What's happening in consumer goods?

What’s happening in Consumer Goods?Global M&A insights

www.pwc.co.uk/deals

February 2015

2 What’s happening in consumer goods?

2014: Lock, Stock and Two Smoking DealsDeal volumes and values in consumer goods were up significantly across the world in 2014, and for the first time in several years two of the biggest deals were in tobacco, rather than food and drink, which took most of the market by surprise.

Contents2014: Lock, Stock and Two Smoking Deals 2

Mature markets: Categories and capabilities 4

M&A in 2015: Country focus 6

Private Equity: Crowded out? 12

The economic outlook 22

In conclusion: what we expect in 2015 23

2014 was also the year of the mega deal, with three deals over $10bn versus one in 2013. In other respects, though, 2014 played out much as we expected. When we looked at the market this time last year, there were two trends that stood out: the major Western conglomerates were restructuring their portfolios and selling non-core brands, and the buyers of many of these brands were players in emerging markets, who planned to launch them through their own domestic distribution networks.

Both trends continued in 2014, as the table alongside shows, with Mondelez, Hillshire Brands and P&G disposals in the top ten global deals, and Yildiz

Holdings of Turkey acquiring United Biscuits of the UK. Below the top ten there were many more examples: Unilever sold Ragu and Bertolli, while Whyte & Mackay whisky went to Emperador of the Philippines, Canada Bread to the Mexican baking giant, Grupo Bimbo and Yildiz Holdings of Turkey acquiring United Biscuits of the UK. So in many ways 2014 was indeed a case of ‘more of the same’, but our own experience as an adviser on many of these deals suggests that there were some new factors in play too, which we will explore in the rest of this publication.

3What’s happening in consumer goods?

Global consumer deal volume and value 1995-2014

- 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000

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Global consumer deal volume and value 1995 - 2014

Source: Dealogic Source: Dealogic

Top 10 Global consumer deals announced in 2014 (including significant deals from Emerging markets)

Ranking Country Description Acquirer Value ($m)

Lorillard 1 USA Tobacco Reynolds American 27,585

Beam 2 USA Alcohol Suntory Holdings 16,008

Mondelez International (Coffee business) 3 USA/Europe Coffee Douwe Egberts 10,563

Hillshire Brands 4 USA Food Tyson Foods 8,534

Reynolds American (certain assets) 5 USA Tobacco Imperial Tobacco Group 7,100

Oriental Brewery Co 6 South Korea Alcohol AB InBev 5,800

Duracell International (P&G) 7 USA Home Appliances Berkshire Hathaway 4,700

Nutreco NV 8 Netherlands Animal Feed SHV Holdings NV 4,067

Bosch und Siemens Hausgeraete (50%) 9 Germany Home Appliances Robert Bosch GmbH 3,849

General Electric Co (Home appliance unit) 10 USA Home Appliances Electrolux AB 3,300

United Biscuits 11 UK Food Yildiz Holding 3,199

United Spirits (26%) 12 India Alcohol Diageo 3,145

Bumble Bee Foods 23 USA Food Thai Union Frozen Products 1,510

Coca-Cola Sabco 24 South Africa Beverages SABMiller 1,500

Tnuva Food Industries 27 Israel Food Bright Food (Group) Co Ltd 1,379

Chiquita Brands 30 USA Food Cutrale; Grupo Safra SA 1,264

BRF SA (Dairy assets) 40 Brazil Food Lactalis 801

Whyte & Mackay 44 UK Alcohol Emperador Inc 729

Source: Dealogic. All deals over $10m


Mature markets: Categories and capabilitiesAfter decades turning themselves into diversified super-conglomerates, the big players are now reversing that trend, and honing their portfolios into clearer clusters of brands organised around specific categories. As Neil Sutton, Global R&C Deals Leader, has observed, “in developed markets now, it’s all about getting focus and dominance in a category”. What’s interesting is what’s driving these category decisions. Shareholder expectations are clearly a big factor, with increasing pressure to deliver higher growth and improved profitability by shedding under-performing divisions, but that’s not the whole story.

In an article written by Strategy& last summer, we put forward the theory that a new breed of ‘supercompetitors’ are building competitive advantage on core capabilities, rather than scale, services or brands. In a world where such advantage is – at best – transient, even a powerbrand may wither and die, but capabilities are the gift that keeps on giving.

It has also become obvious that the capabilities needed to dominate different categories are not the same – for example, Kraft built a successful chewing gum business on blanket distribution and optimum in-store positioning, whereas their cheese and meat products required more focus on R&D and innovation. In one case the crucial capability was the ‘how’, and in the other the ‘what’, and the same logic led eventually to the formal split into Kraft and Mondelez in 2012.

And hence the new focus on core capabilities – those which other companies will struggle to replicate, and which can become the platform for an

entire category. And this in turn has led the big players to define (or redefine) what constitutes their core brands.

So what evidence have we seen of this in 2014? Perhaps the most obvious example is that the major players are now willing to dispose of iconic brands. The major multinationals are also getting more confident in other ways – they’re prepared to pay more for brands they know they have the capabilities to grow, and they’re using their large cash piles to compete with Private Equity buyers. Likewise we’re also seeing a more creative and ambitious approach to M&A – some of this year’s transactions were complex deals involving several players, rather than a conventional buyer/seller split, such as the purchase of the US Chiquita Brands banana business by a partnership between the Safra Group family investment firm and the Brazilian juice company Cutrale.

Countries with the highest number of consumer deals over $10m in 2014

FY14 rank

FY13 rank

Acquirer country

FY14 no. of deals

FY14 increase

Domestic deals %

Deal value ($m)

1 (1) United States 62 11% 63% 70,425

2 (2) China 62 51% 86% 9,304

3 (3) Japan 28 17% 50% 6,051

4 (4) South Korea 20 5% 85% 1,453

5 (9) United Kingdom 16 33% 56% 13,102

6 (6) Brazil 12 20% 67% 3,450

Source: Dealogic

In developed markets now, it’s all about getting focus and dominance in a category

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Premiumisation: Getting more from the corePremiumisation is another facet of the new focus on core capabilities, and core brands. It’s a trend that’s been around a while – Diageo started launching premium extensions of its Johnnie Walker label as far back as the late 1990s – but it’s one that’s gaining new ground now as the multinationals seek to make more from their core by launching higher-margin versions of products they already own. Diageo continues to be a leading light here, and its hip new Haig Club grain whisky has hit the ground running, fuelled by a David Beckham ad campaign. A joint venture with Sean ‘Diddy’ Combs to market the ultra-premium Ciroc vodka brand is fruit of the same thinking, as is the Don Julio tequila deal we feature later.

