Stefano Di Napoli

FMCG M&A Q1 2024 In Review - A New Bottom & Four Reinforcing Trends 'When you hit rock bottom, the only one way left to go is up..., isn't it?' Discover our latest FMCG M&A publication below that tackles the following questions: - What happened in Q1 2024? - How does it compare to the last 10-20 years? - What were the key trends & the underlying key drivers? - What is ahead of us? What is clear is that 2024 will be an interesting year for M&A in the FMCG industry with most likely a much more progressive bounce-back that most expected & maybe few big surprises... Exciting times To get the corresponding deck, pl leave your name in comment 𝗧𝗼 𝗴𝗲𝘁 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀, 𝗳𝗼𝗹𝗹𝗼𝘄 𝘂𝘀/ 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝘁𝗼 𝗼𝘂𝗿 𝗙𝗠𝗖𝗚 𝗖𝗘𝗢𝘀 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿: https://lnkd.in/ea4gy65y #strategy #cpg #fmcg #mergersandacquisitions Frederic Fernandez & Associates

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Drinks giant #Diageo adds Ritual Zero Proof to its stable of non-alcoholic brands, which already included three of the five largest globally by value. After acquiring a minority stake through its brand accelerator Distill Ventures in 2020, Diageo announced that it has fully acquired Ritual Zero Proof Non-Alcoholic Spirits. The move bolsters Diageo’s investment in no- and low-alcohol alternatives after increasing its ownership in Seedlip in 2019. Ritual Zero Proof is the number-one brand in the fastest-growing adult beverage category, and meets growing consumer demand for a flavourfull and sophisticated, yet accessible spirits alternatives. Ritual was founded in 2019 in Chicago, Illinois, by David Crooch, Marcus Sakey, GG Sakey. The line was created to give consumers a simple way to enjoy their favourite cocktails without alcohol, and today, the brand offers alternatives to whiskey, Tequila, gin, rum and apéritifs, all of which can be substituted one-to-one with traditional spirits. #zeroalcohol #ritual #diageo #spirits #distillventures Lars Jensen Jean Noel Ortal Paul Villis Carol Dunne Gwyneth Kelly Michelle Osagie Farrah Gilsenan Gilles Halotel Marc LEJEUNE Diageo Ritual Zero Proof Distill Ventures Jean-Philippe Delforge Kristof König

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Category leading premium spirits multinational manufacturer, Diageo PLC, announced its Preliminary End of Fiscal Year 24 results. Net sales ($ million) Reported net sales declined 1.4% Organic net sales declined 0.6% Reported net sales declined 1.4%, due to an unfavourable foreign exchange impact, organic net sales decline and a negative impact from acquisitions and disposals, partially offset by hyperinflation adjustments. Africa Africa delivered robust organic net sales growth despite ongoing macroeconomic challenges. • Diageo Africa benefitted from price increases and delivered strong performance in a challenging macroeconomic environment with persistent inflationary markets. • Reported net sales declined 13%, reflecting an unfavourable impact from foreign exchange, mainly due to a weakening Nigerian naira, partially offset by organic growth. • Organic net sales grew 12%, with growth across all markets except South Africa. Growth was driven by price increases, partially offset by a 6% volume decline, primarily in spirits. • Price/mix grew 18pps, mainly due to broad based price increases in beer and spirits across the region. • Spirits net sales declined 2%, driven by a volume decline of 16%, which was partially offset by price increases across the region. Tequila growth doubled, led by Don Julio, partially offsetting an 11% decline in Johnnie Walker. • Beer net sales grew 19%, benefitting from price increases across the region and volume growth of 4%. Malta Guinness, Guinness and Senator each delivered double-digit net sales growth. • Organic operating margin increased by 194bps, as price increases and productivity savings more than offset cost inflation. • Marketing investment grew 16%, focused on supporting spirits premiumisation, Guinness and tequila penetration. Market highlights: • East Africa net sales increased 9%, lapping a softer comparator following price increases. The increase was led by growth in beer, mainly Senator, which also grew share of TBA in the fiscal year. RTDs, rum and scotch also contributed to the improvement. • Africa Regional Markets net sales grew 6%, led by growth in beer, primarily driven by Malta Guinness and Guinness, supported by price increases. Growth in beer and RTDs was partially offset by a decline in spirits, particularly in Johnnie Walker. Strong price/mix more than offset a volume decline of 6%. • Nigeria net sales grew 31%, driven by strong price/mix supported by price increases, partially offset by a decline in volume. The market lost share in almost all categories. • South Africa net sales declined 11%, primarily driven by lower volume of 17%, primarily in Johnnie Walker Black Label and Smirnoff 1818. Spirits category growth was slower than the beer category, and Diageo South Africa lost share in spirits. This was despite growth of the markets' share in the gin and tequila categories, led by Gordon’s & Don Julio. #FMCG #AlcoholicBeverages

