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Investment Analysis of the North American Beverages Market

  • September 2015
  • -
  • Frost & Sullivan
  • -
  • 46 pages

Automation Using Robotics is Key for Investment in Soft Drinks while Distillers Focus on Premium Wines

This study presents an overview of the financial trends in the North American beverages industry between FY2009 and 30 June 2015. The industry is classified into three broad segments: brewers; distillers and vintners; and soft drinks, wherein the former two represent alcoholic beverages and the latter non-alcoholic beverages. Each segment is analyzed in isolation as well as in tandem with the entire beverages industry. The study provides insight into the different trends and the rationale behind M&A, private equity, and venture capital deals, as well as the financial ratios that gauge profitability, liquidity, activity, and solvency.

Executive Summary

- The North American beverages industry is fairly immune to business cycles. The overall performance of the industry has been quite stable, but analysis shows significant differences in the dynamics that shape each segment.

- The alcoholic beverages segment is poised for strong growth while the soft drinks segment will remain dependent on bottled water, fruit juices, and other non-carbonated drinks.

- North American is one of the biggest consumers of alcohol both by volumes and dollar spending. The overall spending on alcoholic beverages is likely to increase despite a decline in the consumption of alcohol by volume, indicating steady increase in the unit price of alcoholic beverages.

- The emergence of the millennial demographic group has brought in a large amount of disposable income, and their demand for premium alcoholic brands and originality in its making have driven this trend.

- The soft drinks segment has seen a steady decline in revenue mainly due to growing health consciousness among customers, especially concerning diabetes and the ill effects of excessive caffeine consumption.

- The US government’s 2011 Food Safety and Modernization Act (FSMA) minimizes health hazards related to food and beverages. The regulations under FSMA have had a significant impact on the consumption of soft drinks in North America and have increased the cost of production for soft drinks manufactures who must ensure regulatory compliance.

- Beverage manufacturers, especially in the soft drinks segment, are now focusing on largescale automation with the use of robotics to bring about higher productivity and larger cost efficiency through economies of scale.

- The cost of ensuring high-quality packaging and strong distribution networks has also been rising constantly during the study period. Beverage manufacturers actively sought merger and acquisition (M&A) opportunities in packaging and distribution to gain a competitive edge through forward integration.

- Private equity (PE) and venture capital (VC) activity has been buoyant in the bottled water and wine sub-segments. Several family owned wineries have been needing PE and VC funding to take their agricultural expertise in vineyards to the market.

- The increasing demand for clean drinking water and the higher levels of sophistication in its purification process have brought about many startups in the bottled water segment.

Table Of Contents

Investment Analysis of the North American Beverages Market
1. EXECUTIVE SUMMARY

Executive Summary
Executive Summary

2. KEY TERMS AND DEFINITIONS

Key Terms and Definitions

3. INTRODUCTION

Introduction
Research Objectives and Scope
Research Methodology
Key Industry Trends

4. TRANSACTIONS ANALYSIS

Transactions Analysis
Transaction Analysis—MandA Buy-side Analysis
Transaction Analysis—MandA Sell-side Analysis
Transaction Analysis—PE and VC Analysis

5. FINANCIAL ANALYSIS

Financial Analysis
Financial Analysis—Profitability Analysis
Financial Analysis—Activity/Turnover Analysis
Financial Analysis—Liquidity Analysis
Financial Analysis—Leverage Analysis

6. CONCLUSION

Conclusion
Legal Disclaimer

7. THE FROST and SULLIVAN STORY

The Frost and Sullivan Story
Value Proposition: Future of Your Company and Career
Global Perspective
Industry Convergence
360º Research Perspective
Implementation Excellence
Our Blue Ocean Strategy

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