But premiumisation is not confined to drinks. Companies like Unilever are doing the same with skincare and cosmetics ranges, and in the UK, the big supermarkets are investing in their top-end own-label ranges. Hence the healthy interest in brands like Lululemon Athletica, in which Advent invested $845m for a 13.8% stake, and Farrow & Ball paint, which went for £275m in December 2014, after changing hands for £80m in 2006.

Rationalisation: Cutting costs by sharing servicesAt the other end of the scale, the major consumer goods companies continue to look for ways to take out cost and operate more efficiently to help boost profitability in mature markets. This includes using their balance sheets more effectively – for example, some have sold production assets to free up cash for investment elsewhere, and then entered into contracts with the new owners to continue manufacturing the product line. Others have established shared services centres, the one we helped the spice and flavourings business McCormick set up in Poland this year is a good example, to transfer lower value transactional activity to low cost countries.

Like many companies in the sector, McCormick were keen to release cash to fund investments across the business, one such idea was a shared services centre for back office functions, though there are challenges in doing that, not least possible language issues. Heineken has set up a centre like this in Poland, and as McCormick already had an operation there it was the obvious location for them. Since then they have successfully moved a number of transactional activities from two high-cost European markets – the UK and France – to Poland.


Corporate focusUnilever: Taking good careUnilever exemplifies many of the trends we’re discussing in this report. It’s dramatically reconfigured its portfolio over the last few years, focusing on its core categories and capabilities. It’s also been prepared to sell iconic brands like Ragu and Bertolli as part of that process. It’s a sizeable business in the US, and as Debora Fang of Unilever told us, “in food we are focusing our resources on spreads, dressings and savoury. In this framework Ragu and Bertolli, iconic pasta sauce brands, would drive more value with a focused owner.” That owner proved to be the Mizkan company of Japan, and the price tag was over $2bn.

Unilever is increasingly focusing on its personal care business, which has both attractive growth and margin profiles. The acquisition of Alberto Culver – which includes the TRESemmé and Simple brands – was a solid example of such focus. “Since the acquisition in 2011 Unilever has seamlessly integrated the Alberto Culver brands into our portfolio and achieved considerable synergies. For instance, we’ve used our distribution and marketing capabilities to launch TRESemmé in a number of new markets, most notably Brazil, where it has been a strong success, achieving a significant market share.”

China: Trading upThe Chinese continued to be active M&A players in 2014, acquiring assets across the full range of consumer goods, from agriculture to baby products. Most of these deals were domestic, but the volume of international transactions was still significant and, we believe, likely to rise. As Adam Xu, a partner with Strategy& in Shanghai, says, “Chinese buyers like brands and “new” products or categories from the developed market, and they have the local consumer insight and distribution networks to exploit them. They don’t have the know-how, the category knowledge or the R&D to manage a brand or develop one, so they buy that expertise along with the assets they acquire. This is unlikely to change in the medium term, so Chinese businesses and funds will continue to be actively interested in markets like the UK and US. For the Western multinationals looking to expand in China, the challenge is adapting their brands to the Chinese market – it’s not just a question of different tastes, but understanding how the Chinese market works. Issues like distribution are very different here, though the greater connectivity we’re now seeing between the mid-sized cities is making it easier for brands to penetrate, as well as creating more choice and hence more competition between them.” In addition to be being active in the M&A space, it is also key to mention the Alibaba IPO. Alibaba was the biggest initial public offering of all time, raising $25bn, though due to the company having little presence in the US, the positive effects will be felt mainly in Asia.

Our teams in China have commissioned a survey of trends in the China consumer market for the last four years, and there are four, in particular, which could have a significant impact on the M&A market.

The first is the changes in consumer attitudes, especially when it comes to value. Chinese consumer demand used to be determined mainly by price, but

It’s not just a question of different tastes, but understanding how the Chinese market works

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M&A in 2015: Country focus


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2014 Chinese investment by sub-sector (based on deal value)

shoppers are now more interested in quality, and more prepared to pay for it. This Chinese version of premiumisation is driving growth in niche and higher-margin imported brands, especially in sectors like food, clothing and accessories.

The second trend is related to the first, and that’s health and wellness. A combination of recurrent food scares, an ageing population, and a greater awareness of issues like food security and pollution, is increasing demand for imported and health foods.

Trend number three is the importance of the shopping experience. Again, price is no longer the overriding factor – if people are going out to shop rather than doing so online, they want good service and a more personalised experience, particularly in what you might call the ‘mass luxury’ sector, which includes cosmetics and personal care. Shopping malls are doing well on the back of this trend, by turning themselves into destinations offering not just shopping but entertainment and eating. Adam Xu also points to the success of the Shanghai Johnnie Walker House in creating a “differentiated brand experience”.

And finally, the digital version of the third trend: the quality of the shopping experience online. China is surprisingly mature in the e-commerce market, driven in part by the practical challenges of creating a physical network of stores across such a vast country. Online shopping has always had a stronger social dimension than in markets like North America or Europe – the typical Chinese website has always offered real-time customer service, and China led the way in developing active communities of online shoppers and reviewers. As a result China’s digital-savvy consumers expect more: they want two-way engagement not one-way ‘broadcast’, and Western brands will have to find ways to do that.

23%

16%

13%9%

6%

6%

4%

4%

19%Dairy

Wineries

Food Manufacturing

Seafood

Personal Care

Soft Drinks

Jewellery

Household

Other

Source: Dealogic

Africa: Hotting upFor most of the 1990s, China was the ‘next big thing’ – a market where the scale of the potential was matched only by the size of the challenge. The same label is now being applied to Africa, and this vast new territory comes with the same promise and many of the same problems for the consumer goods industry. The challenge of integrating a business which takes a very different approach to issues like regulation and corporate governance, as well as other cultural differences, should not be underestimated.

“There’s no question that the potential in Africa is vast,” says Geoff Eversfield, Consumer Goods Deals Partner. “You only have to look at the number of prospective new consumers. But for Western companies, Africa is still a difficult place to run – or buy – a consumer goods business. There are a number of dedicated PE funds now specialising in the African continent, but thus far no-one’s found a fail-safe way of dealing with the extra layers of risk. That’s because you have political and economic risk to deal with, on top of the challenges of understanding not just the regional but the national differences in doing business. For most multinationals Africa is still the great unknown, and very few of them have cracked it. Diageo and SABMiller are the obvious exceptions.”

