Food and beverage M&A update: Q3 2018

Major U.S. indexes

The third quarter of 2018 (Q3 2018) showed strong performance for the broader U.S. equity market, as the S&P, DJIA and NASDAQ closed up 7.2 percent, 9.0 percent and 7.1 percent, respectively, for the quarter. For the 12 months ending September 28, the S&P, DJIA and NASDAQ closed up 15.7 percent, 18.1 percent and 23.9 percent, respectively.

Food and beverage relative performance

As of September 28, 2018, three of the five food and beverage segments exhibited increases on a trailing 12-month basis. The beverage segment experienced declines due to sustained efforts to transition from high-sugar-content drinks to healthier alternatives, negatively affecting key segment players. The natural/organic segment declined due to the shaky stock performance by the majority of the segment players, such as United Natural Foods, Inc. (NasdaqGS:UNFI), which recently puzzled investors by announcing the acquisition of Supervalu in Q3 2018.

The agribusiness segment performed the best of the five food and beverage segments. A key component of this segment’s success was the impressive stock performance of Archer-Daniels-Midland Company (NYSE:ADM), which progressed on its portfolio management initiatives and cost-savings plan. This segment exhibited stock gains of 22.1 percent, leading the strong performance of the S&P 500 index’s 16.1 percent increase during the observed period.

Source: S&P Capital IQ and Baker Tilly Capital research (October 2018)

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