craft breweries doubled from 2013to 2016. Then there is the resurgence of spirts sales, driven by the craft cocktail movement and the rapid growthof craft spirit brands across the country.

In terms of the shortage of viable targets, many of the “of-scale” craft breweries have largely been acquired,leaving a bevy of smaller, subscale breweries that do not likely possess the broad brand recognition, productquality, and offering variety to attract the attention of larger producers like AB InBev and MillerCoors. There is alsothe “I’m not for sale” crowd, which includes longtime nationally distributed craft brands Sierra Nevada and NewBelgium.

The craft beer M&A market, although currently not as frothy, should eventually regain momentum as the litany ofsmaller craft brands compete, gain market share, and achieve the scale necessary to draw attention from largerstrategic players.

*Brewers Association


Notable Transactions

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Ferrero Int’l acquires U.S. Confectionary Business of Nestle (January)The Ferrero Group and its affiliated companies (“Ferrero”), a global confectionarygroup, announced a definitive agreement pursuant to which it will acquire theU.S. confectionary business from Nestlé for $2.8 billion in cash. Nestlé’s U.S.confectionary business generated sales of approximately $900 million in 2016.Nestlé USA’s three confectionary manufacturing facilities in Illinois andassociated office space in California will be managed by the Ferrara CandyCompany, which was acquired by a Ferrero affiliated company in 2017.

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Highlander acquires Kernel Seasons (January)Highlander Partners, a leading middle market private investment firm based inDallas, Texas, today announced the acquisition of Chicago Custom Foods, LLCdba Kernel Season's from VMG Partners and Brian Taylor, the founder of thecompany. Founded in 2000 and headquartered in Chicago, IL, Kernel Season'sis the creator and category leader in branded popcorn seasoning. Kernel'sproduct portfolio includes more than a dozen popcorn flavors and are sold inmore than 22,000 retailers internationally.

Constellation invests in Copper Kings Brandy and Real McCoy Spirits (Jan)The Real McCoy, a copper pot-distilled, American bourbon barrel-aged rum, willcontinue to be managed by its CEO, filmmaker Bailey Pryor, and all distributionpartners outside the United States will remain the same. Under the newrelationship, the Corona maker will handle the distribution of the barrel-aged rumthroughout the U.S., and will also assist with marketing and operations.Constellation Brands also announced that it had acquired a minority stake inCopper & Kings, which produces a range of spirits including brandy-based ginsand liqueurs.

All transaction values are reported in terms of enterprise value

Total Produce acquires Dole Food Company (February)Total Produce, Europe's leading fresh produce company, announced that it hasentered into a binding agreement to acquire a 45% equity stake in Dole FoodCompany from Mr. David H. Murdock for a cash consideration of $300 million.Dole is one of the world's largest fresh produce companies and a producer andmarketer of high quality fresh fruit and vegetables. For the twelve months endedOctober 7, 2017, Dole generated revenue and Adjusted EBITDA of $4.5 billionand $237 million, respectively. The transaction consideration for the 45% interestimplies a Dole enterprise value of approx. $2 billion and approx. 9x AdjustedEBITDA.





Charlesbank acquires Hearthside Food Solutions (April)Charlesbank Capital Partners and Partners Group, a global private marketsinvestment manager, have agreed to acquire Hearthside Food Solutions(“Hearthside” or “the Company”), the largest independent bakery in the US, inpartnership with management. The Company is being acquired from GoldmanSachs and Vestar Capital Partners.

Headquartered in Downers Grove, Illinois, Hearthside produces a broad range ofhigh-quality nutrition bars, cookies, cereals and other baked foods and snacks forsome of the world’s premier food brands. It operates 25 manufacturing facilitiesacross the US and Europe and employs around 7,900 people.

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Lassonde Industries acquires Old Orchard Brands (April) Lassonde Industries Inc. has reached an agreement to acquire Old OrchardBrands, LLC, a family-owned juice and beverage company based in Sparta,Michigan, for a total cash consideration of $146.0 million. Old Orchard Brands,LLC is a family-owned and operated fruit juice and beverage companyheadquartered in Sparta, Michigan with sales of $103.3 million and an adjustedEBITDA of $15.8 million for its 2017 fiscal year. Old Orchard is a leading brand inthe shelf-stable fruit juice category across the Central United States and thenation's second largest brand in frozen juice concentrates.

