Consumer deal value decreased from 48% of total deal volume in 2016 to 45% in 2017. In addition to the strong deal activity in the food and beverage subsector, there is increasing investor attention on household and personal care, in particular beauty, as there is more investment into newer high growth start-up type brands. For example, in December 2017 TSG Consumer Partners acquired a minority stake in Huda Beauty, a first ever investment of this size in a beauty blogger.
Retail deal value grew from 28% of total deal value in 2016 to 47% in 2017. Many traditional retailers seek to advance their e-commerce operations and bolster the consumer’s in-store experience via acquisition of companies with those capabilities. They also consider the potential sale or closing of non-performing retail locations in order to focus on fewer, higher-traffic “experiential” locations. Continuing challenges to brick and mortar models and retailer bankruptcies is likely to spur further consolidation in the sector.
Hospitality and Leisure
Hospitality and Leisure deal value declined from 23% of total deal value in 2016 to 8% in 2017. The hospitality and leisure sector is highly fragmented and deals in 2018 will continue to be driven by new competition from innovative disruptors such as Airbnb and millennial consumers’ spending shifts from products to experiences. Additionally, casino and gaming deals will continue in 2018, including transactions in online gambling (as regulations become better understood) and pursuit of a millennial-friendly entertainment environment.