Food Industry Report - Cascadia Capital€¦ · John C. Siegler Managing Director-2550...

Food Industry Report

Fall 2018

Cascadia Capital Food Team

1

Food Advisory Leadership Team

Erik EinwalterSenior Vice President(206) [email protected]

George SentManaging Director(234) [email protected]

Bryan JaffeManaging Director(206) [email protected]

The food sector continues to undergo consolidation as large CPG acquirers utilize M&A as a replacement for more traditional means of innovation.

Private equity has also demonstrated a considerable appetite for acquisitions given the durability and long term growth thematics of the industry.

Cascadia represents emerging growth brands that challenge the industry’s status quo, as well as food processors, ranging from contract manufacturers,

foodservice suppliers and ingredient houses.

With the addition of First Beverage’s advisory team in March of 2018, Cascadia Capital now boasts one of the more active Food & Beverage advisory

practices serving the lower middle market. Our team has closed 50+ transactions over the past three years, and with over 20 current mandates in

process, is well positioned to continue that momentum.

John C. SieglerManaging Director(206) [email protected]

Beverage Advisory Leadership Team

Townsend ZieboldManaging Director(917) [email protected]

Nicole FryManaging Director(323) 486-8121 [email protected]

Recently Closed Food & Beverage Transactions

has been recapitalized by

March 2018

has received a minority investment from

July 2017

has been acquired by

August 2017

S E C T I O N I

Market Observations

Strategic Acquisitions Tapering After Period of Elevated Activity

3

▪ After a period of heightened strategic M&A activity, many strategic buyers have slowed their M&A activity while trying to digest assets purchased over

the last few years. The contraction of the strategic buyer universe could lead to reduced competition and tapering valuations in the lower middle

market, absent private equity’s ability and willingness to fill the void

▪ The narrative that big CPG must buy emerging innovation is colliding with activist investor pressure to more rapidly transform, resulting in challenger

brand deals attracting less interest due to size and valuation expectations

– Large strategic buyers are placing bigger bets – Blue Buffalo, Ainsworth Pet Nutrition, Pinnacle Foods, Amplify Snacks – in an effort to move the needle on growth, profitability and relevance

– A number of emerging brands previously acquired at premium values have now been written down due to their inability to meet growth projections, furthering pressure on acquirers to focus on the next generation of scaled businesses

▪ However, with cash reserves and private equity dry powder at a record high and with emerging brands continuing to take market share, the record levels of activity in food M&A seen in recent years will likely continue for the foreseeable future, with volume shifting between buyer segments

– Middle market private equity is becoming a more likely path to exit for emerging food brands, correspondingly impacting valuations are forcing operators to balance growth and profitability

– A number of Tier II strategic CPG companies have sat on the sidelines as valuations soared, but will become more interested in emerging food M&A opportunities at the right price

Source: S&P CapIQ, Pitchbook, Company Press ReleasesNote: Q1 2018 includes Keurig / Dr. Pepper deal

$1.8 $1.9 $1.5 $4.5

$0.2

$6.5 $5.3

$11.8

$36.3

$16.2

$9.2

70 64

72 68

35

58 59

74

50 57

19

0

20

40

60

80

$0.0

$10.0

$20.0

$30.0

$40.0

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

Strategic Value

Strategic Deals

Strategic Food & Beverage M&A Investment Over Time ($BN)

U.S. Food Manufacturers Are Listening to Consumers

4

In an effort to gain access to challenger brand DNA without paying premium buyout prices, Corporate VCs are filling the void for growth capital

▪ After experiencing a surge in venture capital investment between

2012 to 2015, consumer venture investors have become far more

selective when assessing food start-up investments, leading to a

clear delineation of the haves and have-nots in the industry

▪ Although venture capital investment has slowed, differentiated and

high growth challenger brands are still expected to continue

capturing market share from established food brands as consumers

increasingly demand innovation and healthier, fresher options

▪ However, sifting through the abundance of opportunities to identify

the categories, products and brands with break-out potential is

becoming increasingly difficult amongst a sea of competition

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Deal Count

Invested Capital

US Venture Capital Deal Value ($BN) and Count

General Mills was one of the first major food companies in the U.S. to launch its venture capital investment arm. Early investments in Beyond Meat (plant-based meat) and Kite Hill (plant-based yogurt) have experienced solid growth and gained brand recognition

Campbell’s launched its $125MM venture arm, Acre Venture Partners, in February 2016. The fund deployed capital relatively rapidly in 2016 and 2017 and invested in many businesses well beyond the boundaries of traditional packaged food products

Kellogg launched its $100MM venture capital fund, Eighteen94, in June 2016. Its consumer-facing investments (Kuli Kuli's moringa powder and Bright Greens' frozen smoothie cubes) have experienced mixed results

Kraft Heinz recently joined the movement and launched its own incubator, Springboard, in 2018. Its inaugural class of five start-ups included South African beef jerky and egg-white chips. Beyond Springboard, Kraft also launched Mealtime Stories, a joint venture with Oprah Winfrey, in 2017

Sources: Alliance Bernstein, Fortune

The Sweet Earth acquisition diversifies Nestlé’s frozen

portfolio and gives entry into the rapidly growing plant-

based foods segment

Freezer Aisle Making a Comeback

5

▪ Frozen food volumes grew 1.5% in 2017, with total U.S. sales of $53BN.