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Campari Group Q1 2024 results: when steady is good On tough comps (Q1 2023 was +20%), Campari manages to stabilize sales. What many have struggled to achieve on the liquor category For perspective, Campari continues to belong to the top 5% outperformers in the FMCG industry, with a stock price that multiplied by >3 over the last 10 years, which put it in the same league as the L'Oréal, Lindt & Sprüngli & Church & Dwight Co., Inc.... Impressive All eyes are now turned on the Courvoisier integration & the global Cognac market development Exciting year ahead for Campari Group In the details: Campari Group Q1 FY24 summary: • NR: €664m • OSG: 0.2%; Vol.: 0.6% and Price/ Fx: -1.6% • GM%: 57.5%; -90 bps vs Q1 FY23 • Adj. EBIT%: 22.8%; -100 bps vs Q1 FY23 • A&P: 12.9%; -60 bps vs Q1 FY23 𝗧𝗼 𝗴𝗲𝘁 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀, 𝗳𝗼𝗹𝗹𝗼𝘄 𝘂𝘀/ 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝘁𝗼 𝗼𝘂𝗿 𝗙𝗠𝗖𝗚 𝗖𝗘𝗢𝘀 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿: https://lnkd.in/ea4gy65y #cpg #fmcg Matteo Fantacchiotti Diageo Pernod Ricard LVMH The HEINEKEN Company AB InBev Molson Coors Beverage Company William Grant & Sons https://lnkd.in/eCvN_2VA

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What a dramatic drop in #VC exits mean for the #FMCG companies? Just a handful of large VC-backed companies have gone public since Q1 2022, exiting at only $70bn cumulative worth, which is: i) less than in any quarter in the record-breaking 2021 (outlier) ii) 90.5% decline from 2021’s record highs of $750bn (outlier) iii) the first time the figure has dipped below $100bn since 2016 (serious) What does it mean for CPGs? Mostly buying/ investment opportunities: 1. Strategic Acquisitions: As VC-backed companies struggle to justify their high valuations or demonstrate the necessary fundamentals for IPOs, they may get forced to sell at lower price point to a strategic acquirer 2. Investment opportunities for CVCs: smaller rounds and less competition may enable CPG companies to get a stake in the most promising start-ups 3. Less 'well-funded' competition for incumbents: less exits and lower valuations means the large upstarts will need to be more frugal with resources and less willing to engage in price wars/ overly aggressive consumer acquisition tactics As the saying goes, “In every crisis lies an opportunity.” CPG leaders who will navigate the best this environment may end up winning disproportionally (as we were writing on the topic) FMCG CEOs: 2023 M&A Report – Seven Key Learnings & Seven Predictions For 2024 https://lnkd.in/dT5A-jGZ To receive the corresponding deck, pl. leave your name in comment To get all our insights, follow us/ subscribe to our CEOs newsletter: https://lnkd.in/eR8vDpvE #strategy #mergersandacquisitions Frederic Fernandez & Associates

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3 days, 130 countries, 7,500 exhibitors = 3 key insights into food and beverage innovation! Brilliant summary from Megan Conceição distilling the world’s largest innovation show into the three major trends that we need to be aware of. Video and report linked below 👇🏼 #ThisIsFinlays #trendspotting

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The US spirits market (volumes down -2%) declined for the first time in nearly 30 years in 2023, and every major TBA category saw volume declines, except for tequila, some US whiskey segments and RTDs. Looking forward, tequila is poised to add the most incremental value to the US spirits market by 2028, driven by premium-and-above expressions. #tequila #whiskey #spirits #insights

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To all my friends on the other side of the pond- if you are at London Quirks today check out this awesome discussion with Kevin H. and Pernod Ricard around Fueling Disruptive Innovation! +Dig Insights

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📈 Soft Drinks Trends in 2024 In the ever-evolving beverage market, recent consumer insights from FMCG Gurus reveal a significant trend: a growing preference for cordials, squash, and syrups, with 53% of global consumers enjoying these options either daily or weekly in 2024, up by 12% since 2021. This shift highlights a move towards more cost-effective beverage choices amid rising prices and economic uncertainty. Conversely, the consumption of chilled juice and health-focused drinks like protein and isotonic beverages is declining. Despite a continued interest in health and wellness, the economic strain is leading consumers to be more discerning about the value and effectiveness of these products, particularly those at higher price points. Moreover, nutritional labeling remains a critical factor in purchasing decisions, with consumers increasingly scrutinizing sugar content and other negative dietary ingredients. This scrutiny reflects a broader awareness of health issues such as obesity and the desire for healthier, more sustainable choices. The market's response? A push towards innovation within premium segments, even in economically challenging times, with a focus on natural ingredients and production methods that convey quality and trustworthiness. #markettrends #beverages #softdrinks