History is a big factor here. Diageo’s presence in Africa goes back as far as 1827, when Guinness first started selling beer on the continent, and it opened its first brewery there in Nigeria in 1962. Guinness is one of the few Western brands which is sold and recognised across Africa, and Diageo is using that brand recognition and operational experience to expand into new markets, including Tanzania and Ethiopia, where it bought the Meta Abo brewery for £225m in 2011.

Corporate focusDiageo: In high spiritsLike Unilever, Diageo is at the leading edge of many of the developments we’re now seeing in the market. This includes investing heavily in innovation, not just in new products but in new routes to the consumer. One of Diageo’s most important deals in 2014 was the complex transaction with Jose Cuervo that saw Diageo take full control of the premium Don Julio tequila brand in exchange for the Bushmills Irish whiskey brand.

We interviewed Ravi Rajagopal, Diageo’s Head of M&A, about the Don Julio deal, Diageo’s approach to brand management, and where he personally sees the consumer goods market going in 2015.

Bushmills is a brand some might consider iconic – why did you decide to sell it, and what attracted you in the Don Julio deal?The decision to acquire Don Julio and sell Bushmills was the result of a long and detailed strategic review both of tequila and Irish whiskey. Premium tequila is growing and has great momentum, especially in the US, and we concluded we had much better

prospects in that segment than in Irish whiskey, which is led by Jameson. Don Julio sales were already growing at more than 20%, and we believed we could do even better if we had full control of the brand and could make our own decisions on investment, production, packaging, distribution and marketing. Another attraction is Mexico, which is an important market for us. Johnnie Walker is doing very well there, we’ve regained control of Smirnoff’s Mexican distribution and we now have Don Julio at the premium end. It makes Mexico one of our most exciting emerging markets.

You’ve continued to be active in the M&A market this year, and you’ve also launched some new brands and brand extensions. How does this reflect your strategic priorities for your portfolio?We’re always looking at the best way to position our portfolio, both in terms of what we own, and where we sell it. Our priorities right now are premiumisation, innovation, and route to market, and we’re organising

“For most multinationals Africa is still the great unknown, and very few of them have cracked it ”

But as Ravi Rajagopal of Diageo told us, doing business in Africa still presents unique challenges, even for a company with their long track record. “Beer is by far the biggest drinks category in Africa, with 80% of the market, but the industry is already fairly highly consolidated. We see scope for growth in markets like the Democratic Republic of Congo and Mozambique, but these aren’t easy countries to start up a new business from scratch. So in practice, your options are to acquire a local player, many of which are still family-run, set up a JV with one of them, or work with a

state-sponsored vehicle. All these options present their own challenges, which is one reason why we’re always looking at exploring other options.”

And in the long term? “The potential for our spirits brands is huge. As African economies grow and consumers become more prosperous, they’ll look to a wider range of Western brands. Our beer business gives us a great platform to meet that demand.”

Distribution is a clear home advantage for domestic players, but it remains a challenge for everyone else. After a


our resources and investment to reflect those priorities. Premiumisation is key because the high end of the market is doing well and that’s likely to continue. That’s why we’re launching new brands like Haig Club. This has been one of our most successful new brands of recent years. It’s designed to appeal to a younger market – to encourage those who currently drink beer to try whisky for the first time. As for innovation, we’re constantly exploring exciting new ways to present our existing brands. A good example would be our frozen margarita pouches, which have really taken off in the US and will be going into Europe soon.

And route to market?In consumer goods, you have to keep focused on doing the basics well, especially in emerging markets. You have to make sure your products are within easy reach of consumers. That was one reason why we did the United Spirits deal in India. But wherever you are in the world, there’s always more you can do here.

What trends do you see in the sector in 2015?I think we will continue to see buyers emerging from territories and sectors we might not have expected two or three years ago. More deals like the Yildiz purchase of United Biscuits, and the Mizkan acquisition of Ragu and Bertolli. I also think we’ll continue to see the big multinationals spinning off secondary brands, and both PE and corporates keen to buy them. They’re actively looking for ways to sell Western brands into emerging economies, which is why the huge price some of these brands are attracting doesn’t seem to be deterring them.

number of years as busy acquirers in emerging markets, some of the big consumer goods players are re-assessing whether this is really the best route to market. There can be significant difficulties and delays in getting deals done, and finding the right fit is hard, whether in terms of the nature of the opportunity, the distribution infrastructure, or the working culture. In short, you need a deep knowledge of the local environment to execute well in an emerging market. Multinationals are looking at alternative solutions, including joint ventures or strategic


alliances. The SABMiller / Coca-Cola deal announced in November 2014 is a good example of this. They plan to create Africa’s largest soft drink bottling operation, with annual sales of $2.9bn. The deal will see them merge their bottling assets in 12 countries in south and east Africa, therefore combining to leverage scale, resources, capability and efficiency.

The Middle East: The ‘family factor’ The Middle East is a fascinating region for consumer goods, ranging from emerging economies like Egypt, which have huge and growing populations, to highly developed markets like the UAE, with a sophisticated retail sector and strong demand for luxury goods. Add to that the region’s strategic geographical position at the intersection of Europe, Africa and Asia, and it’s easy to see why both multinational and PE buyers are becoming increasingly interested in some of the Middle East’s largest retail and consumer goods companies.

Bisco Misr, an Egyptian biscuit maker, recently agreed to sell 86% of shares in the company to US firm Kellogg’s for $125m. A competitive tension in the process between Bisco Misr and Abraaj Capital Holdings, a middle-east PE firm, drove the bidding price up, leading to them eventually withdrawing from the process. Even though the deal is seen as relatively small this does suggest growing international interest in the Middle Eastern markets.

Family firms still dominate the Middle Eastern economy, and many have grown into huge and highly diversified portfolios that span industries as diverse as food and financial services. The recent deals and potential activity show some of the groups currently up for sale

contain businesses that would be hugely attractive to overseas buyers.

Richard Rollinshaw, Private Equity Leader for PwC in the Middle East, has been involved in a number of the recent deals: “The great attraction in these sorts of businesses is the opportunity to buy an established position in a whole region, not just one or two markets. The fundamentals of the businesses are sound, and it’s not a saturated market, so there’s real scope for further expansion. On top of that the region is strategically important, its population is rising, and it’s growing at around 8-10%, compared with 2-3% in Europe. So it’s no surprise that there’s been so much interest in some of these large assets, and we expect the trend to continue.”

