Private food & beverage companies raised $514M in investment in Q1’17 across 77 deals. New corporate investors such as Kellogg’s, Campbell Soup, and General Mills have been ramping up their private market activity, as startups emphasizing plant-based foods and direct-to-consumer distribution models gain interest.
Quarterly deals and dollars
Deals to food and beverage companies slipped in Q1’17 compared to the prior quarter, and remain down from their Q1’16 peak of 91. This marked the seventh consecutive quarter with 70+ deals, after a relatively steady run up in deals between 2012-2014. At the same time, funding grew significantly, with the majority of the increase due to a $225M private equity deal by Food Union, a Latvia-based conglomerate of European food and beverage brands.
In the quarter’s second-largest deal, Thai food conglomerate Charoen Pokphand Foods invested $51.5M into Polish food company SuperDrop. BEFORE Brands, a CA-based startup developing food products that aim to improve the immune systems of babies, ranked third with a $35M Series B led by Gurnet Point Capital.
Aside from some of these larger rounds, the majority of the quarter’s deals were under $10M and went to startups focused on healthy beverages and alternative proteins. For example, flavored sparkling water startup Spindrift raised a $10M Series B, bringing total funding to $22.3M; kombucha startup Health-Ade Kombucha raised an $8M Series C, bringing total funding to $22.6M; and packaged plant-based meal startup Hungryroot raised $7.7M in a Series A-II, bringing total funding to $13.4M.
We also saw traditional big food corporates continue their investment activity through several new funds launched over the past two years. Kellogg’s new fund Eighteen94 Capital made its first investment, backing Kuli Kuli, which makes snacks and drinks from the moringa plant.
Annual deals and dollars
Deals to food and beverage companies have been growing steadily, from 154 in 2012 to 339 in 2016. From a dollars perspective, 2014 holds the current record at over $1.8B investments, but private equity investments to major, private corporations drove much of that, including a $470M investment to Canadian dairy producer Agropur in Q4’14, and a $270M investment to Beijing-based meat producer COFCO Meat.
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2014 also saw All Market, the company behind Vita Coco coconut water, receive $165M from the Reignwood Group. While All Market hasn’t raised since 2014, it remains the most well-funded food & beverage startup in the US with $208M in total.
Funding declined in 2015 and 2016, but if investment continues at its current rate, 2017 will see a new record high with over $2B in investment throughout the year. However, deals to food and beverage companies may be on track to decline slightly.
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