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The refreshing beverages market in Europe is experiencing significant growth opportunities and innovation, with trends focusing on reduced sugar content, increased health and functional benefits and bold flavour offerings. I was delighted to have been asked by Maev Martin to contribute an article on the refreshing beverages category, in the Checkout Magazine Top 100 brands edition, that was published today, you can read the full article below. The refreshing beverages market is significantly shifting towards low and no-calorie beverage options, reflecting a broader consumer push towards healthier lifestyle choices. As consumer palates evolve, there's a notable trend towards bold and exotic flavours, which present new opportunities for beverage brands to differentiate and excel. Due to both supply challenges and changing consumer expectations, long-standing sectors like orange juice and energy drinks are innovating with a focus on sustainability, health, and new flavour profiles 😋. While the refreshing beverages category remains dominated by carbonated drinks, there are huge growth opportunities in the “better-for-you” category across reduced and zero sugar, added functional benefits, healthier energy drinks and hydration. The thirst for growth and innovation is there for beverage brands to drink from. For any beverages brand owner or manufacturer looking to create the new great tasting refreshing beverages innovation 💡, please do get in touch, the beverages team at Kerry is here to help. #beverages #softdrinks #refreshingbeverages #sugar #taste #innovation #checkoutmagazine #energydrinks #functionalbeverages #orangejuice #zerosugar #cola #hydration #lemonades #water #kerry #sustainability Thomas Hahlin Ahlinder Sheelagh Pentony Carol Dunne Gwyneth Kelly Michelle Osagie Mark Faherty Sinéad Smith David Deeley Brian Short Farrah Gilsenan Paul Villis Mark Allen Erika Minaguchi Magdalena Edyta Przewoźnik Barbara Lezzer Aoife Mc Donald Ian Chesworth Marc LEJEUNE Breda Kelly Tiphaine BEAU Sergio Saavedra Rodríguez Birgit Schaaf Erlon Pereira Bourcard Nesin Jim Watson Francois Sonneville Stephen Rannekleiv Mark Gallo John Craven Will Keating Lars Jensen Lorenz Hofer Jean-Philippe Delforge Jean Noel Ortal Elaine Druhan Ciara McDevitt Gilles Halotel

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British grocery price #inflation has also fallen for the fifteenth month in a row to 2.4%, the lowest level since October 2021 and 15% points lower than this time last year, whilst sales rose by 2.9% over the four weeks to 12 May. Grocery price inflation is gradually returning to what we would consider more normal levels. It’s now sitting only 0.8 percentage points higher than the 10-year average of 1.6% between 2012 and 2021, which is just before prices began to climb. Typically, an inflation rate of around 3% is when we start to see marked changes in consumers’ behaviour, with shoppers trading down to cheaper items when the rate goes above this line and vice versa when the rate drops. However, after nearly two and a half years of rapidly rising prices, it could take a bit longer for shoppers to unwind the habits they have learnt to help them manage the cost of living crisis. For the full article and the latest #GroceryMarketShare 👉 https://lnkd.in/eDTdVxz3 Worldpanel by Kantar #consumerbehavior

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This statistic is surprising but also unsurprising at the same time... the classic innovation versus renovation debate has long rumbled on. Consumer need and white space needs to drive product launches - which is where Demand Spaces can support category growth from insight. Give me a shout if you need help navigating this #npd #innovation #productlaunch #fmcg #consumerinsight #demandspaces Trinity McQueen

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For the top branded manufacturers, over 11% of sales in 2023 came from #innovation. But if you look at it in terms of year-on-year growth, innovation accounted for 44%. Innovation continues to be a key growth driver in #fmcg and below are the Top 10 launches in GB from 2023. For more great facts and insights on innovation watch this webinar (link below) from my brilliant colleagues Sam Hart and Jackson Woods, part of the 'Recalibrate, Reconnect, Reimaging – Decoding Consumer Spending' series from Worldpanel by Kantar. 👉https://lnkd.in/eHi552Vr Boots UK Mars Petcare PerfectTed L'Oréal L'Oréal Mondelēz International Warburtons Ferrero The HEINEKEN Company Unilever Dove Men+Care