All the same, the process of completing any deals could be longer and more complex than in Europe or the US. “The Middle East is a ‘relationship place’,” says Richard, “and all the more so if you’re negotiating with a family firm. Deal-making here is all about trust – you need to balance competence and relationship, and understand the nuances of business culture. In other words, the way things are done, what you can and can’t do, and who you should talk to first.”

“Deal-making here is all about trust – you need to balance competence and relationship, and understand the nuances of business culture ”


“Very few Japanese consumer goods companies are genuinely global, so what they’ve actually been buying in many of these recent M&A deals is early steps to true globalisation ”

Japan: Buying globalisationIn the last two years we’ve seen significant consumer goods acquisitions by Japanese players: Suntory bought Lucozade and Ribena in 2013 and Beam Inc this year. So what lies behind this sudden resurgence of activity?

“Japan is a small country but a big economy,” says Masaji Hamanoue, partner at PwC Japan, “and up till now the main consumer goods players have been happy to concentrate on the domestic market. But now the population is ageing and shrinking, and the only way to maintain volumes and achieve growth is to look overseas. But this is a challenge, as most Japanese companies do not have the same experience of operating internationally that the big multinationals do, and even fewer are genuinely global, so what they’ve actually been buying in many of these recent M&A deals is globalisation.”

Lucozade/Ribena, Beam, and Ragu/Bertolli share the same three characteristics: a recognised and trusted brand, an established distribution network, and production facilities. Japanese buyers typically look for M&A opportunities that offer all three of these qualities, product brand being particularly crucial. UK and US assets are especially interesting for them, even if these businesses are growing fairly slowly in their home markets: Japanese players are happy to accept slower growth if they perceive it to be sustainable. Perhaps due to peculiarity of consumer tastes and preferences in local markets, they don’t tend to take the brands they acquire back to Japan – Orangina, also now owned by Suntory, has been reformulated for Japanese tastes, but that is a rare example. Nor have they yet made much progress in taking them into emerging markets, though that remains a longer term possibility.


Frozen foods could be another active segment in the future, and the trading houses are also interested in upstream food assets – Mitsubishi Corporation, for example, recently bid $1.4bn for the Norwegian salmon producer Cermaq. There has also been recent speculation about the effect of the Japanese beer sector if Anheuser-Busch InBev should merge with SABMiller. This could trigger industry consolidation, and prompt the disposal of specific beer brands in Asia and elsewhere.

There has also been a trend in recent years for Trading Houses to look to diversify their portfolios away from natural resources, which has a positive impact on other sectors such as consumer goods. This is likely to be accentuated by the recent fall in oil price, alongside some significant write-offs on natural resource investments in the US and Australia.


On the face of it, 2014 appeared a tough year for the pure Private Equity players with fewer than normal blockbuster deals. However, scratch under the surface and many of the larger Consumer deals had a Financial Sponsor involved, whether family or sovereign wealth funds, or operations similar to Berkshire Hathaway or PE / Corporate tie-ups, like American Private Equity firm TSG joining Russia’s Oasis Beverages to buy Pabst Brewery in the US.

Recently, corporate buyers have been prepared to pay more than PE for various reasons – they can integrate acquisitions seamlessly and achieve synergies that aren’t usually available to PE houses, and many have cash piles that are earning low returns. Even those that don’t, can access cheap money – as low as 3% to 4% for up to 30 years. “That can buy the corporates a lot of firepower,” says Neil Coomber, UK Consumer Goods Deals Partner, “We’ve also seen they’re looking to execute deals quicker and more efficiently, and delivering the synergies they promise. This can then make it much harder for PE houses to get involved, although every deal is unique. Certainly more recently the corporates have been driving the market – we’re seeing a number of trade players apply their own valuation methods to assess possible acquisitions, which can lead to a much higher bid than the PE houses want to spend. They’ve always been wary of deals where a high proportion of the price is in intangibles like brand equity. It makes their exit strategy much tougher, and removes the safety net of a possible asset sale if things go badly. That’s not an issue for the corporates. And it only takes one buyer who’s prepared to pay more to reset price levels for the whole market.”

PE will still play a hugely important role in the Consumer sector in 2015.

PE has particular key advantages: for example, it can be easier to restructure a business if it’s taken private, rather than becoming part of a bigger publicly quoted entity. PE also have valuable skills, but they may need to contemplate more complex deals, or less promising candidates to exercise them on. For example, companies where both the business and the brand need significant work – not just the conventional PE process of reducing costs and professionalising operations, but a brand building job as well.

As Robert Ramsauer of Blackstone observes, “You have to think about the value you bring. For example, since we’ve made our investment in Versace our real estate teams have been helping them approach the key high-end shopping malls in their target markets. Our expertise in that area means we can open doors and help with execution.”

A number of this year’s deals had some sort of PE involvement, even if they weren’t the main purchaser, and it may be they will become even more adept at creating opportunities from more complex deals. There will undoubtedly be other opportunities in emerging markets as well, though domestic PE houses may have an advantage here, given the crucial importance of local knowledge. In the fragmented Chinese market, for example, PE houses are driving the consolidation agenda – one fund has bought a number of regional packaged food brands, and is now integrating them into a national player. While the Warsaw-based Innova Capital is a good example of the opportunities opening up for PE houses in Central and Eastern Europe.

“It only takes one buyer who’s prepared to pay more to reset price levels for the whole market

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Private Equity: Crowded out?


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Private Equity focusInnova Capital: A catalyst for changeInnova Capital is a mid-market PE fund, with a 20-year track record. It operates across Central and Eastern Europe, but focuses on Poland, given its larger population. We interviewed Leszek Muzyczyszyn, one of Innova’s partners, about the fund’s approach to consumer goods, and its biggest recent deal in the sector, the linked purchases of the Polish Delecta cake mixes and desserts business, and the Bakalland dried fruits, nuts and seeds company, which was announced in May last year.

You’ve only been in consumer goods for about four years – what made you decide to invest at that point?We’d been monitoring the sector for a while, but we judged the right time had come. The landscape here has completely changed in last decade – consumers are behaving differently, they have more money to spend and we’re seeing the continued development of modern distribution networks. That creates new opportunities for consumer goods companies – and for us. And because the sector has been tracked and monitored for a fairly long time, there is data accessible that can help us spot and analyse the right trends.

