Food & Agriculture Q4 2022

Industry Trends

Grocery Inflation Expected to Slow in 2023

U.S. Grocery prices increased 12.0% since the beginning of the year through November. Price increases in 2022 resulted from poor weather conditions, diseases, and supply chain bottlenecks from the Ukraine conflict. Grocery prices are expected to remain high in 2023, though the USDA expects price hikes will cool off by at least 3% next year as overall inflation lowers. Overall inflation in November was 7.1%, the lowest level since December 2021. ^{1 2}

Investment in Agriculture Technology to Increase

The Food and Agriculture Organization estimates that a 60% increase in global food production will be needed by 2050 to support population growth. Global agricultural technology spending is expected to triple in revenue by 2050 to facilitate the required growth for the sector. Precision agriculture tools to limit fertilizer waste are expected to be a primary investment focus for the industry in 2023.³

Farming Profits on Track for 50-Year High

Net farming income in the U.S. is forecasted to reach $160.5 billion in 2022 as increased prices have boosted profitability in the industry. The USDA estimates farmers’ earnings have increased by over 14% ($20 Billion) since last year. Price increases were driven in part by tightening supply amid drought and geopolitical unrest. Expect prices to remain above historical levels in 2023 as international supply and export pressures drive prices higher.⁴

Bird Flu Sends Egg Prices to Record Highs

The worst outbreak of Avian Influenza in U.S. history has contributed to egg prices rising more than 86% in 2022, more than any other supermarket food this year. According to the USDA, more than 5% of egg-laying chickens died since January 2022, reducing the population to approximately 308 million. The average U.S. egg prices per dozen were $3.59 in November compared to $1.93 in January.^{5 6}

Largest Transactions Closed

Target
Buyer
Value($mm)

Gavilon Agriculture Investment, Inc.
Viterra Ltd.
$1,125.00
Significant Portion of Meal Preparation business of TreeHouse Foods, Inc.
InvestIndustrial
$950.00
Wilderness Trail Distillery, LLC
Davide Campari-Milano N.V.
$420.00
Business and Assets of Imperial Sugar Company
United States Sugar Corporation
$315.00
Pride Convenience Holdings, LLC
GPM Investments, LLC
$230.00
Wetzel's Pretzels, LLC
MTY Franchising USA, Inc.
$207.00
Denali Ingredients, LLC
Orkla Food Ingredients AS
$200.00
Nestlé's Gateway infant formula plant in Eau Claire, Wisconsin
Perrigo Company plc
$110.00
The Collection at Forsyth
CTO Realty Growth, Inc.
$96.00
Rowe's IGA Supermarket
Massy Stores (USA) LLC
$47.00

Other Financial Buyer Transactions Closed

Target
Buyer
Value($mm)

Sunflower Business of SunOpta Inc.
Pacific Avenue Capital Partners, LLC
$16.00
Dispensary in Ohio
NewLake Capital Partners, Inc.
$1.60
82 Acres of Farmland in Edgar County, Illinois
Farmland Partners Inc.
$1.32
KabaFusion, LLC.
Novo Holdings A/S
n/a
Lipari Foods, LLC
Littlejohn & Co., LLC
n/a

Other Strategic Buyer Transactions Closed

Target
Buyer
Value($mm)

Coastal Holding Company, LLC
TPCO Holding Corp.
$41.65
Kohana Coffee, LLC
Westrock Beverage Solutions, LLC
$39.38
Infusionz, LLC
Bloomios, Inc.
$23.50
All Assets of Production Facility Located in Verona, Virginia
BioSteel Sports Nutrition Inc.
$19.50
This Bar Saves Lives, LLC
GOOD Worldwide Inc.
$5.00
Canopy Monterey Bay, LLC
DEP Nevada Inc.
$3.44
CraftedPlants NJ, Inc.
DEP Nevada Inc.
$1.15
Elev8 Hemp, LLC
Apple Rush Company, Inc.
$0.12

Served as advisor to Beef 'O' Brady's in their solvency opinion

Served as advisor to Ice House America, Inc. in their sale to Ice House America ESOP Trust

Advised Heller Brothers Packing Corp in their valuation for tax reporting

Served as advisor to Pacific Tomato Growers for strategic advisory services

Advised Tropicana on their sale of Juice Bowl Products, Inc. to private investors

Served as advisor to PACA on their recapitalization by a private investment group

Advised Wawa ESOP Trust in their purchase of additional shares in Wawa, Inc.

Served as advisor to Next-Port, Inc. on their merger with Merchants Market Group

Advised Western Milling in their sale to the Western Milling ESOP Trust

Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

Wiener-Bronner, Danielle. "Inflation may be easing, but grocery prices are still way up." CNN, 13 December 2022.
"Food Price Outlook, 2022 and 2023." United States Department of Agriculture, 22 December 2022.
“What will 2023 hold for the agricultural industry?” Morning Ag Clips, 19 December 2022.
Newman, Jesse & Bunge, Jacob. "High Commodity Prices Feed a Boom in the U.S. Farm Belt." The Wall Street Journal, 21 December 2022.
Kang, Jaewon & Thomas, Patrick. "Egg Prices Surge to Records as Bird Flu Hits Poultry Flocks." The Wall Street Journal, 22 December 2022.
"Average Price: Eggs, Grade A, Large (Cost per Dozen) in U.S. City Average, Monthly." Federal Reserve Economic Data, 13 December 2022.

Food & Agriculture Q4 2022

Industry Trends

Grocery Inflation Expected to Slow in 2023

Investment in Agriculture Technology to Increase

Farming Profits on Track for 50-Year High

Bird Flu Sends Egg Prices to Record Highs

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

PCE Transactions

Contacts

Michael Poole

David Jasmund

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Food & Agriculture Q4 2022

Industry Trends

Grocery Inflation Expected to Slow in 2023

Investment in Agriculture Technology to Increase

Farming Profits on Track for 50-Year High

Bird Flu Sends Egg Prices to Record Highs

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

PCE Transactions

Contacts

Michael Poole

David Jasmund

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