Major transactions in the Agri-food sector in 2023

Climate change and inflation hit the sector again

Following on from 2022, the warmest year in France since the beginning of the 20th century, 2023 was the second warmest year on record. With an average temperature of 14.4°C, the thermal anomaly for the year as a whole reached +1.4°C (compared to the 1991-2020 normal). As a result, the agri-food sector was again disrupted in 2023, not only by the weather, but also by rising energy and commodity prices. The war in Ukraine has completely disrupted raw material markets in Europe: the cost of energy, farm inputs, labour, and animal feed have soared. All this has been exacerbated by the build-up of European regulations, rising costs, and unfair competition against a backdrop of aid to Ukraine, which is undermining the French agri-food sector.

Sharp variations in production and prices

In 2023, the trend in national production shows marked disparities, with a significant increase for cereals, oilseeds, potatoes, and vines, while a decrease is seen for beetroot and most fruit and animal products. At the same time, farmgate prices for agricultural products (IPPAP) fell by 3.0% year-on-year, following a significant increase of 23.1% in 2022. This increase had been stimulated by a sharp acceleration in agricultural and energy commodity prices linked to the conflict in Ukraine. Although prices remained high, exceeding the already high levels of 2021 by 19.4%, they declined in the first ten months of the year, mainly due to a significant drop in cereal (-27.0%) and oilseed (-36.1%) prices, resulting from abundant global supply and intense competition from Russian grain.

In the case of wine, demand is limited compared to availability, especially at the international level, and putting downward pressure on prices. Price trends for fruit and vegetables vary by type. Despite an average increase in livestock prices over the year, sluggish demand in a context of declining purchasing power led to a fall in prices at the end of the year. At the same time, the cost of farm inputs eased slightly by 0.5% year-on-year, after rising by 22.9% in 2022. This easing is the result of a fall in fertiliser prices (-22.0%) and energy prices (-4.2%), despite an increase in animal feed prices (+2.9%).

In conclusion, INSEE estimates that food product prices will have risen by 3.7% in December 2023 compared to December 2022.

Source:

1. Economic review of the agri-food sector
2. Key figures for the sector
3. Price shocks

An overview of mergers and acquisitions

AURIS Finance has identified 132 transactions in the agri-food sector in 2023. These include at least one French counterparty (buyer or target).

Of the 132 transactions listed, 15 were carried out by foreign buyers (the acquisition of Courvoisier by Italy’s Campari, the acquisition of Cognac Larsen by the UK’s International Beverage, and the Polish group Stock Spirit Group, which bought Clan Campbell from the French group Pernod Ricard), accounting for 11% of the total number of transactions.

In addition, 21 transactions (16% of the total for the year) were carried out by French companies outside France: LDC’s acquisition of the Polish turkey leader Indykpol, Lactalis’ acquisition of Marie Morin Canada, and Pernod Ricard’s purchase of the American brand Skrewball Whiskey.

The remaining 96 transactions were all between French companies, including the acquisition of Minuty by Moët Hennessy, the acquisition of Hermes Boissons by the Agromousquetaires group, and the acquisition of Goulibeur by Maison Duprez, advised on the sale by AURIS Finance.

Transactions breakdown

Of the 132 transactions carried out, 48 were completed with funds raised during the year (i.e. 45% of the total number of transactions recorded). Some industrial groups chose to acquire companies rather than develop new plants in order to gain access to existing clients and sales, as well as to integrate a company with existing employees into the target business, thereby overcoming recruitment challenges in certain geographic locations.

Breakdown by transaction type

From a sectoral point of view, the alcoholic beverages sector leads our ranking with 16% of the volume of transactions recorded over the year (Enowe – Brana, Solexia – Domaine des terres de Velle, etc.), followed by the bread, biscuits, pastries and confectionery sector with 12% of the volume of transactions (Morato – Usine Harry’s, La fabrique cookies – Les p’tits amoureux, etc.). There is some balance in other sectors.

Breakdown by sector

In conclusion, AURIS Finance sees four major trends:

• In response to rising prices, the French have reduced their food purchases, with a growing tendency to systematically focus on lower-priced products. A more rational approach to consumption is beginning to take hold, complementing the trend towards more environmentally friendly behaviour (local, plant-based, etc.), although there are still some subtle nuances to this trend.
• After two consecutive years of declining poultry consumption in France, consumption increased in 2023 (+4.1%). The industry has shown great resilience following a two-year period marked by avian influenza.
• The alcoholic beverages sector was on a roll in 2023: 21 transactions compared with 11 in 2022 and 13 in 2021. The alcoholic beverages industry remained buoyant after months of sluggishness in 2022 and 2023, and France remains the world’s leading wine producer.
• Investment funds remain very interested in the agri-food sector, despite the difficult context (war in Ukraine, inflation, farmers’ protests, etc.). They backed almost half (45%) of all transactions in the sector in 2023.