Specialty food companies, including food products, foodservice and craft beverage companies, are in high demand by private equity investors. Specialty foods are defined by the Specialty Food Association (SFA) as “foods and beverages that exemplify quality, innovation and/or style in their category. Their specialty nature derives from some or all of the following characteristics: originality, authenticity, ethnic or cultural origin, specific processing, ingredients, limited supply, distinctive use, extraordinary packaging or specific channel of distribution or sale.” Due to impressive growth in specialty foods sales, new products and brands, changes in consumer tastes and other industry factors, private equity groups are targeting investments in specialty food companies.
We interviewed a select group of private equity firms which have made recent investments in food and beverage companies to get their views on the middle market food and beverage market. We also asked them to discuss their investment criteria and operational matters they consider when making an investment.