Innovative and better-for-you offerings are bringing the younger

generations of consumers back to the freezer aisle

▪ While frozen foods seem out of step with fresh and functional food

trends, they offer convenience, portion control, fewer preservatives,

and less waste than other dining options with new options

incorporating organic, vegan and more diverse ethnic attributes

▪ Through 2018, frozen vegetable sales have seen an impressive 4.5%

surge, a large increase from the (2.0%) slide in 2017. Along with plant-

based alternatives, the upwards momentum in frozen vegetable sales is

driven by increasingly popular vegetarian and vegan lifestyles,

combined with Millennial demand for speed and convenience(4.5%)

(3.0%)

(1.0%)

0.5%

1.5%

(5.0%)

(4.0%)

(3.0%)

(2.0%)

(1.0%)

0.0%

1.0%

2.0%

2013 2014 2015 2016 2017

Source: Cascadia Capital, RBC research reports

YoY U.S. Sales Change in Frozen Meals ‘13 – ‘17

Consumer appetite for the freezer aisle is heating up and displays trends that mirror the health-focused movement that has altered the landscape of other grocery aisles over the last decade

The combined Pinnacle and Conagra portfolios create an

industry leader in the revitalized frozen foods

segment

▪ Brazi Bites is a leading U.S. producer of naturally gluten-free Brazilian-style cheese bread and has emerged as a key player in the food industry’s rapid evolution towards “clean-label,” offering convenient, delicious, wholesome products

▪ In July of 2018, the Company announced its partnership with San Francisco Equity Partners (SFEP), which focused on development of new businesses around the strength of the founding team that has been leading a movement among consumers toward authentic, ethnic, better-for-you frozen food offerings

Has Been Acquired ByHas Been Acquired By

Meal Kits are Struggling While DTC Brands Thrive

6

Meal-kits ushered in a new age of fresh options but one should not confuse popularity with profitability

▪ The meal-kit business is incredibly capital intensive and involves customer acquisition subsidization, requiring companies to secure substantial funding to start, grow and maintain a business, which often times has too many unknown variables

▪ Meal-kit companies have yet to find success in retaining acquired customers, with users rarely maintaining subscriptions for longer than six months because of market saturation and discounted welcome offers

‒ Additionally, consumers have become overwhelmed by the number of options and the upfront commitment, and tend to end up reverting to the norm of grocery stores runs as their primary source of nutrition acquisition

▪ Companies such as Blue Apron have tried to stem customer attrition by partnering with traditional food retailers, typically at a discount to online offerings, which further reduce already slim margins

Meal-kits broke down the barriers for online product acquisition, but independent products with clearer points of differentiation are garnering the most traction from consumers customizing their own routines through ecommerce

▪ In contrast to meal-kits, where the experience and product can often be replicated, DTC brands have been rewarded for building a crystal-clear brand positions and value propositions that resonates with consumers before launching expensive distribution efforts

▪ As new entrants continue to flood the food and beverage landscape, grocery buyers are increasingly overwhelmed with options and less inclined to change performing sets. Further changes at Whole Foods Markets, the previous launchpad for new offerings, impacts the roadmap for how to scale new challenger brands

▪ Creative entrepreneurs are taking brand incubation away from the grocer through direct sales online, and are scaling quickly and profitably in the process, especially in emerging categories where the speed of digital helps

▪ However, brands should heed warning that filling a pantry with individual online transactions isn’t sustainable: leveraging the points of differentiation that drove success online into a wholesale model will be imperative to build barriers before imitators arrive

▪ Additionally, experienced online retailers, such as Amazon, are pushing the cost of loyalty programs back to brands, as another form of paid promotional services, impacting margins of all product participants

Consumer preference for a simple but personalized food experience should spur growth for leaders in the meal-kit market, but the crowded and capital intensive nature of the space has made sustained growth difficult to capture

Sources: Supermarket News, VC Café, Alliance Bernstein and CoreSight Research

Year-to-Date Public Meal-Kit Stock Performance

(85.0%)

(55.0%)

(25.0%)

5.0%

35.0%

Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18

S&P 500

HelloFresh

Blue Apron Holdings

1.7%

(12.3%)

(73.1%)

Consumer Demand Driving Innovation Trends with Manufacturers

7

The manufacturing landscape within the food and beverage industry is adapting to new consumer preferences and demands through technological advancement and innovation in every step of the production process

SustainabilityConsumers looking for brands that share

their commitment to environmental sustainability and are taking steps to

optimize energy and water consumption throughout the production process

Production TransparencyConsumers are demanding to know more about how their food made it to the shelf, moving the industry beyond clean labeling and now requiring traceability in every step

of the supply chain

Social TransparencyConsumers yearn to connect with the

brands they use and consume, increasingly preferring presentation, packaging, and

marketing that tell a story about the product and its journey to their home

Automation:

▪ Consumer demands, rising labor costs and increased regulations have pushed the manufacturing industry towards automation and innovative

solutions to create a more efficient, cost effective and sustainable processes

Blockchain:

▪ Leveraging blockchain technology to aggregate information across the supply chain in a secure, decentralized fashion, enabling consumers to

quickly and accurately trace products back to their source and provide greater transparency

▪ Walmart announced that they will require all fresh, leafy greens suppliers to implement digital, end-to-end traceability of their products using

blockchain by September 2019

▪ Increased adoption of distributed ledger technology allows brands display their values and back them up with data

Sources: Food Dive, Food Engineering, Food Business News and Fortune

Innovation and Technological Advancements Have Supported Higher Efficiency and Safety

Consumer interest has shifted to food and beverages products that are certified as being made with organic ingredients and whose better-for-you attributes are obvious. The market has grown rapidly since the organic labeling program began, and it has captured the attention of ingredient manufacturers interested in serving the market

Ingredient Innovation Pushing Product Development and Quality

8

$20.4 $21.3 $23.0$25.2

$28.0$31.4

$35.1$39.0

$42.5$45.2

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

▪ The overall industry shift of consumers wanting traceable clean label

and minimally processed products has led to the demand for organic

ingredients. Even as the organic food market is expected to see a

steadier pace of growth as it matures, it will likely continue to surpass

the growth rate of the broader food market

▪ As the organic market has evolved from single ingredient staples (i.e.