What attracted you in the Delecta and Bakalland businesses?We’ve been looking for opportunities in consumer goods where we can buy a favourable positioning in a growing segment that isn’t dominated by multinationals. In that sense, Poland is no different from anywhere else – you don’t want to be number five or six. In Poland, there are still niches where local players dominate, which gives us scope for consolidation, and for scaling-up. We found exactly that combination of factors in Bakalland and Delecta, and we had a rare chance to buy two businesses at once. Delecta is already number one or two in its segments, with a portfolio of market-leading brands. By putting Delecta together with Bakalland we can achieve synergies, modernise the infrastructure, and share skills, especially on R&D and new product development.

For us, these two deals exemplify what we call ‘Platform Plus’ – in other words, a transaction where we buy one company to create a platform, and simultaneously acquire another businesses to merge with it, which allows us to cut costs, grow sales and enhance our position with the retailers, which is crucial in consumer goods. That’s our agenda for these two businesses in 2015.


Private Equity focusBlackstone: Turkish DelightBlackstone is one of the world’s leading investment firms, with investment vehicles across a whole range of investment types, and circa $300bn in assets under management globally. In 2006, Blackstone’s Private Equity arm teamed up with PAI Partners to acquire United Biscuits, whose brands include McVitie’s, Penguin, Jacob’s Cream Crackers, Twiglets, and Mini Cheddars in the UK, and Delacre, Verkade, and Sultana in Europe. Eight years later, having sold the snacks division of UB to Intersnack in 2013, the UB business was sold to Yildiz Holdings for over £2bn. Robert Ramsauer, a Managing Director at Blackstone in London, says the success of the business is down to a number of factors: “A high-calibre management team with deep product understanding and technological expertise; an iconic brand portfolio that commands prime shelf space, in a category with good market dynamics; a stable and resilient business; and real growth potential, especially internationally. By the time we sold UB, sales outside the UK and Europe were accounting for 20% of revenue, and we were significantly increasing our sales in India, the Middle East, Africa and China.”

In many ways, UB was very different from the typical PE investment. It had already been a public company and, as a result, had robust processes, sophisticated reporting and a good governance structure. “UB was very efficient in going about its business, but a little inward-looking –

everything was done ‘the UB way’. We brought in a new CEO with expertise in brands and other consumer goods businesses, which gave the organisation a new direction and fresh perspective.”

The changing retail environment was a challenge: “In the UK especially, retail is in flux. Consumers are more price-aware, and the discounters are here to stay. We realised very quickly that the grocery market was changing and UB had to change too. With limited volume growth in a mature market like the UK, you have to get cleverer if you’re going to extract more money from the consumer. We’ve developed different formats for the different retail segments, and worked with those customers to maximise the value of our promotional spend. Overseas, the issues are different. Mondelez, in particular, is a big and effective competitor and the last thing we wanted to be was a weak number two. So we deliberately opted for markets which initially appeared to be more challenging, but where we wouldn’t be up against a dominant multinational. In this respect, our own international perspective and footprint proved invaluable. We executed this strategy in various ways – in Nigeria we bought the number three player, in Saudi Arabia we joined up with a local partner, and in India we set up our own operation.”

And looking ahead? How does Robert see the sector evolving in the next year? “Many of the same trends are likely to continue. In my view, that makes innovation and differentiation even more important. In a low growth environment, you have to invest your margin to grow your top line. That isn’t in the DNA of all consumer goods businesses, and means a significant culture shift and change of mind-set.”


Tool kitHitting the right target: Deciding what to buyWhat are the ingredients for a great consumer goods business? How do you work out which sectors have potential and which businesses to buy? Inge Cajot, Director in the UK Consumer Deals team, explains six ways to find the right fit.

Understand the trends: does the business operate in a segment that plays well to current demographic trends? For example, does it cater to an ageing or more ethnically diverse population, or offer healthy alternatives? It’s all about identifying a niche where the market dynamics are favourable, and the business itself has a strong position.

Test the pricing model: is the business able to achieve good margins or is its pricing under pressure? In other words, does the product offer some special feature or technical advantage that allows the business to charge more?

Has the business successfully passed on raw material price increases, on raised prices through successful new product development?

Analyse the brand: What does the brand stand for and does it have strong loyalty from its consumers? Is it well managed and well marketed, both online and offline?

Can it stretch into other categories/countries?

Check the channels: where are the products sold – in discount stores, or supermarkets, specialty outlets or corner shops? Are the pricing and pack sizes appropriate for each of these outlets? Do you go the private label route with the discounters, or become one of their select brands? Do you need your own e-commerce site or do you go with online marketplaces like Amazon, and if so, how?

Assess the supply chain: how cost efficient is the supply chain? How strong are the relationships with suppliers? How sustainable is the supply base? Does the business have a track record of successfully managing input cost inflation? A strong supply chain is not only about efficiency and cost management, it’s about ensuring quality and sustainability of products and ingredients.

Look beyond local: could the business grow internationally and what would that take? There are many new variables when a business starts exporting, especially in terms of distribution, marketing and promotions. Does the business have the necessary local knowledge of other markets, or will you have to buy in those skills?

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The US – Megatrends and megadealsThe US market was active all year, with 19 consumer goods deals over $1bn. The third quarter also saw several deals that had been in the wings for up to five years but were unable to complete, whether for financing or operational reasons. The fact that they have been finalised now indicates that funds are more easily available, and there is a greater degree of confidence about the economic outlook. As Leanne Sardiga, US Retail & Consumer Leader, observes, “The market is back towards 2006/07 levels now. Trade buyers are under more pressure from their shareholders to deliver growth, and bids are more aggressive as a result. This is making life tougher for the PE houses. Another trend in 2014 was the increasing number of US corporates using M&A as a response to worldwide megatrends like globalisation – doing a deal in an emerging market, for example, is a much quicker way to broaden your geographical presence than starting up your own operation.”

There’s also is a big divide above and below the $1bn mark: “The market is being driven by the mega-deals but the majority of the volume in consumer goods is in the $50m - $500m range. A really big deal like the Lorillard one can transform a business or even a whole sector, but it does bring a lot more risk. It will be interesting to see how these huge transactions look in five years’ time.”

Alcoholic beverages not only saw Suntory’s acquisition of Beam, but also the US brewers snapping up craft and

“If you’re in food you want to go where populations, incomes and consumption are all rising ”

wheat beers due to a surge in their popularity and they have also shown interest in emerging markets, due to changing tastes and demographics.