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Improverished consumers and what does it mean for #FMCG players? Personal savings rate hitting the all time low, while at the same time credit card debt is near all time high signals that consumers are poor and may be nearing their limits with unprecedented cost of living and assets inflation far outpacing their income growth (excl. top decile) Most of the FMCG players rely on a strong middle class, and the purchasing power of the bottom 90% of the consumers across the major economies got visibly poorer, as the vast majority of newly 'created' (printed) wealth got accumulated by the very rich (>66% of all the wealth 'printed' since 2020 ended up with the top 1%) that are unlikely to drastically increase their spend on CPG (how much more shampoo can Jeff Bezos buy?) If so far the price elasticity was low (low to no volume decline) it was driven by several forces that may well be about to expire, as many metrics are hitting the respective lows/ highs not seen since 2008/09 downturn Maintaining the pre-pandemics consumption will result tricky for many consumers. As such, we may expect strong demand for the entry level and luxury segments, while the mid-tier will face drop in demand (most of consumer goods are not really discretionary, so some mid-tier consumer will switch to Private Labels/ value brands, and 'the rich' got even wealthier so they will not trade down from luxury) The upcoming quarters will bring some important decisions for many Brands willing to defend/ expand their positions, and/ or adjust according to shifting demand Know more about our perspective on how to accelerate organic volume growth create incremental category value read our last publication on Zero Based Growth: https://lnkd.in/eG62xkNE To receive the corresponding deck, pl. leave your name in comment 𝗧𝗼 𝗴𝗲𝘁 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀, 𝗳𝗼𝗹𝗹𝗼𝘄 𝘂𝘀/ 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝘁𝗼 𝗼𝘂𝗿 𝗙𝗠𝗖𝗚 𝗖𝗘𝗢𝘀 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿: https://lnkd.in/ea4gy65y #strategy Frederic Fernandez & Associates Source: tradingeconomics

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Challenging times ahead of #FMCG players? After a period of unprecedented inflation, where most/ all FMCGs benefited from double-digit pricing gains (outpacing the COGS inflation), the pricing gains are drying up, while the volumes keep stagnant/ declining, leaving #CPG players with a rather bleak outlook Most of the FMCG players rely on a strong middle class (additional $100bn income won't make Elon Musk buy any more shampoo/ detergent than he does today), and we have been facing the largest transfer of wealth from the middle class to the super-rich (>66% of all the wealth 'printed' since 2020 ended up with the top 1%) causing their purchasing power/ financial stability to drastically decline with many metrics hitting the worst situation since 2008/09 downturn If so far the volume declines were moderate, it was driven mostly driven by spending of accumulated savings and increased consumption credit (mostly cards), but: - saving rate at the lowest level since 2008 - credit card delinquency rate at the highest since 2011, and the highest since 1991 in small banks (excl. top 100) - consumer debt already higher vs pre-pandemic levels, - first since 2009 decline in avg. Credit Score resulting in slowdown in new credit origination Maintaining the pre-pandemics consumption will result tricky for many consumers. As most of consumer goods are not really discretionary, many middle class consumers will switch to Private Labels/ value brands, while 'the rich' will continue shoppinh luxury tier. As such, we may expect strong demand for the entry level and luxury segments, while the mid-tier will face drop in demand. The upcoming quarters will bring some important decisions for many Brands willing to defend/ expand their positions, and/ or adjust according to shifting demand #strategy Frederic Fernandez & Associates

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Yesterday’s shopper research in the Meal Deal. A cornucopia of choice for shoppers, where they bring their rational but mostly emotional selves to their decisions: 😍 browsing the Premium Meal Deal, looking at 🍣 and 🥗 and 🦐 🏃‍♂️ grabbing a Huel and a banana and dashing away 👯 coming in with a female friend and deliberately making unhealthy (but fun) choices 🍫 💷 carefully buying all the expensive items to max out the value 🩺 feeling a bit unwell so self-medicating with “better” items. It’s all there, in a whirling hurrying mass of humanity, and I love the quick convos and deciphering the motivations afterwards. What’s your favourite combo in the Meal Deal? #shopperresearch #MealDeal #FoodToGo #consumerinsights

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Kantar sees Aperol and Campari soar 🤩🚀 with Aperol fastest growing Italian spirits brand 💗 Kantar revealed that Campari-owned Aperol was the number-one fastest riser of the Kantar BrandZ Most Valuable Italian Brands 2024 ranking. It increased its value by 38% to US$1.37bn in 2024, compared to the previous year. Aperol was ranked number 18 in Italy’s top 40 most valuable brands, while stablemate Campari sat in the 29th spot (up 30% to US$899m). Italy’s most valuable alcohol brands reported a 62% rise to US$3.8bn. https://lnkd.in/dHJUJBcV #enjoyresponsibly #aperol #campari #mostvaluablebrands #lovebrand

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Despite grocery price #inflation easing back to 1.7% over the last four weeks, financial confidence hasn’t risen with it. Memories of the last two years remain strong, with nearly 60% of shoppers still very or extremely concerned about rising grocery prices. In GB, take-home sales at the grocers rose by 3.0% over the four weeks to 1 September compared with one year ago. Ocado Group was the fastest growing grocer for the seventh month in a row, delivering its quickest rate of growth since May 2021 with sales up by 12.9%. For the full #grocerymarketshare update read here: https://lnkd.in/eFgUUXhQ

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