milk, fruits, vegetables) to the production of processed products,

ingredient manufacturers have been developing ingredients that

meet organic labeling standards and improve the organic products

that undergo harsh process conditions

▪ Rapidly changing consumer preferences have pushed product and

ingredient innovation to deliver functional benefits, addressing

consumer conditions (i.e., lactose intolerance, Celiac), concerns over

health benefits, and the demand for plant-based protein alternatives

▪ Global product launches of meat alternatives with pea protein

increased 35% from 2013 to 2017. Protein from rice, fava beans,

potatoes, and lentils also are appearing in meat alternatives

▪ With global popularity and demand for plant-based options, there has

been significant improvement in the texture, taste and nutrition of

these products. While soy protein and wheat protein still dominate the

market, chickpeas, oats and ancient grains are some popular

ingredients being leveraged to deliver improved gluten-free options U.S. Sales of Organic Food Products Continue to Rise

Banza is a chickpea alternative to traditional pasta, touting the same texture and taste of wheat pasta, but with more protein and fiber and less carbohydrates.

($ in billions)

Sources: Food Dive, Food Engineering and Food Business News

Hippeas is a natural, gluten-free chickpea snack which offers the familiar ‘crunch’ that consumers cherish with an appealing nutritional profile.

S E C T I O N I I

Transaction Highlights

Select Transactions Altering the Landscape

10

Pinnacle Foods is Acquired by Conagra Brands

▪ Pinnacle is a leading manufacturer and marketer of high-quality branded foodproducts, with a mission of unleashing brand potential

▪ The transaction aligns with Conagra’s three-year strategic initiative to become apure-play, branded food company by significantly expanding Conagra’s snackand frozen food brand portfolio

Key MetricsAnnounced Date: Jun 2018EV: $10.8BNEV / Revenue: 3.4xEV / EBITDA: 15.8x

J.M. Smucker U.S. Baking Business is Acquired by Brynwood Partners

▪ The J.M. Smucker U.S. baking portfolio includes the Pillsbury, Hungry Jack,White Lily, Jim Dandy, and Martha White Brands

▪ The carved-out entity formed by Brynwood, named the Hometown FoodCompany, will serve as a platform to invest and grow the former J.M. Smuckerbrands as well as potential future acquisitions of bakery-related assets

Key MetricsAnnounced Date: Jul 2018EV: $375MMEV / Revenue: 1.0xEV / EBITDA: NA

Tate’s Bake Shop is Acquired by Mondelez

▪ Tate’s is a nationally acclaimed brand of delicious baked goods with a specialtybake shop located in Southampton, New York

▪ The purchase of Tate’s gives Mondelez an entry-point into the fast-growingpremium cookie segment with a unique and authentic portfolio of deliciousproducts with a strong brand

Key MetricsAnnounced Date: May 2018EV: $500MMEV / Revenue: 7.4xEV / EBITDA: NA

Key MetricsAnnounced Date: Sept 2018EV: $420MMEV / Revenue: 4.7xEV / EBITDA: 15.0x

Key MetricsAnnounced Date: Oct 2018EV: $1.8BEV / Revenue: 0.8xEV / EBITDA: 13.4x

Greencore is Acquired by Hearthside Food

▪ Greencore is a leader in frozen contract packaging and a top producer ofrefrigerated, fresh-made sandwiches, entrees, and salad kits

▪ The acquisition of will expands and diversifies the Hearthside network to 38production facilities and bolsters innovation and R&D capabilities in frozen,refrigerated and fresh sandwiches/entrées

Pirate Brands is Acquired by Hershey’s

▪ Pirate Brands is home to Pirate’s Booty, a leading and fast-growing brand withinthe $2.5BN cheese puffs category

▪ Pirate Brands will operate within Amplify, Hershey’s better-for-you snackingdivision, which is focused on driving growth in the warehouse snacking aislewith unique product flavors and forms like Skinny Pop and Oatmega

Sources: S&P CapIQ, Company Press Releases

Select M&A Transactions

11

($ in millions, except per share data) Industry Enterprise EV /

Date Target Name Acquiror Name Target Business Description Class Value Revenue EBITDA

10/15/2018 Mountain Valley Spring DSS Group, Inc. Mountain Valley Spring produces and delivers bottled spring water Non-alcoholic Beverages $78.5 1.6x 10.3x

10/15/2018 Greencore Us Holdings DSS Group, Inc. Greencore US is a provider of contract packaging services and producer of convenience

foods

Private Label Food and

Beverage

$1,075.0 0.8x 13.4x

10/11/2018 Slim-Fast Glanbia, plc. Slim-Fast produces food products for weight management and health improvement Non-alcoholic Beverages $350.0 1.7x 14.6x

10/01/2018 Mars Drinks North

America

Luigi Lavazza S.p.A. Mars Drinks North America offers specialty single serve coffees, teas, and hot

chocolate drinks for offices in the United States and Canada

Non-alcoholic Beverages $650.0 1.9x NA

09/27/2018 Core Nutrition Keurig Dr Pepper Inc. Core Nutrition produces organic beverages and bottled water Non-alcoholic Beverages $525.0 2.6x NA

09/12/2018 Pirate Brands The Hershey Company Pirate Brands manufactures snack products within the "better-for-you" market Snacks $420.0 4.7x 15.0x

08/31/2018 Costa Limited The Coca-Cola Company Costa Limited operates a chain of coffee shops in the United Kingdom and

internationally

Non-alcoholic Beverages $5,065.0 2.8x 15.4x

08/20/2018 SodaStream

International

PepsiCo SodaStream International manufactures, distributes, and sells home beverage

carbonation systems

Soft Drinks $3,173.6 5.3x 26.0x

08/01/2018 Jamba FOCUS Brands Jamba owns, operates, and franchises Jamba Juice stores Non-alcoholic Beverages $195.8 2.8x NM