JAB acquires Dr Pepper Snapple Group (February)JAB Holding Co. through its Keurig Green Mountain business unit has enteredinto an agreement to acquire the Dr Pepper Snapple Group based in Plano,Texas. Once the transaction is completed, Dr Pepper Snapple Group and KeurigGreen Mountain will merge to form Keurig Dr Pepper. The new business will haveannual revenues of approximately $11 billion.


Nomad Foods acquires Goodfella’s Pizza (April)Nomad Foods has entered into an agreement to acquire Green Isle Foods(Goodfella’s Pizza) from Boparan Holdings subsidiary 2 Sisters Food Group foraround $260 million. Goodfella’s Pizza manufactures and distributes a portfolio ofleading branded and private label frozen pizzas in the United Kingdom andIreland. The Goodfella’s brand, which accounts for the majority of Goodfella’sPizza revenues, was founded in 1993 and holds number one and number twomarket share positions within the frozen pizza category in Ireland and the UnitedKingdom, respectively.





Tyson Foods acquires Tecumseh Poultry (June)Tyson Foods, Inc. (NYSE: TSN) has become one of the nation’s leadingproducers of organic branded chicken through its acquisition of Tecumseh PoultryLLC. The purchase, announced today, includes the air-chilled Smart Chicken®brand. Terms of the deal are not being disclosed. Tecumseh Poultry was foundedin 1998 and produces air-chilled, fresh chicken, as well as deli-style chicken anda variety of chicken sausages. The air-chilling process involves using cold air tocool chicken during processing, while the most common method used by the U.S.chicken industry is water-chilling. Both methods are monitored by USDAinspectors and are considered safe.

Molson Coors Brewing Company acquires Bhakti Chai (June)

Molson Coors Brewing Co. has acquired Clearly Kombucha, a beverage makerbased in Fairfield, Calif., from Top Shelf Beverages, Inc. Financial terms of thetransaction, which closed June 1, were not disclosed. The acquisition furthers thecompany's goal of building a strong non-alcoholic portfolio, moving Molson Coorscloser to its 2025 target to "offer consumers exceptional quality no-alcohol andlow-alcohol choices in 100% of the markets where we sell beer," the companysaid in its most recent goals report. Last year, the company took a minority stakein Bhakti, Inc., a Boulder, Colorado based chai tea company.

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Mondelez International acquires Tate’s Bakeshop (May)Mondelēz International announced an agreement with The Riverside Company, aglobal private equity firm, to acquire Tate’s Bake Shop for approximately $500million. Known for its signature thin-and-crispy cookies with simple ingredients,Tate’s is a fast growing, premium cookie and baked goods brand.


KUC Holdings acquires Zipfizz Corporation (May)

KUC Holding, subsidiary of Chinese health product producer XiamenKingdomway Group Co, announced on Friday that it plans to purchase U.S.energy drink distributor Zipfizz to meet growing demand in China's upgradedconsumption sector. The Shenzhen-listed Chinese company said will acquireZipfizz for $80 million, according to the company's public filing. Zipfizz's shift fromenergy drinks to healthy, natural, and vitamin-rich drinks, will help its products tapinto a larger market.


Food & Beverage Company Performance

Public Company Sector Performance

Key Trading Statistics

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Note: Brand Processed Foods (LSE:ABF, NYSE:CPB, NYSE:CAG, NYSE:GIS, NYSE:HRL, NYSE:K, NYSE:MKC, NasdaqGS:MDLZ, SWX:NESN, NYSE:HSY, NYSE:SJM, NYSE:NOMD), Natural / Organic Foods (NYSE:BETR, NYSE:ANFI, TSX:SOY, NasdaqGS:HAIN, NasdaqGS:UNFI), Baked Goods / Snack Foods (SWX:ARYN, TSX:WN, BMV:BIMBO A, NasdaqGS:JJSF, NasdaqGS:JBSS, NasdaqGS:LANC, NasdaqGS:LNCE), Dairy (NYSE:DF, ISE:GL9, NasdaqGM:LWAY, TSX:SAP), Non-Alcoholic Beverages (LSE:BAG, TSX:BCB, NYSE:DPS, TSX:LAS.A, NasdaqGS:MNST, NasdaqGS:FIZZ, NYSE:PEP, NasdaqGS:SBUX, NYSE:KO), Alcoholic Beverages (ENXTBR:ABI, NYSE:BF.B, NYSE:STZ, LSE:DGE, ENXTAM:HEIA, TSE:2503, ENXTPA:RI, TSE:2501), Protein Processing (NasdaqGS:CALM, BOVESPA:JBSS3, NasdaqGS:SAFM, AMEX:SEB, NYSE:TSN), Produce (NasdaqGS:CVGW, NYSE:FDP, NasdaqGS:SENE.A), Ingredients / Flavors (SWX:GIVN, NYSE:IFF, ISE:KRZ, NYSE:SXT, XTRA:SY1, LSE:TATE), Agribusiness (NYSE:ADM, NYSE:BG, NYSE:DAR, NYSE:MON, NasdaqGS:ANDE, NYSE:MOS)


