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Analysis

Consumer products M&A update: Q3 2018

As more and more consumers are choosing to be more environmentally, socially, and health conscious, the consumer products industry has seen an uptick in soda alternatives such as sparkling water, and meat alternatives such as vegetable mashes and soy. This consumer products mergers and acquisitions (M&A) update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the consumer products industry.

Consumer products trends

  • The future is sparkling 1,2,3: As fewer consumers are drinking soda, filling the void (and then some) is sparkling water. Americans will drink approximately 821 million gallons of sparkling water in 2018, about three times American consumption in 2008. With sales of traditional sparkling water totaling $2.7 billion this year, alcoholic sparkling water also continues to gain traction with 2018 annual sales totaling $295 million, up from $11 million in 2016. The increase in sales has spurred an increase in M&A activity, with one notable transaction in 2018 being Hiball, a growing caffeinated sparkling water, recently being acquired by Anheuser-Busch.
  • Smart(phone) shoppers 4,5: Online shopping via mobile devices is expected to grow 16 percent, up from 12 percent in 2017. The trend is largely driven by users spending increased time on mobile devices, forcing retailers to pivot their efforts to reach consumers by way of mobile media. The trend has also led many social media apps to build out their mobile commerce capabilities this year in advance of what is expected to be a strong Christmas season for retailers. This trend is especially true for Generation Z, with half of the demographic planning to complete 100 percent of their shopping online with a smartphone.
  • Luxury remains vogue 6,7: The luxury fashion and accessories sector has experienced 42 percent growth since 2017, making luxury apparel one of the top performing sectors in the consumer space. Companies in the sector have continued to show an ability to respond to cultural trends, retaining an authentic and original feel that has allowed them to grow while still demanding a premium for their name brand products. Going forward, the future success of these companies will likely depend on the effectiveness of their outreach and early marketing to younger generations.
  • Meat alternatives that bleed 8,9: Continued customer interest in alternative proteins, driven by health-, environmental-, and socially-conscious individuals has driven growth in the sector as demand for in-home consumption of meat alternatives has grown 24 percent since 2015. New meat alternatives have increased in popularity as newer technology has made it possible to create alternatives to burgers, chicken strips, and steaks consisting of lab-grown meat and high-tech vegetable mashes with new “bloody” versions, including beet juice, in attempts to appeal to carnivores.

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References

1 “No Signs of Fizzing Out: America’s Love of Sparkling Water Remains Strong Through August”. Nielsen, 24 July 2018.

2 “Move Over, Soda: Seltzer Sales are Through The Roof.” Fortune, 27 Aug. 2018.

3 "Anheuser-Busch Partners with Hiball Energy and Alta Palla Brands.” Anheuser-Busch Press Release, 20 July 2017.

4 Thomas, Lauren. “It’s going to be an Instagram Christmas.” CNBC, 2 Oct. 2018.

5 Williams, Robert. “16% of consumers to use smartphones for holiday shopping.” Retail Dive, 3 Oct. 2018.

6 Handley, Lucy. “The Luxury Sector is Growing Faster Than Many others and Gucci is in the Lead.” CNBC, 4 Oct. 2018.

7 Arienti, Patrizia. “Global Powers of Luxury Goods 2018.”, Deloitte, 2018.

8 Chamlee, Virginia. “Why Do People Want Veggie Burgers That Bleed.” Eater, 25 Aug. 2017.

9 Cheng, Andria. “The Plant-Based Meat Trend is Sizzling – Even KFC is Eyeing Faux-Chicken.” Forbes. 7 June. 2018.

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