07/09/2018 The J. M. Smucker

Company (U.S. Baking

Business)

Brynwood Partners U.S. Baking Business Of The J. M. Smucker Company comprises baking products

producing business, including Pillsbury, Hungry Jack, White Lily, Jim Dandy, and

Martha White brands

Branded Processed Foods $375.0 1.0x NA

06/27/2018 Pinnacle Foods, Inc. Conagra Brands, Inc. Pinnacle Foods manufactures, markets, and distributes branded convenience food

products in North America. It operates through four segments: Frozen, Grocery,

Boulder, and Specialty

Branded Processed Foods $10,777.9 3.4x 15.9x

Select M&A Transactions (cont’d)

12



05/23/2018 Shepherd Gourmet

Dairy (Ontario)

Saputo, Inc. Shepherd Gourmet Dairy is a Canadian producer of dairy products Dairy $78.3 1.8x NA

05/17/2018 Zipfizz Corp. KUC Holding Co. Zipfizz engages in the production and distribution of energy and sports drink tubes in

the United States


05/06/2018 Tate's Bake Shop, Inc. Mondelez International,

Inc.

Tate’s Bake Shop is a producer of premium bake goods and cookies Snacks $500.0 7.4x NA

05/03/2018 SarPes Beverages Harvest One Cannabis SarPes Beverages manufactures sleep and relaxation water-based beverages. It offers

Dream Water, water that helps users to relax and fall asleep


04/26/2018 Old Orchard Brands Lassonde Industries Old Orchard Brands produces fruit juices. It offers bottled juices, fruit juice

concentrates, and frozen juice concentrates

Non-alcoholic Beverages $156.0 1.5x 9.9x

04/17/2018 Hearthside Food

Solutions

Charlesbank Capital

Partners

Hearthside Food Solutions provides contract manufacturing services for baked goods

and snack foods


04/09/2018 National Beef Packing

Co. LLC

Marfrig Global Foods S.A. National Beef Packing engages in processing, packaging, and delivering fresh and

frozen beef and beef by-products in the United States and internationally

Meats $2,300.0 0.3x 4.4x

04/04/2018 Ainsworth Pet Nutrition The J. M. Smucker

Company

Ainsworth is a leading producer, distributor, and marketer of premium pet food and

pet snacks

Pet Food $1,900.0 2.4x 13.9x

03/31/2018 C.H. Guenther & Son,

Inc.

PPC Partners C.H. Guenther & Son produces branded and private-label food products for food

services, quick-serve restaurants, club and retail customers


Beverage

$1,400.0 1.8x NA

02/22/2018 Blue Buffalo Pet

Products, Inc.

General Mills, Inc. Blue Buffalo Pet Products operates as a pet food company in the United States,

Canada, Japan, and Mexico. It develops, produces, markets, and sells dog and cat food

under the BLUE Life Protection Formula, BLUE Wilderness, BLUE Basics, BLUE Freedom,

and BLUE Natural Veterinary Diet lines names.


02/21/2018 NutraDried LLP EnWave Corp. NutraDRIED produces cheese snacks. Its products include cheddar cheese, gouda

cheese, and Monterey jack cheese with jalapeño peppers



13



02/20/2018 Del Monte Canada, Inc. Bonduelle SA Del Monte Canada produces canned fruits, refrigerated fruits, and canned tomatoes

and vegetables

Fruit and Vegetable $34.2 0.7x NA

02/12/2018 Crystal Rock Holdings Cott Corp. (Canada) Crystal Rock produces, markets, and distributes bottled water to homes and offices in

New England, New York, and New Jersey. The company also distributes various

coffee, tea, and other hot beverage products

Non-alcoholic Beverages $34.8 0.6x 8.0x

02/06/2018 Mann Packing Co. Del Monte Fresh Produce

N.A.

Mann Packing offers fresh-cut and commodity vegetables for retail, wholesale, and

foodservice marketplaces

Fruit and Vegetable $361.0 0.7x NA

02/01/2018 Dole Food Co. Total Produce Plc Dole Food engages in growing, sourcing, processing, marketing, and distributing fresh

fruits and vegetables to wholesale, retail, and institutional customers

Fruit and Vegetable $666.7 0.2x 2.8x

01/29/2018 Dr Pepper Snapple

Group, Inc.

Keurig Dr Pepper Inc. Dr Pepper Snapple is a major US-based producer of soft drinks and non-alcoholic

beverages

Soft Drinks $26,801.0 4.0x 18.0x

01/24/2018 Galaxy Nutritional

Foods

GreenSpace Brands Galaxy Nutritional Foods produces plant-based cheese-free products Branded Processed Foods $16.9 1.0x NA

01/12/2018 Bob Evans Farms Post Holdings, Inc. Bob Evans Farms produces and distributes food products for grocery retailers

throughout the US


12/18/2017 Snyder's-Lance, Inc. Campbell Soup Co. Snyder's-Lance engages in the manufacture, distribution, marketing, and sale of snack

food products in North America and Europe


12/17/2017 Amplify Snack Brands Hershey Amplify Snack Brands develops, markets, and distributes better-for-you snack

products in North America and internationally

Snacks $1,503.0 4.0x 18.5x

12/12/2017 Betin, Inc. Saputo, Inc. Betin, doing business as Montchevre, produces and sells goat cheese Dairy $263.9 2.3x NA

12/12/2017 Pacific Foods of Oregon Campbell Investment

Company

Pacific Foods of Oregon produces natural and organic food products; the company

offers broths and stocks, soups, meals and sides, sauces and purees, non-dairy

beverages, and special diets



14



11/30/2017 Squirrel Brand LP John B. Sanfilippo & Son,

Inc.