* Stock performance figures are weighted by market capitalization

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Sector Number of Companies

Median Enterprise

Value ($mm)

Stock Price Peformance*

Median Forward Ratios

Median LTM Multiples Median 2017E Multiples

1 Year 3 Years P/E PEG EV/Revenue EV/EBITDA EV/Revenue EV/EBITDA

Branded Processed Foods 12 $22,313 -10% 4% 16.7x 1.9x 2.4x 12.6x 2.4x 12.5xNatural / Organic Foods 4 $1,878 -6% -45% 11.9x 2.0x 0.8x 10.8x 0.8x 10.9xBaked Goods / Snack Foods 6 $3,372 -11% 7% 20.8x 1.3x 1.0x 10.6x 1.0x 10.6xDairy 4 $3,829 -3% 21% 18.8x 2.5x 1.2x 14.6x 1.1x 13.1xNon-Alcoholic Beverages 10 $15,693 -1% 18% 22.6x 2.5x 3.7x 16.8x 3.6x 15.5xAlcoholic Beverages 8 $54,249 4% 22% 22.7x 2.5x 5.1x 15.4x 5.2x 15.0xProtein Processing 5 $4,111 16% 40% 13.9x 0.7x 0.7x 9.0x 0.7x 7.4xProduce 3 $1,630 6% 36% 21.2x - 0.7x 17.1x 1.3x 20.9xIngredients / Flavors 6 $12,250 10% 44% 23.1x 2.8x 3.0x 16.1x 2.9x 16.0xAgribusiness 5 $15,880 20% -54% 17.8x 2.0x 0.6x 13.8x 0.6x 10.7x

