The Evolving Role of Private Equity in the Food and Beverage Space

Cory Sexson, CEO of Hidden Embers and former Vice President and General Manager of Tropicana’s Emerging Brands and Breakthrough Innovation, comments on two key takeaways for PE firms looking to enter into the food and beverage space in 2024. 

The barriers to entry to build a food and beverage brand are lower than ever

Gone are the days of limited access to consumers through traditional advertising methods. The ubiquity of social media has given rise to a new generation of brands that have immediate access to consumers at a fraction of the cost. Brands like Olipop have reached over $200MM in annual sales using TikTok as a primary method to build brand love. As high-growth brands continue to perform, many retailers are beginning to take more risks on founder-led businesses. However, as these businesses continue to build on their foundations, meaningful access to capital is critical to achieve sustained growth. 
Mr. Sexson forecasts a continued rise in early-stage, high-growth brands tapping into private capital to fund and maintain scale. Firms that can provide flexible capital options that enable operational expansion will win. 

Private equity firms are requiring an extra level of due diligence

During Covid, we witnessed empty grocery shelves due to supply chain disruptions followed by significant price increases. According to the Bureau of Labor Statistics (BLS), the cost of store-bought food increased by 23.5 percent from February 2020 to May 2023. That level of price disruption is significant and many brands did not survive. As we head into 2024, inflationary pressures will likely remain elevated vs. pre-pandemic levels. With a hopeful fall in interest rates in 2024, we are likely to see a rebound in food and beverage M&A transactions. As firms evaluate new deals, an extra level of due diligence needs to be given to price elasticities and supply chain efficiencies. Emerging brands in food and beverage that choose to more closely integrate their operations and supply chain will be in a stronger position to withstand disruptions. 

About Cory Sexson

Granite Creek Executive Council Member Cory Sexson is a seasoned CPG/Food & Beverage Executive with over 15 years of transformative leadership in multinational corporations like PepsiCo & Tyson Foods, and private equity-backed ventures like Tropicana Brands Group. He is the Owner and CEO of Hidden Embers, a strategic consulting firm focused on growth mapping in the CPG space. In his most recent role at Tropicana, he was the Vice President & General Manager of Emerging Brands & Breakthrough Innovation. In 2022, he was recognized by Brand Innovators as a top consumer marketer in the Midwest, as he has consistently demonstrated his prowess in innovation, team leadership, and delivering strong P&L results. He holds an MBA from Northwestern University – Kellogg School of Management and a BA from Hastings College.