RubinBrown Food & Beverage Update 2015

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This publication examines the middle market food and beverage industries by looking at both M&A transaction activity during 2015 as well as the performance of U.S. public companies in the space.

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MID-YEAR UPDATE MIDDLE MARKET FOOD & BEVERAGE SECTOR

A Publication of RubinBrown LLP

published 08/15

Table of Contents

Topic

Page

M&A Activity Overview Overall Transaction Activity………………………………………………………………… 3 Valuation Levels……………………………………………………………………………… 4 Buyer Landscape……………………………………………………………………………… 5 2014-2015 Deal Spotlight…………………………………………………………………… 6 Most Acquisitive in 2014 and through June 2015……………………………………… 8 Middle Market Deals………………………………………………………………………… 9 Economic Factors Long-term Indicators…………………………………………………………………………10 Current Indicators………………………………………………………………………………11 Producer Price Index by Sub-Industry…………………………………………………… 12 Commodity Pricing: Major Livestock, Dairy, and Eggs…………………………………13 Commodity Pricing: Major Field Crops……………………………………………………14 Public Equity Markets Food & Beverage Returns……………………………………………………………………15 Food & Beverage Valuation Multiples……………………………………………………16

Public Company Subsector Constituents…………...………………………………………17

Contact Information…………………………………………………………………………… 20

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: Overall Transaction Activity

Bigger Deals, Albeit at a Slowing Pace A wide range of acquisitions are taking place in the industry, with buyers targeting everything from small, single-product companies to large corporations with a full arsenal of product categories and brand names. On one end of the spectrum, you’ve got the mega-deal, headline grabbers (e.g., H.J. Heinz’s $45 billion merger with Kraft Foods, creating the 5 th largest food and beverage company in the world) – while on the other end, there remains a healthy flow of small-to-midsize deals taking place in the middle market, as well as bigger corporations adding new products and brands on a much smaller scale to capture the ever-evolving consumer tastes (e.g., Hormel Foods’ $0.8 billion acquisition of Applegate Farms, an organic meat producer). These trends, in combination with a low interest rate environment and excess corporate cash stockpiles, have contributed to above-average deal activity in the food and beverage industry over the last several years. While the industry has seen (and should continue to see) heightened transaction activity, the pace has slowed somewhat over the last three quarters, in spite of median deal sizes increasing considerably of late. During the first six months of 2015, the total number of food and beverage transactions continued the downward trend, that began in the 4 th quarter of 2014, with 111 deals closing during the period – down from a total of 142 transactions during the second half of 2014, and 133 transactions during the first half of 2014.

Food & Beverage Transaction Activity

$120.0

100

$100.0

$80.0

$60.0

Millions

$40.0

No. of Transactions

$20.0

$0.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015

Median Enterprise Value

No. of Transactions

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions, regardless of size. Median Enterprise Value is based on transactions where this information was available, regardless of size.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: Valuation Levels

Valuation Multiples Trending Down As depicted in the chart to the right, valuation multiples in the food and beverage industry (on a trailing four-quarter basis) exhibited a steady increase throughout 2014, before pulling back some through the first half of 2015. When comparing the first half of 2015 (12 transactions with multiples disclosed) to the first half of 2014 (9 transactions with multiples disclosed), the median enterprise value to revenue (or “EV/Revenue”) multiple actually increased slightly from 1.3x to 1.4x; however, if you exclude the highest EV/Revenue multiples from both periods, the median EV/Revenue multiple declined from 1.2x during the first half of 2014 to 0.7x during the first half of 2015. Enterprise value to earnings before interest, taxes, depreciation, and amortization (or “EV/EBITDA”) multiples told a similar story – with the median multiple declining from 9.6x during the first half of 2014 to 8.1x during the first half of 2015. It is unclear what led to lower valuation multiples during the first half of 2015, but it is likely due to a combination of factors including a greater supply of companies being marketed for sale, less demand from buyers (i.e., buyer fatigue), and/or a lower appetite for risk for investors (which would translate to less competitive bids and thus lower valuation multiples). While these factors are all at play, a strong rebound during the second half of 2015 (similar to what we saw in 2013 and 2014) could make the apparent downward trend in valuations short-lived.

