The Silverwood Partners consumer products team recently attended the Natural Products Expo West show in Anaheim. Silverwood Partners has released an Analysis and Deal Review of the natural products industry, which can be downloaded by clicking the image. The natural products industry continues to grow at rates far exceeding those of the conventional consumer market, creating strong interest and action from both investors and strategic acquirers.

Click here to access the presentation.

Highlights of the Silverwood Industry Analysis Include:

• Natural products industry and segment growth data
• Capital markets review for 2012 year-to-date
• Industry data and identification of high-growth areas
• Reasons for the variation in company valuations

Financing and M&A transaction highlights and data

On June 6, Silverwood Partners’ Managing Director Michael Burgmaier presented at Bevnet Live in NYC. The presentation reviewed what strategic acquirers of beverage companies look for with innovation and some common themes that came up. Michael will also have an article in Beverage Spectrum, providing further detail. For the presentation, Michael spoke with business development leaders at Coca-Cola’s Venturing & Emerging Brands group, PepsiCo, Nestle Waters, Tata, Dr Pepper Snapple Group, The Hershey Company, ITO EN and National Beverage Co.

Click here to access the presentation.

Questions asked to the strategics included, among others:

• - How important is innovation when doing a deal?
• - How do you value innovation?
• - What innovations do you look for?
• - Can innovation make a deal close more quickly?
• - What do you consider new and innovative now?
• - What innovation will you buy rather than build?
• - What’s the most important component of innovation?
• - Do you think innovation is getting more complex?

Four common themes from the strategics included:

1. Risk. Acquirers and large strategics are conservative and do not like to take risks – they must be mitigated for the acquirer – entrepreneurs can and should take risks, but they must be minimized for the buyer (less risk will also translate to a better deal and a faster deal).

2. Fit: The right deal happens when strategics have already identified they want to play in the space in which the target competes. Right place, right time, right product, right team, right cultural fit…it all matters.

3. Brand. Do not think that the innovation (if not a brand innovation) overshadows brand. The opposite may be the case. Create a brand that has permission to travel in new categories and products – show the innovation path for that brand – have vision.

4. Market timing. Strategics are willing to test brands in emerging categories more and more – but the “emerging” category must be close to where the consumer is now – the inflection point must not be more than one-to-two years away from where the consumer is today.

For more information, email Michael Burgmaier at mburgmaier -at- silverwoodpartners.com.

ConAgra Foods , Inc. (NYSE:CAG) made a $4.9 billion offer to acquire Ralcorp Holdings, Inc. (NYSE: RAH) on May 4, 2011. As ConAgra stated in a press release about the offer: Ralcorp is a successful manufacturer of both private label and branded consumer foods. The company, which owns the Post cereal brand, is also a leader in a number of private label categories, including cereal, pasta, crackers, jellies/jams, syrups, frozen waffles and other products. Every paragraph of the release focuses on private label (PL). It is here to stay and CAG knows it. Over the past decade or so, the quality of PL consumer products has grown immensely, helped in part through the growth of retailers like Trader Joe’s and ALDI. They have helped nurture many smaller companies in the PL space and demonstrated to consumers that there does not need to be a taste or efficacy compromise with PL. And of course, the savings are real (a recent study by the Private Label Manufacturers Association last month showed that consumers on average can save 33% off their grocery bills by buying all private-label products). With the Great Recession, use of PL has only grown. According to Nielsen data, private-label brands accounted for 17.4% of the total U.S. dollar share of food products in 2010, up from 15.2% in 2006. And it seems as if it is now here to stay for the long term (really, it’s the US catching up to Europe, where PL is more highly developed). A March study by Rabobank concluded that PL foods are set to double their global market share to 50 percent by 2025.

Earlier this year, Silverwood Partners advised a private label leader, On a Roll Sales, Inc, in the company's sale to Greencore Group PLC.

With the natural products industry arriving in Baltimore for Expo East, we at Silverwood would like to share our insights into the trends that are shaping the industry. Below is a link to our latest strategic industry analysis, a culmination of our views on the important topics that are forming industry trends, the state of the financial markets, and there impact on industry leaders, participants, and observers.

As always, Silverwood will have a full team available at Expo East, and we would welcome the chance to meet with you during the show to elaborate on the topics raised in our latest analysis, as well as to discuss your business and strategic objectives.

To schedule a meeting at Expo East, please contact :