Squirrel Brand produces roasted and flavored nuts Branded Processed Foods $31.5 0.9x NA

11/30/2017 Field Roast Grain Meat

Co.

Maple Leaf Foods Inc. Field Roast Grain Meat produces and markets vegan meat products Meat $120.0 3.2x NA

11/10/2017 Original Philly Holdings,

Inc.

Tyson Foods, Inc. Original Philly Holdings through its subsidiaries, produces raw and fully-cooked Philly-

style sandwich steak and cheesesteak appetizer products

Meats $226.0 1.7x NA

11/02/2017 Tazo Tea Company Unilever Plc. Tazo Tea offers tea and herbal beverages; the company provides filter bags, full leaf

tea kits, tea lattes, and iced teas


11/02/2017 Richelieu Foods, Inc. Süddeutsche

Zuckerrübenverwertungs

Genossenschaft

Richelieu Foods engages in the production of private label food products for retail,

corporate brands, and contract packing customers


Beverage

$435.0 1.3x NA

10/27/2017 Chicago Bar Company Kellogg Company Chicago Bar Company, doing business as RXBAR, produces and sells food protein bars

in the United States. The company offers food protein bars in various flavors


10/26/2017 Inventure Foods, Inc. UTZ Quality Foods Inventure Foods manufactures and markets healthy/natural and indulgent specialty

snack food products in the United States and internationally; operates in two

segments, Frozen Products and Snack Products

Snacks $137.8 0.9x NA

10/16/2017 East Balt, Inc. Grupo Bimbo, S.A.B. East Balt produces buns, bagels, English muffins, tortillas, breads, and specialty bakery

products

Branded Processed Foods $650.0 1.6x 9.3x

10/16/2017 Ferrara Candy Co. Ferrero SpA Ferrara Candy Company manufactures and sells candies, snacks, and gummy bears Confections $1,300.0 1.5x NA

10/06/2017 Omega Protein

Corporation

Cooke, Inc. Omega Protein develops, produces, and delivers products to enhance the nutritional

integrity of foods, dietary supplements, and animal feeds worldwide

Meat $473.6 1.4x 7.8x

10/03/2017 Main on Foods (USA) Nagatanien Holdings Co. Main on Foods, based in Los Angeles, produces and markets food products Branded Processed Foods $54.1 1.0x NA


15



10/02/2017 Boyd Coffee Company,

Inc.

Farmer Bros. Co. Boyd Coffee Company produces and sells roasted coffee Coffee $58.6 0.6x NA

10/01/2017 Tinhorn Creek

Vineyards Ltd.

Andrew Peller Limited Tinhorn Creek Vineyards produces red and white wines in Canada Alcoholic Beverages $23.8 4.1x NA

09/21/2017 Angie's Artisan Treats,

LLC

Conagra Brands, Inc. Angie's Artisan Treats produces and sells popcorns and other snack items. Branded Processed Foods $250.0 2.5x NA

Max $26,801.0 7.4x 26.9x

Median $420.0 1.8x 14.2x

Mean $1,753.2 2.4x 14.5x

Min $3.7 0.2x 2.8x

S E C T I O N I I I

Public Comparables

Food and Beverage Performance

17

7.0x

9.0x

11.0x

13.0x

15.0x

17.0x

19.0x

October 2017 December 2017 February 2018 April 2018 June 2018 August 2018 October 2018

Alcoholic Beverages Branded Processed Foods Private Label Food and Beverages

Natural / Organic / Better-For-You Baked Goods Dairy

Snacks Non-Alcoholic Beverages

8.9x

10.6x

10.5x

12.7x

13.6x

16.0x

14.2x

17.5x

($ in millions, except per share data) Price Market Enterprise LTM Revenue Growth LTM Margins P/E EV / Revenue EV / EBITDA

Company 10/25/18 Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple LTM NTM LTM NTM

Alcoholic Beverages

Anheuser-Busch InBev $73.75 $144,315 $258,279 $55,002 $21,534 (1.9%) 7.0% 63.0% 39.2% 21.9x 4.7x 4.6x 12.0x 11.0x

Asahi Group Holdings 42.15 19,308 28,621 19,113 2,876 20.9% 5.5% 38.4% 15.0% 16.6x 1.5x 1.7x 10.0x 10.0x

Brown-Forman 47.08 22,298 24,573 3,291 1,122 7.7% 1.7% 67.8% 34.1% 36.2x 7.5x 7.2x 21.9x 20.9x

C&C Group plc 3.89 1,203 1,522 623 115 87.9% 17.5% 27.7% 18.5% 21.5x 2.4x 0.8x 13.2x 9.9x

Carlsberg A/S 109.33 16,617 19,789 9,390 2,010 (1.5%) (1.7%) 51.4% 21.4% 25.0x 2.1x 2.1x 9.8x 9.3x

Craft Brew Alliance 16.10 323 328 212 23 2.9% 2.0% 33.7% 10.7% 44.1x 1.5x 1.5x 14.5x 13.7x

Constellation Brands 214.13 40,266 50,247 7,915 4,427 6.2% 8.1% 50.7% 55.9% 18.2x 6.3x 6.0x 11.4x 15.8x

Diageo plc 34.39 83,765 97,857 15,591 5,679 0.9% 4.0% 61.9% 36.4% 29.3x 6.3x 6.0x 17.2x 16.8x

Heineken N.V. 88.66 50,606 66,906 25,387 5,390 6.1% 3.9% 38.9% 21.2% 28.9x 2.6x 2.6x 12.4x 10.9x