Food and Bev. Index 63 $14,034 -1% 15% 20.6x 2.0x 2.1x 13.9x 2.2x 12.7x


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Other Q1 & Q2 Transactions


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EnterpriseDate Target Acquirer Value Revenue EBITDA6/27/2018 Pinnacle Foods Inc. Conagra Brands, Inc. $10,765.3 3.4x 16.3x6/26/2018 L&P Cold Brew, LLC Elev8 Brands, Inc. -- -- -- 6/26/2018 Excelsior Wine Company, LLC Fetzer Vineyards, Inc. -- -- -- 6/25/2018 Cajohns Fiery Foods Co. Hot Shots Distributing Inc. -- -- -- 6/20/2018 RUNA, LLC All Market Inc. -- -- -- 6/12/2018 Good Eats Food Co. Lakeside Foods Inc. -- -- -- 6/6/2018 Top Shelf Beverages, Inc. Tenth and Blake Beer Company -- -- -- 6/6/2018 Bhakti Chai LLC Molson Coors Brewing Company -- -- -- 6/5/2018 The Chill Group Inc. Life On Earth, Inc. -- -- -- 6/1/2018 New England Confectionery Company, Inc. Round Hill Investments, LLC $17.3 0.3x -- 5/25/2018 Bare Foods Co. Frito-Lay North America, Inc. -- -- -- 5/17/2018 Zipfizz Corporation KUC Holding $80.0 1.5x -- 5/16/2018 Carolina Beverage Group LLC Cold Spring Brewing Company -- -- -- 5/8/2018 California Olive Ranch Inc Crefica, SL; Calliopsis, LLC; Duncanson SL $20.3 -- -- 5/8/2018 G & S Foods, Inc. MAW Acquisitions LP -- -- -- 5/6/2018 Tate's Bake Shop, Inc. Mondelez International, Inc. $500.0 -- -- 5/3/2018 Rancho Real Vineyard E. & J. Gallo Winery, Inc. -- -- -- 4/26/2018 Old Orchard Brands, LLC Lassonde Industries Inc. $158.9 1.5x 10.1x4/17/2018 Hearthside Food Solutions LLC Charlesbank Capital Partners, LLC -- -- -- 4/17/2018 Deli Star Ventures, Inc. Deli Star Corporation -- -- -- 4/13/2018 Al Dente Pasta Company ALB-GOLD Teigwaren GmbH -- -- -- 4/12/2018 Abbott & Cobb, Inc. Syngenta Corporation -- -- -- 4/9/2018 Denizen rum brand Hotaling & Co., LLC -- -- -- 4/6/2018 Acrobat Wine Foley Family Wines, Inc. -- -- -- 4/6/2018 Riverside Foods, Inc. Lakeside Foods Inc. -- -- -- 4/4/2018 Temple Turmeric, Inc. Dunn's River Brands, LLC -- -- -- 3/29/2018 Baetea LLC New World Natural Brands, LLC -- -- -- 3/29/2018 All Assets of Phoebe Products, LLC BrightPet Nutrition Group, LLC $23,057.1 -- -- 3/26/2018 Azure Water, L.L.C. IsoBev, Inc. $2.3 -- -- 3/20/2018 Green Chef Corporation Grocery Delivery E-Services USA INC. -- -- -- 3/20/2018 Finest Made Ales Council Brewing Company, LLC -- -- -- 3/8/2018 Dahlicious, LLC KEEN Growth Capital -- -- -- 3/8/2018 Exo, Inc. Aspire Food Group USA, Inc. -- -- -- 3/6/2018 ViaViente Youngevity International, Inc. -- -- -- 2/27/2018 La Mexicana Food Products Italian Rose Garlic Products, Inc. -- -- -- 2/27/2018 Capital Soul L.L.C. Buchi Kombucha -- -- -- 2/27/2018 Pedernales Brewing Company, LLC Uncle Billy's Brewery -- -- -- 2/22/2018 Braaitime LLC Stryve Foods LLC -- -- -- 2/20/2018 TCHO Ventures, Inc. Ezaki Glico Co.,Ltd. -- -- -- 2/19/2018 6DAYS Productions Black Dog Venture Partners $23,057.1 -- -- 2/12/2018 Crystal Rock Holdings, Inc. Cott Corporation $34.8 0.6x 8.0x2/8/2018 Popcorn Passion and DK Organics Celebrate Brands LLC -- -- -- 2/8/2018 Avani Snacks Celebrate Brands LLC -- -- -- 2/4/2018 Mullins Food Products Inc. Newly Weds Foods, Inc. -- -- -- 2/1/2018 Dole Food Company, Inc. Total Produce plc $1,901.5 0.4x 9.6x2/1/2018 Certain U.S. Breakfast Assets of Aryzta LLC Hostess Brands, Inc. $25.0 -- -- 1/30/2018 Paleo Meals to Go Wild Zora Foods, LLC -- -- -- 1/29/2018 Dr Pepper Snapple Group, Inc. Maple Parent Holdings Corp. -- -- -- 1/22/2018 Reallygoods LLC EVOLVE Brands LLC -- -- -- 1/22/2018 Smart Fuels, LLC EVOLVE Brands LLC -- -- -- 1/16/2018 U.S. Confectionary Business of Nestlé S.A. Ferrero International S.A. $2,800.0 -- -- 1/16/2018 Kernel Season's LLC Highlander Partners, L.P. -- -- -- 1/12/2018 Culinarte Marketing Group, LLC Kainos Capital, LLC -- -- -- 1/9/2018 Atlanta Cheesecake Cafe, LLC Dessert Holdings -- -- -- 1/5/2018 Copper and Kings American Brandy Company Constellation Ventures $23,057.1 -- -- 1/5/2018 Real McCoy Spirits, Corp. Constellation Ventures -- -- -- 1/4/2018 The Icelandic Milk & Skyr Corporation Groupe Lactalis S.A. -- -- --

High: $23,057.1 1.5x 10.1xMean: $5,747.0 0.9x 9.2x

Median: $158.9 0.6x 9.6xLow: $2.3 0.3x 8.0x

Enterprise Value /

Food & Beverage Industry Update...share. Large strategic buyers that include AB InBev, Sapporo,...

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