TTM Food & Beverage Valuation Multiples

16.0x

1.8x

1.6x

14.0x

1.4x

12.0x

1.2x

10.0x

1.0x

8.0x

0.8x

6.0x

EV / EBITDA

EV/ Revenue

0.6x

4.0x

0.4x

2.0x

0.2x

0.0x

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015

TTM Median EV/Revenue

TTM Median EV/EBITDA

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions, regardless of size. Valuation multiples are based on transactions where this information was available, regardless of size.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: Buyer Landscape

Strategic Buyers Dominate the Industry As shown in the chart to the right, strategic buyers continued to dominate the majority of the acquisitions during the first half of 2015, accounting for approximately 82.0% of all transactions. Consolidation within the food and beverage industry will continue to drive strategic acquisitions, especially as favorable market conditions (i.e., low interest rates) and idle cash stockpiles promote deal activity. While many industries experience growth via product or technology innovation, growth in the food and beverage industry comes almost exclusively from adding new offerings. The quickest, and often most efficient, way for industry participants to grow revenue and thus market share is through mergers and acquisitions. Acquisitions of all sizes provide a way for buyers to gain market share and boost growth – large targets can be acquired to capitalize on economies of scale and strong brand recognition, while smaller targets can provide buyers with specialized or niche products. The following page highlights some of the more notable transactions over the last twelve months.

Strategic vs. Financial Deals

4 6

6 13

4 2

56 56

Number of Deals

39 41

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015

Strategic Buyer

Financial Buyer

Anonymous Buyer

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions, regardless of size.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: 2014-2015 Deal Spotlight

Sucocitrico Cutrale Ltda; Banco Safra S.A., Investment Arm / Chiquita Brands International Inc. On August 11, 2014, Sucocitrico Ltda. and Banco Safra S.A., Investment Arm made a non-binding proposal to acquire Chiquita Brands International Inc. for approximately $610 million in cash. Chiquita agreed to the deal in late October 2014 for $742 million. Cutrale and Safra Groups successfully completed their $14.50 per share tender offer for 39.79 million shares of common stock on January 6, 2015. The agreement came after Chiquita shareholders voted to reject a proposed $1.07 billion merger with Irish food company Fyffes PLC that would have created the world’s largest banana seller.

General Mills, Inc. / Annie’s Inc. On September 8, 2014, General Mills entered into a definitive agreement to acquire Annie’s, Inc. for approximately $820 million in cash. Under the terms of the agreement, General Mills will commence a cash tender for $46 per share. The deal is inclusive of the acquisition of options, restricted stock units and performance share units. Annie's will join General Mills' U.S. natural and organic products portfolio. General Mills intends to fund the acquisition

Ajinomoto North America, Inc. / Winsor Quality Food Company, Ltd On September 10, 2014, Ajinomoto North America, Inc. agreed to acquire Windsor Quality Holdings for $800 million. The Ajinomoto Group will retain Windsor’s current management structure after closing. Procedures were completed on November 5, 2014 to acquire full equity interest in the target. As a consolidated subsidiary, Windsor will strengthen its own product portfolio in the North American frozen food business to expand its share in this growing market.

through available credit. The transaction was unanimously

approved by the Boards of Directors of both General Mills and Annie's, Inc.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: 2014-2015 Deal Spotlight

Cott Corporation / DSS Group, Inc. On November 6, 2014 Cott Corporation entered into a definitive merger agreement to acquire DSS Group, Inc from Crestviews Partners II, L.P. and other shareholders for $1.3 billion. The consideration included cash payments and the assumption of $350 million of debt issuance of convertible and non-convertible preferred shares of Cott Corporation. The acquisition of DSS Group allows Cott to enter the water and coffee home delivery, water filtration, and water retail markets.

MOM Brands Company / Post Holdings, Inc. On January 25, 2015, Post Holdings, Inc. entered into a definitive agreement to acquire MOM Brands Company for $1.2 billion in cash and stock. Under the terms of the agreement, at closing Post paid $1.05 billion in cash and issued the current owner of MOM Brands approximately $2.45 million shares of Post Holdings common stock. MOM will give Post a portfolio of cereals aimed not only at budget-conscious consumers, but also those interested in foods free of additives and preservatives.

