Welcome to the Spring / Summer 2016 edition of our Food & Beverage newsletter.
Our first article, "5 Keys to a Successful Succession Plan" highlights important aspects of succession planning in the food and beverage industry. Most business owners do not consider planning for an exit strategy until their pending retirement, when the issue becomes urgent and critical. Establishing a sound exit strategy— well in advance—is a vital part of the business planning process, and may substantially reduce uncertainties within the family regarding the future direction of the business.
Another area that needs greater attention by business owners is fraud prevention and detection. Fraud is becoming more sophisticated and is a growing problem in many food and beverage businesses. According to the Association of Certified Fraud Examiners "2014 Global Fraud Study", survey participants estimated that the typical organization loses 5% of revenues each year to fraud. The median loss caused by fraudulent activities was $145,000 and in 22% of the cases, losses of at least $1 million were incurred. Our second article titled "Warning Signs of Employee Fraud" illustrates red flags of employee fraud and practical measures that can be taken in each case to help reduce the incidence of fraud.
In the Road to Success section of our newsletter, we share the story of the growth of Italian Home Bakery. Discover how the Rossetti brothers successfully grew their business and ultimately sold it to a strategic buyer.
The Fast Facts, Trends and Recent News section of our newsletter sets out selected food and beverage market transactions in Canada and the United States. According to the "2016 Food Report" prepared by Blake, Cassels & Graydon LLP, the total value of food, beverage and agribusiness M&A deals in Canada was $4.8 billion for the four quarters ending September 30, 2015. This compares to $19.9 billion in the year earlier, which spiked due to the merger of Tim Hortons and Burger King.
In recent years, there has been tremendous growth in Canada's craft beer market. One of Canada's major beer producers, Labatt Breweries, was active in the fall of 2015 acquiring Toronto-based craft beer maker Mill Street Brewery. Mill Street is Canada's largest producer of certified organic beer. In another 2015 transaction, Labatt also acquired a number of craft beer brands owned by the Mark Anthony Group.
In March 2016, Canadian drug store chain Rexall was acquired by public healthcare company McKesson Corporation in a $3 billion deal. Rexall operates 470 pharmacies and in recent years has built larger stores offering grocery and private label product lines. The acquisition of Rexall was widely anticipated following Loblaw's purchase of Shoppers Drug Mart in 2013.
There were several recent notable U.S. transactions in the grocery sector including Kroger's purchase of Roundy's Supermarkets for USD $835 million and private equity firm, Apollo Global Management's acquisition of grocer The Fresh Market for USD $1.3 billion.
We appreciate the opportunity to share these articles, best practices, market activity and trends in the food and beverage sector. Thank you for your readership and we hope you enjoy the newsletter!
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