The beverage manufacturing market comprises businesses that produce beverages, including soft drinks, water, juices and spirits. This research excludes breweries and wineries, which will be covered in a different market report. As such, we segmented the European market into: (i) generalists, (ii) soft drinks and water, (iii) juices and (iv) spirits.

The European market is relatively fragmented, with numerous international players and a long tail of local champions with limited international presence. Although the industry is characterised by high entry barriers (e.g. CAPEX and scale requirements), we have recently witnessed the emergence of innovative “start-up like” setups focusing on novel products such as low/no-alcohol and functional drinks (interview by Gain.pro). These small players will likely get acquired by established players in their quest for innovation and scale.

Sponsor-led interest has been limited, with only ~25% of identified assets being backed by a financial sponsor (September 2022). We see declining EU consumption of soft drinks and juices and limited cash generative capacity due to CAPEX requirements as two of the main drivers deterring investor-led interest. Positive aspects can be found in the market’s non-cyclical nature and potential for buy-and-build plays. Additionally, the market comprises several fast-growing niches, such as no-/low-alcohol and functional beverages. Both listed alcoholic beverages manufacturers and their soft drinks peers trade at ~14.0x EBITDA (February 2022). An expert interviewed by Gain.pro indicated that spirits manufacturers typically are valued at >15x EBITDA in a deal setting.

ESG topics primarily relate to potential environmental and social issues. The industry’s impact on climate change is significant due to energy-intensive manufacturing processes and carbon-heavy logistics due to the voluminous nature of beverages. Players increasingly opt for sustainable packaging to offset some of their CO2 emissions. The safety of incumbents’ products serves as the main potential social issue, with consumers and retailers increasingly demanding greater transparency in terms of the entire value chain and raw materials used (e.g. sweeteners). Additionally, distilleries have a responsibility to promote moderate alcohol consumption.