Hormel Foods Corp. / Applegate Farms, LLC On July 14, 2015, Hormel closed its acquisition of Applegate Farms for $775 million. Applegate is a leading brand in the natural and organic value-added prepared meats category and will operate as a stand-

alone subsidiary in Hormel’s Refrigerated Foods segment.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: Most Acquisitive in 2014 and through June 2015

Encore Consumer Capital BBX Sweet Holdings, LLC

Highlights

 Following a busy 2014, BBX Sweet Holdings completed two more acquisitions in the candy and confectionery space in the first half of 2015.  Encore Consumer Capital closed three transactions during the first half of 2015, acquiring a snacks company, a brewery, and a packaged foods and meats company.  Post Holdings continued its buying spree with the purchase of MOM Brands in early 2015 for a reported value of $1.2 billion. The MOM deal follows the $2.5 billion Michael Foods acquisition in June 2014 as well as its $0.4 billion purchase of a private label pasta producer in January 2014.  The Hain Celestial Group closed another transaction in 2015 with the acquisition of Empire Kosher Poultry, which followed its controlling interest purchase of another poultry producer, Hain Pure Protein Corp., in 2014.  Wilbur-Ellis Company closed a deal in the first half of 2015 with the purchase of The Seedhouse, a full service seed production company. The Seedhouse deal adds to Wilbur- Ellis’ 2014 acquisitions of a protein supplements company and an agriculture services company.

Arthur Dogswell, L.L.C. Armstrong Growers, Inc. Arbor Private Investment Company Amway Corporation Amplify Snack Brands, Inc. American Brewing Company, Inc.… Alltech, Inc. Allied Old English, Inc. All City Candy The Coca-Cola Company (NYSE:KO) Level 5 Beverage Company, Inc. E. & J. Gallo Winery, Inc. Del Monte Pacific Limited (SGX:D03) Archer-Daniels-Midland Company (NYSE:ADM) Alkame Holdings, Inc. (OTCPK:ALKM) Alico Inc. (NasdaqGS:ALCO) AdvancePierre Foods, Inc. AccelPath, Inc. (OTCPK:ACLP) Wilbur-Ellis Company Inc. The Hain Celestial Group, Inc. (NasdaqGS:HAIN) Post Holdings, Inc. (NYSE:POST)

Bailey Nurseries, Inc. Bacardi Limited

2014 2015

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions, regardless of size.

No. of Acquisitions Made per Year

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Food & Beverage Industry Sector: 2015 Mid-Year Update

M&A Activity Overview: Middle Market Deals

Similar Start to 2015 for the Middle Market 1 While the larger deals have dominated much of the industry press of late, the relative familiarity of the food industry is also attractive to many smaller buyers looking to put capital to work after a nearly half-decade lull brought on by the financial crisis. Given the industry’s stability and relatively constant demand, food and beverage assets provide financial buyers (i.e., private equity firms) with less volatile investment opportunities to nurture, grow, and eventually exit. In addition, the industry is still fragmented enough to offer ample acquisition opportunities. Further, the smaller price tags of small-to-middle market food and beverage companies tend to attract a more diverse group of buyers and present a wider array of acquisition options – which also includes larger corporations pursuing new products and brands Consistent with the overall food and beverage transaction activity discussed previously, middle market deal volume during the first half of 2015 (20 transactions with implied enterprise values available) came in lower than the pace set for the same period in 2014 (29), and in line with the first six months of 2013 (19). However, the median enterprise values of the companies acquired during the first half of 2015 of approximately $78 million was nearly double what was seen in 2014 and 2013 ($41 million) during the first six months of each respective year. 1 Middle market is defined as companies with implied enterprise values between $10.0 million and $1.0 billion.