Health food continues to be a hot sector in deal terms, as it was last year, and there’s also continued interest in the snacking and ready meals segment, especially at the healthier end. There could well be more activity in the ingredients segment, as this is still quite a fragmented market. Archer Daniels Midland’s purchase of the Swiss-German natural ingredient company Wild Flavors for $3.1bn is an obvious example.

In mature markets like the US and Europe we’re now seeing portfolio restructuring moving in the same general direction: out of food and into higher-margin categories like homeware and personal care. In emerging economies the dynamics are different, and more favourable: as Peter Wietfeldt, a partner in PwC’s US Consulting team, observes, “If you’re in food you want to go where populations, incomes and consumption are all rising.”

The other difference between food and other segments is its local character. By and large, food is still a national product, not an international one, and

USA consumer deal volume and value 1995 – 2014

Source: Dealogic – Deals above $10m

this distinguishes food from personal care, homecare, Quick Service Restaurants, and drinks, all of which travel well. Some of this is down to the fact that most food has to be made locally but an even bigger factor is the difference in palates across the world. This means brands that dominate in one market may have very little penetration elsewhere: “It even happens between the US and Canada, despite the fact that 70% of Canadians live within two hours of the US. They may share the same language, but they don’t share much when it comes to food – the number one US brand in a category may score as low as number four in Canada, while the leading Canadian brand may not be available in the US at all.”

Conversely, exactly the same product may be sold under different names around the world, which works against global branding and makes it difficult to produce and distribute internationally. Lay’s potato crisps, for example, are sold as Walkers in the UK, Smith’s in Australia, Chipsy in Egypt, Poca in Vietnam, Tapuchips in Israel, Margarita in Colombia, and Sabritas in Mexico. These factors are contributing to the multinationals’ decision to move out of food, and we expect that trend to continue in 2015.

Source: Dealogic

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A selection of UK Consumer deals in 2014

The UK: Deal-makers and discountersIn UK consumer deals in 2014, there was a huge range between the deal value at the top and the bottom of the top 10 deals: the largest UK deal was the $7bn Imperial Tobacco purchase of some of the Lorillard/Reynolds brands, and the smallest, a food business, valued at only $133m. In other respects trends in the UK reflect those worldwide, especially the emergence of emerging market buyers like Yildiz and Emperador, and the disposal of brands like Bushmills, as part of a longer-term reshaping of portfolios and UK corporates looking at different ways to tackle emerging markets such as Africa (SABMiller/Coca-Cola tie-up). The UK is also a good example of the trend towards more complex deals. Premier Foods, for example, sold 51% of its baking business and Hovis bread brand to Gores Group, the US PE house, thus handing over control but retaining a stake in any future growth.

Looking to the UK in 2015, and Mike Jervis, partner in our UK Restructuring and Insolvency team, highlights the

challenges facing suppliers to the major supermarkets: “The UK grocery sector is facing unprecedented pressures right now. The big players are losing both margin and market share and the discounters are getting better and better at competing for the middle ground. The trend is towards more simplified shopping, both because customers seem to want that, and because it cuts operational costs. This will probably mean a gradual shift towards smaller outlets rather than out-of-town superstores, and a significant slimming down of the number of lines the major supermarkets carry. This in turn would squeeze the marginal and specialised suppliers. De-listing is a very real possibility, and we could see M&A activity among some smaller suppliers as a result, in an attempt to build greater scale and resilience.”

Another trend to watch in 2015 will be food price deflation. In the UK, for example, food prices have fallen thanks to a perfect storm of bumper harvests,

lower international demand, and intense price competition among the supermarket chains. This is good news for consumers, but causes problems at primary production level: the UK dairy co-operative First Milk, for example, has had to delay payments to its dairy farmers, and milk is now cheaper than bottled water. The same story is playing out elsewhere in the food chain, with producers under severe margin pressure and a record number filing for insolvency in the UK in 2014. There is no simple answer to this – consolidation within the industry is one approach, and we talk elsewhere about how this is already happening in the French food production industry. The other alternatives for producers are sharper supply chain management to reduce their own costs, or finding new ways to add value so they can charge the retailers more. Experience suggests that the former is more likely to be achievable.

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France: Restructuring and realignmentThe French economy remains stagnant, and some of last year’s M&A activity was the result of the failure of businesses weakened by the length of the downturn. The largest deals in the French market were restructurings, with a final resolution of the long-running LVMH/Hermès saga, which saw Bernard Arnault relinquish his $7.5bn Hermès stake, and Nestlé selling €6bn of its stake in L’Oréal back to the company.

Luxury goods followed many of the same trends as the rest of the consumer goods sector in 2014, though there were some specific factors in play that reflect the particular geographical and market dynamics of this segment. Looking first at the corporates, the major players made a number of niche acquisitions of high-potential or young brands; Kering’s acquisition of Ulysse Nardin watches of Switzerland is a good example. At the other end of the scale, corporate buyers used M&A as a way to diversify the risk of their portfolios.

Beyond these trends in luxury goods, consumer M&A activity last year was characterised by numerous smaller deals in food and agribusiness. These tended to be defensive or distress sales, motivated in some cases by changes to the EU quotas regime, which have put pressure on producers in sectors like meat, dairy and poultry. Some were forced into receivership, others closed production facilities, and some sold out to competitors looking to achieve greater scale and bargaining power, expand internationally, and deliver synergies. For example, Terrena, one of France's largest farming co-operatives, disposed of a stake in its loss-making beef processing division to Dawn Meats of Ireland.

Portfolio realignment is another global trend which is playing out in the French food sector, with businesses selling secondary brands to focus on their core. “These are exactly the same factors that are driving deals downstream in consumer goods,” says Sabine Durand-Hayes, Head of Retail & Consumer Goods in PwC France, “The point is that it’s happening upstream too.” Ardian’s €1.3bn sale of Diana, its food ingredients business, to German flavours group Symrise is a good example, as is Lur Berri’s disposal of Labeyrie Fine Foods to the PE house PAI partners. A key factor in the latter deal was the experience in the food sector that PAI was able to bring to the Labeyrie business. As these deals suggest, both corporates and PE houses are active acquirers, as are overseas buyers. The Chinese, in particular, continue to look for manufacturing and agribusiness opportunities in France, as their own consumers become more concerned about health and food safety, as we discuss in the article on China in this report.