Kirin Holdings Company 23.41 20,554 25,297 16,162 2,602 5.1% (1.6%) 42.4% 16.1% 20.9x 1.6x 1.4x 9.7x 10.3x

Molson Coors Brewing Company 57.77 12,810 23,104 10,879 2,438 23.9% 41.4% 41.6% 22.4% 16.4x 2.1x 2.1x 9.5x 9.2x

Pernod Ricard SA 150.80 39,846 47,972 10,221 2,911 (0.3%) 1.6% 62.4% 28.5% 28.0x 4.7x 4.5x 16.5x 15.1x

Sapporo Holdings Limited 18.91 1,473 3,811 4,753 349 (2.8%) 0.7% 32.6% 7.3% 21.2x 0.8x 0.8x 10.9x 10.9x

The Boston Beer Company 270.84 3,208 3,132 917 160 3.9% (0.8%) 52.1% 17.4% 49.0x 3.4x 3.1x 19.6x 16.9x

Mean 11.4% 6.4% 47.5% 24.6% 26.9x 3.4x 3.2x 13.5x 12.9x

Median 4.5% 3.0% 46.5% 21.3% 23.4x 2.5x 2.3x 12.2x 10.9x

Branded Processed Foods

Associated British Foods plc $30.14 $23,754 $23,704 $19,847 $2,427 6.2% 6.0% 23.3% 12.2% 23.6x 1.2x 1.2x 9.8x 9.5x

B&G Foods 27.30 1,820 3,831 1,714 326 13.8% 26.0% 26.8% 19.0% 17.5x 2.2x 2.2x 11.8x 10.9x

Campbell Soup Company 38.02 11,545 21,222 8,685 1,945 10.1% 2.4% 33.6% 22.4% 13.7x 2.4x 2.2x 10.9x 11.8x

Conagra Brands 36.64 15,163 19,012 7,969 1,572 3.0% (10.8%) 29.6% 19.7% 20.8x 2.4x 1.8x 12.1x 9.3x

General Mills 44.60 26,723 43,026 16,065 3,469 3.8% (2.9%) 34.4% 21.6% 17.9x 2.7x 2.5x 12.4x 12.3x

Hormel Foods 41.58 22,343 22,798 9,514 1,360 2.3% 0.4% 20.7% 14.3% 30.6x 2.4x 2.3x 16.8x 16.2x

Kellogg Company 70.55 24,770 34,147 13,261 3,216 3.8% (2.3%) 39.6% 24.3% 16.3x 2.6x 2.5x 10.6x 13.1x

McCormick & Company 139.51 18,599 23,528 5,401 1,117 18.2% 8.2% 43.9% 20.7% 36.8x 4.4x 4.2x 21.1x 20.1x

Nestlé S.A. 83.93 257,080 287,168 90,986 18,785 1.7% (0.2%) 50.1% 20.6% 27.9x 3.2x 3.1x 15.3x 14.6x

Post Holdings 90.06 6,036 13,104 6,076 1,147 20.6% 11.5% 30.1% 18.9% 24.2x 2.2x 2.1x 11.4x 10.1x

The Hershey Company 102.47 22,641 26,789 7,696 1,921 2.6% 1.1% 44.7% 25.0% 23.7x 3.5x 3.4x 13.9x 13.9x

The J. M. Smucker Company 106.73 12,199 18,722 7,511 1,664 2.5% 5.9% 38.2% 22.2% 18.4x 2.5x 2.4x 11.3x 10.9x

Mean 7.4% 3.8% 34.6% 20.1% 22.6x 2.6x 2.5x 13.1x 12.7x

Median 3.8% 1.8% 34.0% 20.7% 22.2x 2.5x 2.4x 11.9x 12.0x

Food and Beverage Public Comps

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19



Private Label Food and Beverages

Cott Corporation $14.63 $2,020 $3,132 $2,337 $277 9.5% (3.4%) 49.5% 11.9% 72.5x 1.3x 1.3x 11.3x 9.5x

Seneca Foods Corporation 31.18 298 656 1,377 24 6.8% 2.7% 4.8% 1.8% NM 0.5x 0.0x 27.1x 0.0x

Treehouse Foods 47.58 2,687 4,960 6,186 532 (3.7%) 24.0% 17.0% 8.6% 28.0x 0.8x 0.8x 9.3x 8.9x

Mean 4.2% 7.8% 23.8% 7.4% 50.3x 0.9x 0.7x 15.9x 6.1x

Median 6.8% 2.7% 17.0% 8.6% 50.3x 0.8x 0.8x 11.3x 8.9x

Natural / Organic / Better-For-You

SunOpta 7.54 656 1,250 1,256 52 (5.2%) 7.4% 10.8% 4.2% NM 1.0x 1.0x 23.9x 15.5x

Pinnacle Foods 66.89 8,020 10,696 3,154 668 0.8% 6.3% 29.1% 21.2% 29.2x 3.4x 3.4x 16.0x 14.8x

The Hain Celestial Group 24.78 2,594 3,201 2,458 219 4.9% (2.0%) 21.0% 8.9% 31.3x 1.3x 1.3x 14.6x 11.8x

Mean 0.2% 3.9% 20.3% 11.4% 30.2x 1.9x 1.9x 18.2x 14.0x

Median 0.8% 6.3% 21.0% 8.9% 30.2x 1.3x 1.3x 16.0x 14.8x

Baked Goods

ARYZTA AG $8.67 $779 $2,526 $3,974 $347 (9.5%) (3.5%) 15.6% 8.7% NM 0.6x 0.7x 7.3x 7.2x

Flowers Foods 19.29 4,190 4,996 3,954 438 1.3% 1.7% 48.2% 11.1% 23.4x 1.3x 1.3x 11.4x 11.1x