Middle Market Transaction Activity

$800.0

$700.0

Millions

$600.0

$500.0

$400.0

$300.0

No. of Transactions

$200.0

$100.0

$0.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 Median EBITDA Median Enterprise Value # of Transactions Median Revenue

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions with implied enterprise values between $10.0 million and $1.0 billion.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Long-term Economic Indicators

Highlights

Consumer Confidence Index

Producer Price Index

 The U.S. economy has continued its recovery following the Great Recession, with many consumer-based metrics exhibiting marked improvement.  Absent a decline in food prices during the Great Recession, prices for both generally increased over the last decade – before food prices began another descent starting in the 3 rd quarter of 2014 (discussed in more detail to follow).  Overall, the improvement in the U.S. economy, in combination with manageable producer price increases, should bode well for industry participants as well as the end consumer. food and beverage manufacturers have

120

220

Food Manufacturing Beverage Manufacturing

100

200

180

160

Source: US Bureau of Labor Statistics (BLS)

Source: The Conference Board

140

Disposable Personal Income Per Capita

Personal Consumption Expenditures Per Capita on Food

$40,000

$2,700

$38,000

$2,600

$36,000

$34,000

$2,500

$32,000

Source: US Bureau of Economic Analysis (BEA)

$30,000

$2,400

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Current Economic Indicators

Highlights

Consumer Confidence Index

Producer Price Index

 Consumer confidence continued to increase until it peaked in January 2015, decreasing by 8.4 points over the following four months. The Conference Board attributes the recent decline to consumer’s uncertainty in the financial markets prompted by the deteriorating situations in Greece and China.  The recent movement in PPI for food manufacturers was largely attributed to the volatility of cattle and hog prices. The prices for both increased during the first half of 2014, before hog prices declined sharply beginning in the second half of 2014.  PCE per capita on food has exhibited a relatively

120

220

100

200

180

Food Manufacturing Beverage Manufacturing

160

Source: US Bureau of Labor Statistics (BLS)

Source: The Conference Board

140

Disposable Personal Income Per Capita

Personal Consumption Expenditures Per Capita on Food

$2,700

$40,000

$38,000

$2,600

$36,000

$34,000

$2,500

$32,000

steady decline since January 2014, before reversing in March 2015.

Source: US Bureau of Economic Analysis (BEA)

$2,400

$30,000

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Producer Price Index by Sub-Industry

Highlights

Fruit / Vegetable Processing

Meat / Dairy Processing

 As mentioned previously (and illustrated in the charts to the left), composite producer prices for food manufacturers began declining during the 3 rd quarter of 2014.  As depicted in the charts, the decline in overall input prices for food manufacturers has been largely driven by declining input prices for meat and dairy processors – with prices for fruit / vegetable processors, beverage manufacturers, and bakeries exhibiting much less volatile price movements.  Much of the recent decline in input prices (beginning in the 3 rd quarter of 2014) can be attributed to generally declining commodity prices (excluding eggs) – especially hog prices, as discussed on the following page.

Year-over-year % Change in PPI

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

Overall Food Manufacturing

Dairy Manufacturing

Meat Processing

Overall Food Manufacturing

Fruit / Vegetable Processing

Soft Drinks / Breweries

Bakeries

Year-over-year % Change in PPI

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

Overall Food Manufacturing

Bakeries

Overall Food Manufacturing

Soft Drink Manufacturing

Breweries

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Commodity Pricing: Major Livestock, Dairy, and Eggs

Disease and Drought Played a Big Role in Price Swings From July 2010 though October 2014, the price of a dozen eggs rose approximately 60.6%, from $0.71 to $1.14 per dozen, or an annual rate of 11.8%. From October 2014 through June 2015, however, the price of a dozen eggs nearly doubled to $2.01 per dozen, in large part due to the outbreak of avian flu that reduced the number of egg-producing chickens. The price for cattle steadily increased from $0.59/lb in July 2010 to $1.21/lb in August 2014 (+105.1%), before declining 6.6% to $1.13 over the last 10 months. The increase was primarily due to the drought conditions in Texas and California over the period, meaning less grass for grazing. As a result, the price of hay nearly doubled, leading to higher cattle prices. Going forward, the price of beef should remain more stable, or slightly decrease, as Texas has enjoyed above-average rainfall this past year; however, there is no apparent end in sight for the California cattle industry. The price of pork was relatively stable from mid-2010 through mid-2013. Beginning in mid-2013, the outbreak of the PED virus sent the price of pork to period highs, reaching $0.93/lb in July 2014. Since the virus was brought under control, record production of hogs has resulted in a significant decline in the price of pork, from $0.93/lb in July 2014 to $0.60/lb in June 2015. The sharp decline in the price of pork has contributed to much of the decrease in the PPI for meat processors, lowering the overall PPI for food manufacturers.

