Food and Drink

As consumers become more sophisticated they become more demanding, expecting more for less, while their tastes and habits continue to change. Competition in the food and drink industries is fierce, with rising costs and downward pressure on prices and margins. Meanwhile, the strength of major retail customers, particularly the large supermarket chains, continues to increase. The industry’s priorities include traceability, animal welfare, testing, labelling, health and well-being, carbon footprints, carrier bags and the ‘green’ agenda. Companies continue to debate whether they are brand owners, or producers, or both.

Private equity has consistently invested in many of Europe’s favourite household brands, such as Weetabix, Birds Eye, Findus, McVities, Finland’s Vaasan & Vaasan and Yoplait in France.

Foodvest was formed in 2006 to combine CapVest’s interests in Youngs, Findus and The Seafood Company and has over £1 billion of revenues. CapVest and management led a strategy to invest in the business in both organic and acquisitive growth and in their period of ownership increased earnings six fold as they transformed the size and scale of the business. CapVest has recently sold the business to Lion Capital, who are recognised as one of Europe’s leading consumer specialists. Lion Capital’s portfolio includes Orangina, Weetabix, Jimmy Choo, La Senza, Russian Alcohol Group and Hema.

In 2006, PAI Partners and Blackstone acquired United Biscuits from Cinven, MidOcean and PAI Partners for £1.6 billion. United Biscuits (UB) is the leading manufacturer and marketer of packaged nuts and biscuits in the United Kingdom and number one or two in other European countries. UB’s brands include Penguin, Jaffa Cakes, Jacobs, Twiglets, Hula Hoops, Delacore, Phileas Fogg and KP. The business employs over 9,000 people, including 7,500 in its home country. The shareholders are keen to further develop the key brands, look at new product lines and perhaps make acquisitions.

Drinks brands owned by private equity include Schweppes, Orangina and Oasis, acquired by Lion Capital and Blackstone for £1.3 billion in 2006 from Cadbury Schweppes. The brands are sold across Continental Europe, North and West Africa and the Middle East; 85% of sales are concentrated in France, Spain and Germany. The business has its own bottling operations as well as licensing agreements with third party manufacturers and distributors.