George Weston Limited 70.11 8,951 25,724 36,847 3,102 (0.7%) 0.8% 30.6% 8.4% 22.9x 0.7x 0.7x 8.3x 7.4x

Grupo Bimbo 2.00 8,769 13,341 14,161 1,662 4.0% 10.6% 53.0% 11.7% 19.1x 0.9x 0.9x 8.0x 9.1x

Lancaster Colony Corporation 157.25 4,430 4,224 1,223 201 2.6% 2.9% 24.9% 16.4% 40.2x 3.5x 3.3x 21.0x 19.8x

Mean (0.4%) 2.5% 34.5% 11.3% 26.4x 1.4x 1.4x 11.2x 10.9x

Median 1.3% 1.7% 30.6% 11.1% 23.1x 0.9x 0.9x 8.3x 9.1x

Dairy

Danone $72.03 $46,588 $62,302 $28,403 $6,101 8.2% 4.2% 49.3% 21.5% 16.3x 2.2x 2.2x 10.2x 11.4x

Dean Foods Company 7.87 697 1,540 7,804 288 (1.3%) (4.0%) 22.7% 3.7% 16.6x 0.2x 0.2x 5.3x 5.7x

Emmi AG 687.11 3,676 4,023 3,434 417 5.3% 1.0% 35.7% 12.1% 21.7x 1.2x 1.2x 9.6x 11.4x

Glanbia plc 16.85 4,971 5,428 2,631 396 (1.1%) (4.7%) 26.4% 15.1% 28.7x 2.1x 2.0x 13.7x 14.3x

Lifeway Foods 2.68 43 45 111 1 (10.6%) (2.5%) 27.5% 1.0% NM 0.4x 0.0x 40.3x 0.0x

Parmalat S.p.A. 2.98 5,501 5,328 7,367 423 (4.7%) 3.1% 19.3% 5.7% 51.2x 0.7x 0.0x 12.6x 9.3x

Saputo 30.32 11,963 14,079 9,141 928 4.3% 4.0% 10.2% 10.2% 27.5x 1.5x 1.3x 15.2x 13.3x

Savencia SA 74.83 1,041 1,770 5,509 298 3.4% 2.1% 33.9% 5.4% NM 0.3x 0.3x 6.0x 5.0x

Mean 0.4% 0.4% 28.1% 9.3% 27.0x 1.1x 0.9x 14.1x 8.8x

Median 1.2% 1.5% 27.0% 7.9% 24.6x 0.9x 0.7x 11.4x 10.3x


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Non-Alcoholic Beverages

A.G. BARR $9.50 $1,074 $1,069 $365 $64 9.0% 3.7% 46.9% 17.4% 32.0x 2.9x 2.9x 16.8x 15.1x

Cott Corporation 14.63 2,020 3,132 2,337 277 9.5% (3.4%) 49.5% 11.9% 72.5x 1.3x 1.3x 11.3x 9.5x

Dr Pepper Snapple Group 24.01 33,180 46,135 4,207 1,165 0.0% (3.5%) 47.9% 27.7% 36.9x 11.0x 4.1x 39.6x 14.8x

Lassonde Industries 180.68 1,265 1,592 1,166 135 0.2% 4.1% 28.4% 11.6% 23.6x 1.4x 1.2x 11.8x 10.6x

Monster Beverage 52.61 28,742 27,871 3,587 1,304 12.4% 11.9% 61.6% 36.4% 38.0x 7.8x 7.1x 21.4x 19.5x

National Beverage 98.82 4,636 4,388 1,008 223 16.0% 15.4% 39.9% 22.1% 35.3x 4.4x 3.9x 19.7x 17.5x

Pepsico 112.66 159,451 180,773 64,663 12,714 1.8% 0.1% 54.4% 19.7% 27.0x 2.8x 2.7x 14.2x 13.6x

The Coca-Cola Company 46.47 198,739 228,090 33,143 11,998 (14.7%) (10.2%) 63.6% 36.2% 30.5x 6.9x 7.1x 19.0x 20.2x

Mean 4.3% 2.3% 49.0% 22.9% 37.0x 4.8x 3.8x 19.2x 15.1x

Median 5.4% 1.9% 48.7% 20.9% 33.7x 3.6x 3.4x 17.9x 14.9x

Snacks

J&J Snack Foods 155.99 2,929 2,805 1,154 164 12.1% 6.0% 29.8% 14.2% 37.9x 2.4x 2.4x 17.1x 16.8x

John B. Sanfil ippo & Son 71.48 811 877 889 69 5.0% 0.1% 15.6% 7.7% 26.3x 1.0x 1.0x 12.8x 10.1x

Mondelez International 41.07 60,598 79,528 26,373 5,303 3.2% (6.8%) 40.3% 20.1% 24.5x 3.0x 3.1x 15.0x 15.0x

Pepsico 112.66 159,451 180,773 64,663 12,714 1.8% 0.1% 54.4% 19.7% 27.0x 2.8x 2.7x 14.2x 13.6x

Mean 5.5% (0.2%) 35.0% 15.4% 28.9x 2.3x 2.3x 14.8x 13.9x

Median 4.1% 0.1% 35.1% 16.9% 26.7x 2.6x 2.6x 14.6x 14.3x

S E C T I O N I V

Appendix – Cascadia Capital

Cascadia Capital Overview

Founded in 1999Cascadia has a successful 18 year history

investment banking professionals

Managing Directors in five cities

transactions completed, with more than $12 billionin aggregate value

22

5016OVER300

Headquartered in Seattle, with Managing Directors in Los Angeles, Minneapolis and New York

INDUSTRYEXPERTISE

RESULTSFOCUS

DEALVOLUME

Leading diversified investment bank

• M&A, private placements, advisory services

• Specialized in-depth expertise across multiple industry verticals

• Representing clients in the US and globally, including Europe, Asia and Australia

Experienced team with successful track record

• Cascadia is the investment bank of choice for entrepreneurs and family-owned companies

• Decades of investment banking and operational expertise

• Deep capital markets expertise

Providing a Full Suite of Banking Services

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MERGERS &

ACQUISITIONS

We have completed hundreds of M&A transactions ranging in size from $20-$500 million. Our thorough and disciplined process, in combination with our deep industry expertise, has resulted in a proven track record of delivering successful outcomes for our clients.