Price Received – Major Livestock, Dairy, and Eggs

$0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00

Source: USDA National Agricultural Statistics Service

Cattle, Cows ($ / LB)

Chickens, Broilers ($ / LB)

Hogs ($ / LB) Milk ($ / LB)

Eggs ($ / Dozen)

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Commodity Pricing: Major Field Crops

Weather a Major Culprit for Crop Price Volatility Corn prices rose from June 2010 to December 2010 due to unfavorable weather conditions in the U.S., which is the world’s largest producer of corn. Severe drought in China and Argentina also contributed to a corn shortage globally. The low corn stockpile in 2011 and a small crop yield in 2012 helped maintain the elevated corn prices through 2011 and 2012. The subsequent decreases in corn prices in 2013 and 2014 were helped by good weather conditions, “with 74% of the crop rated in good or excellent condition [..], the best in two decades.” (Bloomberg) From July 2010 through 2011, wheat price increases were due to world wheat shortages caused by a severe winter drought in China and record-breaking heat waves and floods in Ukraine, Russia, Canada, and Australia. Since October 2012, the price of wheat has exhibited a steady downward trend, boosted by investors’ pessimistic outlook on demand in combination with the steady climb of the U.S. dollar over the same period, which has made the grain less affordable for overseas buyers.

Price Received – Major Field Crops

$18.0

$16.0

$14.0

$12.0

$10.0

$8.0

$6.0

$4.0

$2.0

Source: USDA National Agricultural Statistics Service

$0.0

Corn, Grain ($ / BU)

Soyeans ($ / BU)

Wheat ($ / BU)

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Public Equity Markets: Food & Beverage Returns

Industry Subsectors Exhibit Lackluster Performance Relative to the S&P 500 Index The S&P 500 exhibited a rocky start in 2015, with the index dropping by 3.1% in January alone. The S&P 500 has since recovered and has remained relatively flat, finishing up 0.2% during the first half of 2015. While the Food & Beverage (F&B) Index has generally been correlated with the S&P 500 over the last year or so, the F&B Index has consistently outperformed the S&P 500. Since January 1, 2014, the F&B Index returned 20.5%, outpacing the S&P 500 with a return of 12.6%. When further stratifying the food and beverage universe into subsectors consisting of companies with LTM revenue less than $1.0 billion (refer to pages 17 – 19 for the subsector constituents), the S&P 500 managed to outperform the smaller food and beverage companies over the last 18 months. The beverage subsector witnessed a sell-off in March 2015, eroding much of the gains accumulated during late 2014 / early 2015. Over the trailing 18-month period, the ingredients subsector generally generated mostly negative returns, while food production companies lagged the S&P 500.

Industry Equity Performance

Equity Performance by Subsector

40.0%

S&P 500 Index Food Production Companies BeverageCompanies Ingredients Companies

S&P 500 Index S&P Food & Beverage Select Industry Index S&P 500 Consumer Staples Sector Index

30.0%

12.6% 20.5% 11.8%

20.0%

12.6% 7.1% 10.4%

10.0%

0.0%

-6.4%

-10.0%

Source: S&P Capital IQ

-20.0%

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Public Equity Markets: Food & Beverage Valuation Multiples

Middle Market Exhibiting Large Swings in Valuation Multiples Valuation multiples (i.e., EV/EBITDA) for the S&P Food & Beverage (F&B) Index expanded approximately 4.0% over the last 18 months, from 10.6x LTM EBITDA on January 1, 2014 to 11.0x by June 30, 2015, and ranged from 10.1x to 11.7x over the period. While multiples for the F&B Index were generally higher than the S&P 500 over the last 18 months, the S&P 500 actually saw slightly higher multiple expansion, rising 4.9% from 9.9x LTM EBITDA on January 1, 2014 to 10.4x by June 30, 2015. Both the S&P 500 and F&B indices traded at lower multiples relative to the Consumer Staples index over the same period. Looking at the industry’s middle market companies, the valuation multiples varied widely by subsector. The ingredients subsector, for example, exhibited a considerable decline in valuation multiples during much of 2014 (from 28.0x on January 1, 2014 to 23.6x on December 31, 2014), before increasing sharply in the first half of 2015 (from 23.6x to 28.5x by June 30, 2015). The beverage subsector, on the other hand, saw multiples contract 18.1% between January 1, 2014 and June 30, 2015, while the food production subsector saw EV/EBITDA multiples expand 8.4% over the same period.