Italy: Private owners and Private Equity By far the biggest Italian R&C deal in 2014 was a corporate deal, the Whirlpool acquisition of Indesit for €1.6bn, a market leader in the production of branded white goods in Italy, UK and Russia. This deal had been on the cards for some time, and will give Whirlpool greater scale and distribution in new markets in Europe, as well as synergies in product range and cost savings.

The other big deals of the year all involve PE houses: Charterhouse bought a majority stake in cheese maker Nuova Castelli for over €400m and Investindustrial acquired 80% of Flos, the designer lighting brand, for around €400m and Versace sold a 20% stake in its business to the US PE House Blackstone for around €200m. “We were involved in all of these deals, and they are all fairly typical of the Italian market in that they are mid-sized deals involving PE houses and private or family-owned operations, “ says Giovanni Tinuper, partner at PwC Italy. “Unlike other parts of Western Europe, there are still a large number of family companies in Italy. Many of them are at some sort of crossroads – either they need to grow internationally and are struggling to do that alone, or they may be facing an internal issue like succession. Either way, a partnership with a PE house can be a productive way forward. It brings in new capital and skills. Many of these family owned businesses prefer selling a minority stake to retain family control. That’s why we see more minority sales in Italy than elsewhere, and why the PE houses continue to be such big players here.” The involvement of private equity in supporting growth can be crucial – Moncler is a case in point: during Carlyle’s ownership the brand was repositioned at the high end of the market and expanded internationally, and was eventually floated on the Milan exchange in 2013.

The Italian market saw the continuous interest of private equity, sovereign funds as well as large corporates in the luxury sector, both at the aspirational end and the ultra-premium, where a number of ‘trophy assets’ changed hands in recent years: Mayhoola, an investment vehicle for the Qatari royal family, bought Valentino for €0.7bn and the Pal Zileri menswear brand, LVMH bought out 80% of Loro Piana for $2.6bn. In Italy, unlike elsewhere, many of the luxury brands are still in private or family hands, which opens up opportunities for PE’s and also strategic buyers. Trilantic Capital, for example, recently bought a stake in the Elisabetta Franchi, a relatively new premium fashion Italian brand, which has expanded significantly in recent years.

Looking ahead, fashion and apparel is likely to remain an attractive sector, as there are a number of luxury as well as dynamic young brands here that could interest local and foreign investors. Food is also likely to be an interesting sector, and this year’s Milan Expo will probably fuel even more interest in this segment. Many of the other trends we have explored also apply in Italy, and especially in food, where premiumisation, local sourcing, and a focus on health and wellness are all having an impact. Designer furniture, where Italy has a long tradition, could offer similar opportunities too.


Brand Consolidation The biggest deal in consumer goods last year was the $27.6bn acquisition of Lorillard by Reynolds American and the related sale of many of these assets and other selected brands to Imperial. This will create a big new number two in the US tobacco market, and a powerful new competitor to Altria, which currently has around 50% market share. The move was largely defensive, with tobacco sales in long-term decline in the US and other Western markets. Tobacco remains a profitable sector, nonetheless, and the combined business will benefit from considerable synergies in areas like sales and distribution, and allow the combined group to compete more effectively across the full range of smoking products with a more balanced portfolio. Vinay Sumant, Director in PwC’s US Consulting team, has been involved in the deal from the start, and

says “it creates a platform for a ‘total tobacco strategy’ in the US.”

The merger also involves the $7.1bn spin-off sale of the KOOL, Salem, Winston, Maverick brands, and the leading e-cigarette blu to Imperial (a deal big enough in its own right to make the top ten US transactions last year) strengthening its position at number three in the US market.

The result is likely to be a round of pricing wars between “the Big Three” and more investment behind e-cigarettes, which has been a game-changer to the whole tobacco industry, having grown into a $3bn market in not much more than three years.

Other sectors also saw consolidation in an effort to make them stronger challengers to industry leaders. This includes the tie-up between Mondelez’s

coffee business and Douwe Egberts announced in May 2014, which will create a new JV company with over $7bn revenues to compete against the market leader Nestlé.


Digital: On and offWe’ve covered online retailing in these publications for a couple of years now, and in that time technology has become more sophisticated, and consumers more savvy, but the traditional retailers are still struggling to integrate their on- and off-line operations fully. The question still remains to what extent retailers will expect consumer goods businesses to support them in this transition.

PwC has done a lot of work on the difference between multichannel and ‘Total Retail’, but the number of operators that have achieved anything like the latter model is still very low.

As Benedikt Schmaus, Partner at Strategy& explains, the online-only players are a very different animal, and emulating their success is tough for a conventional retail business: “The pure online operators aren’t retailers in the traditional sense. They don’t have the traditional deep expertise in specific product categories; it’s all about creating and exploiting consumer insights via

data, and having ultra-efficient logistics. In other words, their capability isn’t in what they sell, but how they sell it, and they can apply that same skill across a whole range of categories. You only have to look at what Amazon sells now – they’ve gone way beyond books, and it all comes down to analytics. The same holds true for companies like Zalando in Germany or Wehkamp in the Netherlands. Whereas conventional retailers, by contrast, still think in terms of product, supply, purchasing and so on – analytics just aren’t in their DNA. It’s a huge culture change.” So what should the traditional bricks-and-mortar players do? “It’s not just about having the right technology, but asking the right questions. Like how online and especially mobile fit into your commercial strategy and help deliver it, and the implications it has for the whole business, from strategic issues like the operating model and reward framework, to commercial factors like pricing, sourcing and IT.

Benedikt concedes that when it comes to digital it’s hard to discern what’s a gimmick and what will last, but there’s no question that better analytical capability will be one pre-requisite for long-term success. Another is the customer experience, especially off-line: “Most traditional retailers need to make significant improvements to their physical stores in the next year, and if necessary find the money to do that by cutting costs elsewhere. Customer experience management is not a recognised role in most retailers but it needs to be driven at C-suite level. That’s the only way to overcome the channel silo thinking that will otherwise hold traditional retailers back. They need to begin with the customer, and focus the whole business on what they want. That, in essence, is what Total Retail is all about. Different channels then become a question of route to market, rather than ends in themselves.”


The economic outlook There are likely to be three big factors affecting the consumer goods sector in the coming year: the oil price, the strength of the dollar, and inflation (or the lack of it).

