Bahige El-Rayes

Bain procurement leaders award for best consultancy

The global food system’s ability to meet rising demand from finite resources is coming under strain. At the same time, consumers are demanding healthier and more sustainable food. These trends create a huge opportunity for food tech innovations such as alternative protein, functional food, clean food, vertical farming, and cutting-edge techniques for food waste reduction. With food tech growth capital fund Zintinus, Bain & Company has examined how companies, investors, and other stakeholders… Show more

The global food system’s ability to meet rising demand from finite resources is coming under strain. At the same time, consumers are demanding healthier and more sustainable food. These trends create a huge opportunity for food tech innovations such as alternative protein, functional food, clean food, vertical farming, and cutting-edge techniques for food waste reduction. With food tech growth capital fund Zintinus, Bain & Company has examined how companies, investors, and other stakeholders can realize the full benefits of this transformation. Show less

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Bahige El-Rayes at the consultancy Bain said that with… Show more

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Bahige El-Rayes at the consultancy Bain said that with plant-based meat alternatives still 30-40 per cent more expensive than real meat and improvements in taste and texture required, an increase in production capacity to cut costs and more research and development were essential for the category to continue growing. Show less

Our national meat supply is facing unprecedented challenges and news outlets are abuzz about the potential for shortages and rising costs affecting U.S. supermarkets. But with an understanding of the dynamics at play, there is arguably no time like the present for food retailers to focus on improving surety of supply and right sizing their cost structure for chicken.

Global merger & acquisition activity in the consumer and retail sector collapsed by over a third last year, according to a new report by Kearney, in what is the largest decrease since the 70% crash in deal value observed during the global financial crisis.

The coronavirus pandemic is leading the food industry and regulators to change policies as they grapple with empty shelves, a glut of fresh produce and milk, and sudden shifts in consumer buying habits.

Slowing consumption of beef and pork has been exacerbated by health scares and environmental concerns

Analysis from global consultancy AT Kearney has found that the global halal market is set to exceed $2.5 trillion for the first time in 2020, and will continue to grow to hit $3 trillion in under five years.

The role of spices in the evolution of global taste buds.

This year, in the face of a potential slowdown in the economy, Consumer Packaged Goods (CPG) and Retail companies will use Mergers & Acquisitions (M&A) to rebalance their portfolios; letting go of non-core assets and reinvesting in the capabilities they need to stay relevant to the consumer.

This drive towards a comprehensive portfolio management comes as a result of several years of anemic growth and a looming slow down in the economy.

“We’ve witnessed over the last two years a complete resurgence and growth in the private label industry in the U.S. driven by retailers wanting to be more relevant to their customers, and a shift from a need to focus on having the right price point to establishing private brands that are top of mind to consumers and build intimacy with consumers,” said Bahige El-Rayes, a partner in the consumer and retail practice of A.T. Kearney, a global strategy and management consulting firm."

We predict that legacy consumer and retail companies will fight back in 2018 and seek out adjacent and convergent deals

Hot topics on this episode include e-Commerce’s impact on retail especially for digitally native brands, Amazon’s acquisition of Whole Foods and what their influence on their platform means for suppliers. Michael Dart welcomes Charlie Cole, Chief Digital Officer of TUMI and Global Chief eCommerce Officer for Samsonite Corp and A.T. Kearney principal Bahige El-Rayes to discuss e-commerce, and global mergers and acquisitions.

Legacy retailers are increasingly looking at opportunities to drive growth. More and more, they are seeking out-of-the-box ideas to ensure they stay relevant to their client base. The Best Buy-Amazon partnership definitely illustrates these trends

Legacy consumer and retail companies will fight back in 2018 and seek out adjacent and convergent businesses. Winners will be those that understand what consumers prefer and the channels they use, take a holistic view of their industry, and fearlessly pursue innovative, out-of-the-box opportunities.

M&A Activity in Adjacent Businesses Expected to Grow
The A.T. Kearney report is also predicting an increase in cross-border transactions with U.S. firms looking overseas for deals.