EV/EBITDA (LTM) – Indices

EV/EBITDA (LTM) – Subsectors

5.0x 10.0x 15.0x 20.0x 25.0x 30.0x 35.0x 40.0x

S&P 500 Index Food Production Companies BeverageCompanies Ingredients Companies

S&P 500 Index S&P Food & Beverage Select Industry Index S&P 500 Consumer Staples Sector Index

28.5x

15.3x 14.9x

10.4x 11.0x 12.8x

10.4x

Source: S&P Capital IQ

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Public Company Subsector Constituents: Food Production Companies

$ in Millions

Fundamentals

Ratios

Multiples

Proj. Revenue Growth (NTM)

EBITDA Margin (LTM)

EBITDA Margin (NTM)

EV/ Revenue (LTM)

EV/ EBITDA (LTM)

EV/ Revenue (NTM)

EV/ EBITDA (NTM)

Enterprise Value 2,662.0 $

Market Cap.

Revenue (LTM)

EBITDA (LTM)

Revenue (NTM)

EBITDA (NTM)

Company Name B&G Foods Inc.

1,653.6 $ 2,068.5 2,025.5

867.0 $ 948.4 542.1 881.4 835.8 522.8 868.3 525.7 543.5 316.8 119.0 295.8 131.1 94.5

183.3 $ 145.6 103.4

875.9 $ 985.9 887.6 985.3 522.3 909.1 124.2 575.6 574.8 369.5 134.9 296.5

200.9 $ 156.2

1.0% 21.1% 22.9% 3.1x 4.0% 15.4% 15.8% 2.1x 0.7% 10.6% 14.2% 1.8x 17.9% 6.1% 6.3% 1.1x -0.1% 11.3% 13.6% 1.3x 31.5% -0.1% 15.2% 6.2x 9.5% 4.6% 5.6% 0.8x 5.8% 6.0% 8.4% 0.7x 16.6% 18.9% 18.8% 1.1x 13.4% 6.5% 11.3% 2.7x 0.2% 8.0% 7.6% 1.0x n/a 19.1% n/a 3.5x 4.7% 7.2% n/a 0.8x

14.5x 13.6x 18.3x 17.1x 18.6x 11.9x 11.1x 17.5x 11.0x 41.2x 11.9x 5.6x

3.0x 2.0x 1.8x 1.0x 1.3x 0.8x 0.7x 0.6x 0.9x 2.3x 1.0x

13.3x 12.7x 12.7x 15.2x 10.0x 31.3x 13.2x n/a

J&J Snack Foods Corp. Tootsie Roll Industries Inc. Diamond Foods, Inc. Calavo Growers Inc. Boulder Brands, Inc. John B Sanfilippo & Son Inc.

1,981.5 1,895.9 1,603.2

n/a n/a

987.7 902.7 425.3 578.0 622.6 388.8 376.0 298.6 313.7 198.4

93.6 50.9 59.2 62.7 (0.1) 24.3 32.7 60.0 23.7 (0.1) 7.7

125.9

944.7 704.6 693.2 590.1 424.6 359.5 338.1 316.5 282.5

62.2 70.8 n/a 18.9 32.1 48.1 69.6 15.3 22.7

Freshpet, Inc. Landec Corp.

n/a 4.8x

Farmer Brothers Co.

7.5x 4.9x

Omega Protein Corporation Lifeway Foods Inc. Inventure Foods, Inc. Bridgford Foods Corp. Golden Enterprises Inc. RiceBran Technologies Rocky Mountain Chocolate Factory Inc. Coffee Holding Company, Inc.

20.7x 12.5x

80.4 77.1 55.1 45.4 33.4 21.6

88.0 78.4 46.1 31.9 31.0 21.6

n/a n/a n/a n/a n/a n/a

n/a -0.1% n/a n/a 19.6% n/a n/a 5.3% n/a n/a 0.9% n/a n/a n/a n/a

0.6x 1.9x 0.4x 1.1x 0.3x 1.6x

n/a n/a n/a

41.6

8.1 7.0

9.5x 7.9x

n/a n/a n/a n/a

131.7

42.1

(6.8)

46.5

n/a 10.4% -16.1% n/a

n/a 1.0x

n/a

124.8

1.2

n/a n/a

28.5x

n/a n/a

Tofutti Brands Inc.