CORPORATE

FINANCE

We have extensive experience placing equity and debt capital ranging from $10-$250 million. We leverage our deep relationships with institutional investors; including private equity, growth equity, venture capital, family office, mezzanine and venture debt, hedge funds and BDCs.

STRATEGIC

ADVISORY

SERVICES

We provide our clients with analytical data and insights to facilitate strategic decision-making. We advise our clients on how to maximize shareholder value and then provide support for transaction implementation.

PRIVATE

CAPITAL

We listen carefully to business owners and managers and then work closely with them to custom design long-term and flexible capital solutions. Our approach resonates particularly well with family-owned and closely-held companies.

E N G A G E M E N T S I N C L U D E :

• Mergers & Acquisitions (Buy & Sell Side)

• Corporate Divestitures

• Management Buyouts

• Leveraged Buyouts

• Recapitalizations

• Partial Liquidity Events

• Private Equity Capital Raises

• Public Company Capital Raises

• Debt Financings & Restructurings

• Project Finance

• Valuations

• Fairness Opinions

• Shareholder Rights Planning

• Shareholder Value Analysis

• Strategic Alternatives Reviews

• Strategic Partnerships & Joint Ventures

• Special Situations

Process and Experience Deliver Results

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We Differentiate Each Process With a

Customized Approach

• We are thoughtful advisors who deliver a tailored process to suit the needs of our clients

• We understand the strategies of the counterparties, enabling us to tell them why they should be interested – allowing Cascadia to drive the transaction and maximize results

Team Members Have

Deep Industry Expertise

• With bankers across multiple industry verticals, we have the experience to offer industry breadth while maintaining sector depth

• Dedicated resource model with comprehensive vertical expertise from Managing Director to Analyst

Our Experience and Approach

Drive Results

• We have experience, industry focus and a differentiated process that drives success

• Our transactions are built upon delivering the best quantitative and qualitative terms with the most desirable counterparty

$10+ billion in total M&A transactions closed in the firm’s history

$5+ billion in total capital raised in the firm’s history

Note: Transaction Values include deals closed by Consumer Managing Directors while at prior firms

Consumer & Retail Practice Overview

Principal Sector Focus• Branded Food

• Branded Beverage

• Food and Beverage Manufacturing

• Media, Commerce & Consumer Tech

• Pet Industry

• Auto Aftermarket

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• Restaurants & Retail

‐ Ecommerce

‐ Outdoor Sports

‐ Restaurants

‐ Specialty Retail

Auto Aftermarket

Business Services

Consumer & Retail

Energy & Applied Technology

Food & Agribusiness

Healthcare & Digital Health

Industrials

Real Estate

Technology

Acquisition of First Beverage GroupOn March 5th, Cascadia Capital announced a merger with First Beverage Financial,

the investment banking division of First Beverage Group. The merger brings

Cascadia a proven and highly-specialized team with a deep focus across the

beverage landscape, including the market’s leading M&A franchise in craft beer.

This expertise in alcoholic beverages augments Cascadia’s current consumer

practice in consumer packaged goods, food and beverage manufacturing, specialty

retail, outdoor goods, restaurants, health and wellness, and the pet industry.

OverviewWe have 13 professionals with greater than 100 years of collective consumer

investment banking experience that have completed over 75 transactions since

the beginning of 2010 valued at over $3.5 billion in enterprise value, including 25

capital markets transactions and 50 M&A advisory assignments. Our team has a

deep understanding of the underlying consumer trends driving disruptive change

in our core sectors of focus. We are in constant dialog with active strategic and

financial counterparties in the consumer sector, providing us with the ability to

best position our clients for an optimal outcome.

Note: Transaction Values include deals closed by Consumer Managing Directors while at prior firms

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March 2018

has been recapitalized by

July 2016

a StrategicBuyer

August 2015

August 2016September 2016

March 2016

September 2016

March 2016

July 2017

August 2016

C A S C A D I A’ S C O N S U M E R T E A M H A S B E E N A M O N G T H E M O S T AC T I V E M I D D L E M A R K E T

I N V E S T M E N T BA N K S I N T H E I N D U S T RY, W I T H OV E R 5 0 C L O S E D T R A N S AC T I O N S

Food & Beverage Transaction Experience

May 2016

September 2016

August 2017

Consumer & Retail Leadership Team

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Managing Director

Experience:

15+ years banking

13 years with

Cascadia

Education:

BA, Washington

University

MBA, Wharton

Bryan Jaffe

Managing Director

Experience:

25+ years banking

5 years with

Cascadia

Education:

BA, Princeton

MBA, University

of Chicago

John C. Siegler

Managing Director

Experience:

15+ years banking

4 years with

Cascadia / First

Beverage

Education:

MBA, BA, UCLA

MS, London

School of

Economics

Nicole Nugent Fry Erik Einwalter

Senior Vice President

Experience:

10+ years banking

7 years with

Cascadia

Education:

BA, University of

Washington

Managing Director

Experience:

25+ years banking

1 year with

Cascadia

Education:

BA, University of

Cincinnati

MBA, Cornell

University

George Sent

Managing Director

Experience:

25+ years banking

7 years with

Cascadia / First

Beverage

Education:

BA, Trinity

College

MBA, Stanford

University

Townsend Ziebold

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