Our Economics and Policy team see oil prices stabilising eventually around the long-term equilibrium level of $80 a barrel. Below that price, there are consequences for big producers like Russia, Nigeria, and the Middle East, and advantages for consumers and organisations in other parts of the world. However, while the problems will make themselves felt immediately, the benefits will take time to come through: they will, in effect, function like a ‘tax cut’ for individuals and businesses, which some will spend, and others – especially in more troubled economies, will save. In other commodity markets the biggest single issue is China. Due to their slowing rate of growth they are building less, for example, which will have an impact on the price of construction materials like steel. Food will continue to be affected by variables like weather and harvest yields, and we talk elsewhere about food price deflation in some parts of the world.

The US dollar is likely to remain strong, driven by the end of quantitative easing, which will support the currency, and a resurgent economy in which confidence is growing, unemployment falling, and consumption rising. The strong dollar will give a further boost to US businesses looking to acquire overseas entities.

As for inflation, there is a fine line between low and steady inflation, and deflation. The former is a stabilising factor, but the latter would cause significant problems, if individuals and businesses began to postpone purchases and investment in the hope of cheaper prices later. At present, most of the world is still in low inflation, though this is not the case in parts of the Eurozone, where it is adding to the problems its peripheral members are facing. Some of those countries have, in fact, turned the corner in recent months – Spain has now returned to growth, and the possibility of a Greek exit is no longer the all-enveloping catastrophe it would have been a couple of years ago. France and Italy, however, look more vulnerable, especially the latter, which has now slipped to its third recession since 2008, and has not grown at all in net terms in the 21st century. Nor is it sustainable for Germany to remain the only engine of the Eurozone economy.

To summarise: 2015 will see a continuation of many of last year’s trends, though we would not underestimate the potential economic impact of major geo-political developments. The tension between Russia and Ukraine, for example, remains unresolved.

PwC Global Consumer Index

Source: Global Economy Watch 2015

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4The GCI is a monthly updated index providing an early steer on consumer spending and growth prospects in the world’s 20 largest economies. For more information, please visit www.pwc.co.uk/globalconsumerindex


In conclusion: what we expect in 2015We can look at the prospects for 2015 in three ways: by region, by category, and by wider trend.

Geographically, we expect more activity in the Middle East in particular, driven both by the positive market dynamics and the number of privately owned businesses looking for the next stage of growth. US buyers will continue to be active, both at home and abroad, where the strength of the dollar will give them added purchasing power. They may be particularly interested in UK targets, as this brings the additional advantage of a lower-tax regime.

The most active categories are likely to be food, pet-food, baby products and personal care. The hot sub-segments within food will continue to be those that cater to current demographic trends like health and wellness or convenience shopping.

There could also be more consolidation in chilled and frozen food in the UK, and pet-food generally. Demographic changes will also drive activity in personal care and baby: women are having children later, which means they often have more to spend, and there is a growing demand for more sophisticated beauty products that offer anti-ageing benefits.

Looking across the whole market, there are likely to be more carve-outs from the big multinationals, in a continued drive to satisfy investor pressure and improve growth rates. We expect to see more investment in technology for the same reason, as well as more emphasis on cutting costs by streamlining operations and sharing services.

We see the PE houses focusing more on retail, not so much for its own sake but because it is increasingly seen as a real estate play, as the big retailers try to reshape their estates away from large out-of-town formats and towards smaller outlets. Big food and drink deals are likely to continue to interest Western PE houses, but there could be scope in emerging markets, or in niche segments.

“If there’s one message from our work with consumer goods companies over the last few years,” says Neil Sutton, “it’s that they need to be smarter, quicker and more innovative than ever before, if they’re going to stay ahead of the curve. The speed of change is accelerating, and it’s far better to help shape that change, than end up merely reacting to it.”

“Consumer goods companies need to be smarter, quicker and more innovative than ever before, if they’re going to stay ahead of the curve ”

Our Team

BrazilChristian Gamboa+55 11 3674 3378 [email protected]

International Consumer Team

ItalyGiovanni Tinuper +39 02 778 5302 [email protected]

AustraliaKate Warwick +61 (3) 8603 3289 [email protected]

Spain

Malcolm Lloyd +34 915 685 038 [email protected]

Antony Reynolds +34 932 532 858 [email protected]

NetherlandsIstvan Csejtei +31 88 792 15 89 [email protected]

JapanMasaji Hamanoue +44 20 7804 4376 [email protected]

ChinaRoger Liu +86 21 2323 3951 [email protected]

Gabriel Wong +86 21 2323 2609 [email protected]

FranceSabine Durand-Hayes +33 1 56 578 529 [email protected]

USLeanne Sardiga +1 312 298 3183 [email protected] Wietfeldt +1 646 471-3712 [email protected]

Alistair Rimmer +44 7802 475 035 [email protected]

Middle EastNorma Taki +64 3 374 3052 [email protected]

Richard Rollinshaw +971 4 304 3050 [email protected]

SingaporeRichard Skinner +65 6236 3388 [email protected]

Central and Eastern EuropeMartijn Peeters +7 495 967 6144 [email protected]

Krzysztof Badowski +4 822 746 6716 [email protected]


UK Consumer TeamGlobal DealsNeil Sutton +44 20 7213 1075 [email protected]

Corporate FinanceStuart McKee +44 20 7213 4321 [email protected]

Chris Hemmings +44 20 7804 5703 [email protected]

StrategyInge Cajot +44 20 7804 6651 [email protected]

Transaction ServicesNeil Coomber +44 20 7804 8258 [email protected]

Lisa Hooker +44 20 7213 1172 [email protected]

Geoff Eversfield +44 20 780 44371 [email protected]

Mark Binney +44 20 7804 0855 [email protected]

Business Recovery ServicesMike Jervis +44 20 7212 6610 [email protected]

ConsultingMark Hudson +44 20 7804 5141 [email protected]

Shane Horgan +44 20 7804 5617 [email protected]

Strategy & EconomicsBarrett Kupelian +44 20 7213 1579 [email protected]

John Potter +44 20 7393 3736 [email protected]

Benedikt Schmaus +49 69 97167 437 [email protected]

J Neely +1 216 696 1674 [email protected]

Adam Xu +86 21 2327 9800 [email protected]

Richard Rawlinson +44 20 7393 3415 [email protected]


Strategy&


Looking to acquire, merge, divest or restructure? Get the latest analysis, insight and opinion from PwC Deal Talk – www.pwc.co.uk/deals

pwc.co.ukThis publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2015 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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What's happening in consumer goods?

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