13.6

n/a n/a n/a

Count

Minimum Maximum

21.6

13.6 $

(6.8)

46.5 $

15.3 $

-0.1% -16.1% 5.6% 0.3x 31.5% 21.1% 22.9% 6.2x 8.9% 8.0% 12.7% 1.7x 5.8% 6.8% 13.6% 1.1x

5.6x

0.6x 4.8x 1.6x 1.0x

4.9x

2,662.0

2,068.5

948.4 412.9 316.8

183.3

985.9 560.6 574.8

200.9

41.2x 15.9x 13.6x

31.3x 14.0x 12.7x

Mean

690.0 359.5

586.1 376.0

47.6 28.5

74.8 62.2

Median

Source: S&P Capital IQ Includes Food Production Companies with LTM Revenue less than $1.0 billion.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Public Company Subsector Constituents: Beverage Companies

$ in Millions

Fundamentals

Ratios

Multiples

Proj. Revenue Growth (NTM)

EBITDA Margin (LTM)

EBITDA Margin (NTM)

EV/ Revenue (LTM)

EV/ EBITDA (LTM)

EV/ Revenue (NTM)

EV/ EBITDA (NTM)

Enterprise Value 2,973.6 $

Market Cap.

Revenue (LTM)

EBITDA (LTM)

Revenue (NTM)

EBITDA (NTM)

Company Name Boston Beer Co. Inc.

3,095.2 $ 1,042.9

918.7 $ 645.8 314.8 197.9 112.0 50.7

195.3 $

1,052.5 $

220.2 $

14.6% 21.3% 20.9% n/a 13.2% n/a n/a 7.9% n/a 27.7% -0.3% 2.5% 7.5% 6.6% n/a 7.9% 8.5% 13.7% n/a 25.6% n/a n/a 6.1% n/a 10.1% -3.9% -1.0% 7.5% -3.9% -1.0% 27.7% 25.6% 20.9% 14.3% 8.7% 9.0% 12.3% 7.2% 8.1% 6 10 4

3.2x 1.5x 1.0x 4.6x 1.2x 1.5x 2.4x 0.5x 1.1x

15.2x 11.6x 12.1x 17.8x 17.5x

2.8x

13.5x

National Beverage Corp. MGP Ingredients Inc. Craft Brew Alliance, Inc. Primo Water Corporation Willamette Valley Vineyards Inc. Crystal Rock Holdings, Inc. Castle Brands Inc. REEDS, Inc.

995.6 301.1 233.5 230.8 166.6

85.6 24.8 (0.2) 13.0

n/a n/a n/a n/a

297.3 219.3 211.6 142.4

64.8

1.6

n/a 3.6x 145.9x

212.7 120.8

n/a 16.5

1.1x 1.4x 1.7x

n/a

9.5 0.7 4.1 4.6

10.1x

89.4 39.2 36.0 27.7

81.5 34.0 16.0

45.1 16.1 74.6 24.7

53.2

n/a 17.8% 1.5% n/a

2.0x 130.0x

n/a

n/a n/a n/a n/a

9.5x 7.9x

n/a n/a n/a n/a

Truett-Hurst, Inc.

9.1

(1.0)

27.2

(0.3)

n/a 1.0x

n/a

Count

Minimum Maximum

27.7

9.1

16.1 $

(1.0)

27.2 $

(0.3)

0.5x

7.9x

1.0x

10.1x

2,973.6

3,095.2

918.7 240.0

195.3

1,052.5

220.2

4.6x 130.0x

3.6x 145.9x

Mean

509.3 198.7

514.9 177.0

33.7

255.2

59.5

1.9x 1.5x

27.7x 13.7x

1.9x 1.5x

56.5x 13.5x

Median

93.3

7.1

92.8

9.1

Source: S&P Capital IQ Includes Beverage Companies with LTM Revenue less than $1.0 billion.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Public Company Subsector Constituents: Ingredients Companies

$ in Millions

Fundamentals

Ratios

Multiples

Proj. Revenue Growth (NTM)

EBITDA Margin (LTM)

EBITDA Margin (NTM)

EV/ Revenue (LTM)

EV/ EBITDA (LTM)

EV/ Revenue (NTM)

EV/ EBITDA (NTM)

Enterprise Value 610.5 $

Market Cap.

