Innovation is the key to success, says new report

09 March, 2016

A new bakery and pastry report from Catalyst Corporate Finance has found that the fastest-growing brands specialise in healthier baked goods using high-quality ingredients.

It is these brands, the report said, that meet demand for innovation in the free-from and food on-the-go categories. It said: “Large corporations are changing their products to match these trends, and are using acquisitions to access market leaders and accelerate growth in market share.”

Major emerging market players are targeting leading brands in mature markets, according to the report. “Major emerging markets, bakery manufacturers and brand owners which dominate their domestic markets are making strategic acquisitions of the market leaders, and often iconic brands, in more mature and sophisticated markets.”

It added: “Acquiring these brands enables diversification and gives these players access to stable cash flows and further growth opportunities.”

Strategic acquirers are willing to pay high multiples, often in excess of 12x ebitda, it went on to say, to leverage new technologies, access new markets, grow product portfolios and expand addressable market size.

In terms of private equity, it said that it was attracted to smaller, innovative manufacturers that have “shown they can build loyalty, achieve high levels of product development and gain significant market share”.

Asian developments

It also found that rising disposable incomes, urbanisation and the demand for western-style diets are supporting the growth in sales of baked goods and pastries in particular. “China is set to become the second-largest baked goods market globally by 2020,” it said, “with pastries the most popular segment. These markets are attractive to major corporations which see the potential for significant sales growth.”





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