All quiet on the M&A deal front for alcohol firms

All quiet on the M&A deal front for alcohol firms

Alcoholic drinks firms in the US have been reluctant to acquire new businesses in the last 18 months and activity has lagged behind other sectors, such as soft drinks, new figures show.

There has been only one deal initiated and one completed in the US alcoholic drinks arena in the first half of 2010, according to figures released by the country's Food Institute today (28 July).

It said that there was also only one deal initiated in the first six months of 2009, although four deals were closed during that period.

The figures highlight a slow couple of years for takeover activity as US brewers, wine producers and distillers have refocused on organic growth and restructuring amid tough economic conditions.

Private equity has so far supplied one of the largest deals in the alcohol sector in 2010, after Metropoulos & Co last month agreed to acquire Pabst Brewing Co for US$250m.
Food Institute figures show that the alcoholic drinks category has lagged behind soft drinks, restaurants and other food sectors on mergers and acquisitions.

There were eight deals closed by soft drinks producers and bottlers in the first half of 2010, with one initiated and not yet closed by the end of the period. That compares to six deals closed and five initiated but not fully completed in the first half of 2009.     

Those figures will include PepsiCo's buyout of its major bottlers, PepsiAmericas and Pepsi Bottling Group, as well as The Coca-Cola Co's acquisition of Coca-Cola Enterprises' North America operations.

Private equity has showed some of the greatest buoyancy in M&A deals across the food sector in 2010, but has not been a significant player in drinks outside of the Pabst Brewing deal.

"Much of the involvement by private equity was in the restaurant segment, or in deals that increased ownership or a non-majority stake in a company," Food Institute spokesperson Henry Mollman told just-drinks.

Across the entire US food and drink sector, the Institute said that it expects more M&A deals in 2010 than in 2009.

For the full figures, click here.