Keurig Green Mountain’s deal for Dr Pepper Snapple marks the largest-ever global soft-drink deal. Its ripple effect has been felt across the beverage industry.

Mergers and acquisitions (M&As) are increasingly being seen as an antidote to low or no organic growth,in a commercial world where established retail and consumer goods companies find themselves struggling for survival in the face of radical consumer change and a series of continuous, devastating attacks on their markets and historic value propositions

Discuss how the food value chain is evolving and the role of Middle Eastern cuisine in general and Lebanon in particular can have on Western markets.

“We’re entering a really interesting time,” Bahige El-Rayes, a principal in the retail practice of consulting firm A.T. Kearney, told Food Dive. “A lot of the food companies over the last four to five years have been … really implementing cost-cutting like zero-based budget and other bottom-line-driven activities. But the question is when will that be not enough? When will there be no more opportunity to cut costs? When will they actually fundamentally have to rethink about growth and the… Show more

“We’re entering a really interesting time,” Bahige El-Rayes, a principal in the retail practice of consulting firm A.T. Kearney, told Food Dive. “A lot of the food companies over the last four to five years have been … really implementing cost-cutting like zero-based budget and other bottom-line-driven activities. But the question is when will that be not enough? When will there be no more opportunity to cut costs? When will they actually fundamentally have to rethink about growth and the growth agenda?” Show less

The emerging landscape of 2017 consumer and retail M&A feels both familiar and foreign; while it mirrors 2016’s primary drivers of M&A, it also introduces a new set of financial and political complexities. In response to this evolving market, A.T. Kearney suggests three strategic insights to navigate the road ahead.

Consumer and retail M&A activity in 2014 and 2015 was characterized by high deal volumes, relatively high valuations, and mega deals. While we see deal volumes for large, lower-risk businesses maintaining at 2015 levels, we believe that the valuations and liquidity that drove the “frothy” seller’s market are giving way to a more balanced market between buyers and sellers.
We believe that 2016 will be characterized by tighter credit markets and lower valuations, especially for smaller… Show more

Consumer and retail M&A activity in 2014 and 2015 was characterized by high deal volumes, relatively high valuations, and mega deals. While we see deal volumes for large, lower-risk businesses maintaining at 2015 levels, we believe that the valuations and liquidity that drove the “frothy” seller’s market are giving way to a more balanced market between buyers and sellers.
We believe that 2016 will be characterized by tighter credit markets and lower valuations, especially for smaller companies with riskier, more volatile cash flows. Thus we see an active M&A market in consumer-retail overall, but also a return to a more rational market with a better balance between buyers and sellers and more reasonable deal values for higher-risk acquisitions.

In this context, we offer five strategic insights on M&A in consumer and retail in 2016:
1. Consolidation Remains Critical

2. Wanted: New Paths to Growth

3. Capital Heads West

4. Big Bets on India

5. PE Firms Face Challenges


We remain bullish that consumer-retail M&A activity, particularly among larger corporate buyers, will be healthy even amidst current market uncertainty.

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By Amy Or
...
Not only is there a lack of momentum in consumer spending, but private-equity firms also are facing heightened costs when making consumer and retail investments, said consulting firm A.T. Kearney Inc., which published a new report on the outlook of the consumer and retail sector in 2016.
“The cost of capital in the high-yield market is at a much higher rate than it was five years ago,” said Bahige El-Rayes, a principal at A.T. Kearney. “It is much more expensive to… Show more

