Consumer Products M&A Update: Q1 2018
With consumers putting a bigger emphasis on their wellness and diet, food and beverage organizations have had to adapt and make changes to products to keep up with this type of lifestyle change. 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
- Innovation through renovation1: As consumers become increasingly selective when it comes to defining what constitutes a clean ingredient, major corporations are revising their approach by reinventing existing brands. Kraft Heinz altered its recipes for its Oscar Mayer and Kraft Mac & Cheese brands to include healthier ingredients and remove artificial additives. Interestingly, the company shipped the product without notifying consumers, and sales remained steady after the change. 2018 will likely see a mixture of innovation and renovation among household consumer brands.
- Omni-channel operating model2: Traditional big-box retailers have actively pursued new ways to bring customers into declining brick-and-mortar locations. A common initiative of ‘buy online, pick up in store’ has paid dividends, as many retailers have seen both online growth and same-store sales growth. In-store pickup options and product inventory applications have driven consumers to retail locations, with big-box giant, Target, estimating that 1,400 of 1,800 US stores will fulfill online orders.
- Biohacking continues to grow3: As individuals continue to learn the negative effects of a poor diet, consumers are moving past simply trying to eat healthily, but instead searching for products to improve their bodies and health. According to Innova, there was a 36 percent increase in product launches referencing cognitive function benefits largely backed by EPA and DHA omega-3s. Consumers will continue to search for products that improve their health, whether it be from improved growing and farming practices or consumption methods.
- Increased use of Apple Pay4: Apple Pay® mobile payments solution has quietly gained major traction in US retail locations and has surpassed PayPal in terms of physical retail acceptance. Apple Pay is now accepted at over half of all domestic retail locations and in two-thirds of the top 100 US retailers. Apple’s financials show adjusted services revenue is up 27 percent year-over-year growth in Q1 2018. With year-over-year volume tripling in Q1 2018, Apple Pay is here to stay and will continue its rise as a major payment option in the United States.
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1 “2018 Consumer Products Industry Outlook,” Deloitte. December 31, 2017.
2 “Omnichannel investments pay off for brick-and-mortar retailers.’ MultiChannel Merchant. October 2, 2017.
3 “10 food trends that will shape 2018,” Forbes. December 13, 2017.
4 “3 metrics show surprising growth for Apple, Inc.'s Services,” The Motley Fool. March 20, 2018.