Revenue (LTM)

EBITDA (LTM)

Revenue (NTM)

EBITDA (NTM)

Company Name

Alico Inc.

375.5 $

104.3 $ 109.1

19.8 $ 14.7 (14.2)

n/a n/a

n/a 18.9% n/a

5.9x

30.9x 28.2x

n/a n/a

Limoneira Company Arcadia Biosciences, Inc. S&W Seed Company

416.1 363.9 106.5

314.0 277.6

102.8

15.5

-5.7% 13.5% 15.1% 3.8x 90.0% -221.9% -98.4% 56.7x 27.0% 7.0% 6.3% 1.5x -5.7% -221.9% -98.4% 1.5x 90.0% 18.9% 15.1% 56.7x 37.1% -45.6% -25.7% 17.0x 27.0% 10.3% 6.3% 4.8x 3 4 3 4

4.0x

26.8x

6.4

12.2 91.5

(12.0)

n/a 29.8x

n/a

65.2

72.0

5.1

5.8

21.1x

1.2x

18.4x

Count

Minimum Maximum

106.5 $

65.2

6.4 $ (14.2) $

12.2 $

(12.0) $

21.1x 30.9x 26.7x 28.2x

1.2x

18.4x 26.8x 22.6x 22.6x

610.5 374.3 390.0

375.5 258.1 295.8

109.1

19.8

102.8

15.5

29.8x 11.7x

Mean

73.0 88.2

6.3 9.9

68.8 91.5

3.1 5.8

Median

4.0x

Source: S&P Capital IQ Includes Agricultural Products Companies with LTM Revenue less than $1.0 billion.

S&P Capital IQ Screen Criteria M&A Transactions • Industries: Food Products and Beverages • Geographic Location: United States of America • M&A Closed Date: 1/1/2013 – 6/30/2015 Public Companies • Industries: Food Products and Beverages • Geographic Location: United States of America • Exchanges: Major US Exchanges • Total Revenue (LTM): Less than $1.0 billion

Contributors • Tim Farquhar, CFA, CPA – Partner Valuation and Mergers & Acquisition Services Groups • Ryan Meesey, CFA – Manager Valuation and Business Advisory Services Groups • Leslie Harrison – Analyst Valuation and Business Advisory Services Groups

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Contact Information

Tim Farquhar, CFA, CPA Partner Valuation Services Group St. Louis 314.290.3281 tim.farquhar@rubinbrown.com Ben Barnes, CPA, CGMA Partner-in-Charge Mergers & Acquisitions Services Group St. Louis 314.678.3531 ben.barnes@rubinbrown.com Jim Mather, CPA, CGMA Partner-in-Charge Manufacturing & Distribution Services Group St. Louis 314.290.3470 jim.mather@rubinbrown.com

Jeff Sackman, CPA, CGMA Partner Private Equity Services Group St. Louis 314.290.3406 jeff.sackman@rubinbrown.com Rick Feldt, CPA, CGMA Partner Business Advisory Services Group St. Louis 314.290.3220 rick.feldt@rubinbrown.com Dale Lash, CFA Partner Valuation Services Group Denver 303.952.1261 dale.lash@rubinbrown.com

Sunti (Sunny) Wathanacharoen Partner Business Advisory Services Group Kansas City 913.499.4462 sunti.wathanacharoen@rubinbrown.com Ryan Meesey, CFA Manager Valuation Services Group St. Louis 314.290.3454 ryan.meesey@rubinbrown.com Leslie Harrison Analyst Valuation Services Group St. Louis 314.678.3617 leslie.harrison@rubinbrown.com

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Food & Beverage Industry Sector: 2015 Mid-Year Update

Feedback

We would love to hear from you As this publication continues to evolve (currently in its 3 rd edition), we are always looking for ways to improve our content and more importantly, enhance the value for our readers. As such, if there is anything you’d like to see (e.g., more food & beverage sub-industries, or expanded coverage on certain trends) in our future publications, please let us know. Please email your suggestions to ryan.meesey@rubinbrown.com.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

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