Food And Beverage M&A Deals Roundup: RTD Coffee, Premium Spirits And Sauces

M&A activity in the U.S. food and drinks market continues to pick up, as evidenced by several notable deals particularly in the ready-to-drink coffee and premium sectors during Q3 2023.

Analysts at global investment bank, Harris Williams
WMB
, believe the broader category to be recession resilient, which helps open up further opportunities for scalable and accelerated growth, despite the ongoing market volatility. In the near future, significant dry powder will remain for buyers to seek acquisition opportunities, and they will likely move towards partnership deals with more meaningful seller rollover. Here’s a recap of some of the most recent M&A deals:

Keurig Dr Pepper

KDP
acquires 33% of La Colombe for $300 million

Beverage giant Keurig Dr Pepper’s (KDP) latest strategic partnership involves a long-term sales and distribution agreement for La Colombe’s ready-to-drink products and a separate manufacturing and distribution agreement for its branded coffee pods. The deal has made KDP the second largest stakeholder in La Colombe behind the company’s chair Hamdi Ulukaya, who also founded Greek yogurt sensation Chobani.

In a public release, La Colombe is described as the only vertically integrated, super premium ready-to-drink coffee company that owns the entire coffee journey from conscious bean sourcing and premium roasting to the creation of exceptional product experiences for loyal customers. KDP’s investment in La Colombe, which sets to close by the end of Q3 2023, represents a multiple of approximately 3.0x estimated 2024 consolidated net sales. La Colombe will use the proceeds to accelerate growth and pay off debt.

Beliv acquires 78% High Brew for eight figures

In a separate ready-to-drink coffee deal, beverage company Beliv that also owns plant-based energy drink brand, OCA, has acquired a 75% stake in Texas-based High Brew for eight figures. The company’s remaining share will continue to be held by its founder David Smith, who has joined Beliv as a consultant as a result of the transaction.

High Brew is a well-positioned brand in the ready-to-drink cold brew coffee market. Due to the cold extraction process, it naturally contains more antioxidants, enhancing its original flavor and significantly reducing the characteristic acidity of the traditional brewing method, company said in a release.

Carlos Sluman, founder and CEO of Beliv, believes the acquisition will further strengthen their foothold in the U.S. beyond the company’s existing operating locations across Latin America, Europe, and Asia. “With High Brew, we are adding a disruptive product in a booming category, through its distribution to 15,000 sale points in the US and the collaboration with 54 strategic partners,” Sluman said in a statement, hinting a head-on competition with KDP.

Monster approved to acquire bankrupted Bang Energy for $362 million

Monster Beverage Corp. has been granted approval in court to acquire bankrupted rival Bang Energy for $362 million, including the latter’s production facility in Arizona. Bang Energy, owned by Florida-based Vital Pharmaceuticals, filed for bankruptcy in October 2022 after it was sued by Monster for false advertising and other alleged misconduct with a California jury awarding Monster $293 million. Earlier in June, Bang Energy also parted ways with PepsiCo
PEP
on an exclusive distribution partnership, while the CPG conglomerate, which already owns Rockstar Energy, made a $550 million investment in Celsius shortly after.

Molson Coors

TAP
Beverage Company acquires Blue Run Spirits

Molson Coors has struck a deal to acquire bourbon and rye whiskies maker Blue Run Spirits for an undisclosed sum as part of the brewer’s evolution as a total beverage company. This acquisition will more than double the size of Molson Coors’ spirits portfolio, further supporting the company’s premiumization strategy.

As Molson Coors’ first spirits acquisition, says in a public statement, the addition of Blue Run boosts the company’s footprint in spirits as it continues to evolve from its storied history as a beer company and premiumize its portfolio. In tandem with the acquisition, Molson Coors has also established Coors Spirits Co., an expansion of its existing spirits business, which will house Blue Run, Five Trail Blended American Whiskey, Barmen 1873 Bourbon and future innovation.

Currently available in 31 U.S. states and online, Blue Run is currently sold at retail and on-premise accounts, and is in the process of building a distillery in Kentucky, and releasing three new whiskies in late summer and fall this year.

Campbell Soup

CPB
acquires Rao’s parent Sovos Brands for $2.7 billion

Campbell Soup has agreed to acquire Sovos Brands, the maker of Rao’s Pasta Sauce, for $2.7 billion. The deal, which is expected to close by year end, will help enrich a high-growth, market-leading premium portfolio of brands to diversify and enhance Campbell’s meals and beverages division, providing a substantial runway for sustained profitable growth, says in a company statement. Particularly, it will help expand Campbell’s presence into the fast growing, on-trend, premium frozen meals segment with Rao’s and Michael Angelo’s, while adding meaningful scale to the existing Pepperidge Farm’s frozen portfolio.

Rao’s accounted for 69% of Sovos’ net sales in fiscal year 2022, and has seen its organic sales grow by 35% year-over-year. The brand is expected to help Campbell achieve its strategic goal of “building a $1 billion sauces business by entering the ultra-distinctive pasta sauce market,” the company said.

LIVEKINDLY Collective acquires plant-based Company Alpha Foods

LIVEKINDLY Collective has acquired California-based Alpha Foods, the sixth deal to date since its launch in 2020. LIVEKINDLY, which has previously raised $135 million to mainly develop chicken substitutes, also formed two separate joint ventures with food ingredients player Puris Holdings back in 2021 to invest in regenerative agriculture and plant-based food.

Alpha Foods offers a variety of products in the frozen food section across major retailers including Costco, Kroger
KR
, Whole Foods, Safeway
SWY
, H-E-B, Albertson’s, Sprouts and other regional banners. With the acquisition of Alpha Foods, LIVEKINDLY Collective enters the ready-to-eat breakfast and burrito snacking category, and will significantly expand its distribution in the U.S.