By Amy Or
...
Not only is there a lack of momentum in consumer spending, but private-equity firms also are facing heightened costs when making consumer and retail investments, said consulting firm A.T. Kearney Inc., which published a new report on the outlook of the consumer and retail sector in 2016.
“The cost of capital in the high-yield market is at a much higher rate than it was five years ago,” said Bahige El-Rayes, a principal at A.T. Kearney. “It is much more expensive to access the [debt] market when a private-equity fund goes after smaller midmarket companies.”
...
Mr. El-Rayes said 2015 was a sellers’ market in which one of his private-equity clients was “selling every business that isn’t nailed to the floor.” At the same time, private equity, flush with liquidity in a low interest-rate environment, competed aggressively with strategics for assets. Financial sponsors paid a median multiple of 17.5 times earnings before interest, taxes, depreciation and amortization for assets last year, when strategics paid about 13 times, according to the report.
….
A.T. Kearney’s Mr. El-Rayes expects private-equity deal flow in consumer and retail companies to slow this year, and deal valuation to be more rational moving forward.
“Several retail companies with challenged business models are going bankrupt, as it is difficult for midmarket companies to access debt,” Mr. El-Rayes said. “We expect to see more going forward and, as a result, driving the adjustment in valuation.” Show less

Expect less froth and lower valuations on the mergers and acquisitions front in 2016.
...
The report noted that with $365 billion in transactions, 2015 saw the highest dollar value in deals in the consumer-retail sectors since 2008. Bahige El-Rayes, principal in A.T. Kearney’s consumer and retail practice and a coauthor of the report, said the expectation is that 2016 will be a bullish year and will hit 2015’s $365 billion in deal value. “We are expecting megadeals, so long as they are… Show more

Expect less froth and lower valuations on the mergers and acquisitions front in 2016.
...
The report noted that with $365 billion in transactions, 2015 saw the highest dollar value in deals in the consumer-retail sectors since 2008. Bahige El-Rayes, principal in A.T. Kearney’s consumer and retail practice and a coauthor of the report, said the expectation is that 2016 will be a bullish year and will hit 2015’s $365 billion in deal value. “We are expecting megadeals, so long as they are investment grade or higher as investment grade deals tend to be bigger,” he said.
...
“Private equity investors historically look at riskier companies to justify the higher returns they try to reach. I think they will have a harder time to get deals done. Finding deals is not the problem for them. It’s finding deals with the valuations they like that is the problem,” El-Rayes said.
....
That split in opportunities available to strategic and financial buyers will result in a bifurcated M&A market, El-Rayes said. That means that better companies could see slightly higher valuations, with strategic buyers outbidding their financial counterpart. The smaller firms with riskier balance sheets could see valuations head lower, both as a function of the balance sheet risk but also because financial sponsors will be offering less since they can’t put as much leverage into the deal. Show less

Changing consumer taste in North America can present opportunities for Middle Eastern food to become staples for the American consumer.

By Bob O'Brien

Earlier this month, A.T. Kearney released a new report that focused on consumer and retail M&A year to date in 2016. The title of the report posed the provocative question: "Has the market lost its froth?"

Following five years of intense negotiation, the U.S. and ten Pacific Nations recently announced a deal to open agricultural markets, tighten intellectual property protection and establish a bloc to challenge China’s influence in the Asia-Pacific region. This deal, subject to approval by the U.S. Congress, will likely transform how major food companies purchase their agro-commodities — specifically sugar.

Hedging is not the only way to address volatility. A.T. Kearney research finds that an integrated approach to commodity risk management separates those who react to volatility from those who manage it.

Across much of the world, the media sector is facing unprecedented challenges. Newspaper readership is on the decline. Advertising revenues and consumer spending have been hit hard by the recession. The Internet is seen as a threat by the traditional media. But one region stands out in contrast—the Middle East. Across the Arab world, increasing disposable income for entertainment, an improving regulatory environment, and a burgeoning youth population that is open to new technology are providing… Show more

Across much of the world, the media sector is facing unprecedented challenges. Newspaper readership is on the decline. Advertising revenues and consumer spending have been hit hard by the recession. The Internet is seen as a threat by the traditional media. But one region stands out in contrast—the Middle East. Across the Arab world, increasing disposable income for entertainment, an improving regulatory environment, and a burgeoning youth population that is open to new technology are providing opportunities for dynamic growth. Show less

The sector is expected to address years of anemic growth and shifting consumer demands by rebalancing corporate portfolios to include skill gaps like last-mile delivery, digital capabilities and e-commerce, according to the report, which analysed 2018 M&A data and insights from executives in consumer packaged goods, retail and private equity