Shifting consumer behaviours, category innovation and strategic repositioning are creating new growth opportunities across the European beverage market.
Those themes were at the centre of Investec’s and OC&C’s recent beverage sector conference in Haarlem, the Netherlands, where 40 senior leaders from alcoholic and non-alcoholic beverage companies gathered alongside a select group of private equity investors with portfolio exposure to the sector.
Hosted at brewery Jopenkerk, the event brought together macroeconomic, strategic and operational perspectives to examine where value creation is emerging in an increasingly competitive market.
Resilient demand, evolving behaviours
While the broader economic backdrop remains mixed, beverages continue to demonstrate resilience as a consumer category. Repeat purchasing habits, frequent consumption occasions and strong brand loyalty have historically supported demand through periods of pressure.
Philip Shaw outlined how inflation, energy costs and geopolitical uncertainty continue to shape household budgets and corporate planning. Even so, beverage demand has remained comparatively durable. For operators across the value chain, resilience alone is no longer enough. Agility in pricing, portfolio management and route-to-market execution is becoming increasingly important.
Growth is becoming more selective
Headline market growth across Europe has been modest in recent years, but performance beneath the surface is diverging sharply.
Dan Zubaida highlighted that some of the strongest momentum is now concentrated in categories aligned with changing consumer preferences: functional drinks, hydration, low- and no-alcohol alternatives, convenience-led formats and premium propositions with clear brand identities.
At the same time, more traditional segments face slower growth and greater competitive intensity. The result is a more polarised market, where targeted positioning matters more than broad category exposure.
For management teams and investors alike, the opportunity increasingly lies in identifying specific pockets of structural growth rather than relying on the market to rise uniformly.
Brand strength still drives outperformance
As innovation accelerates and shelf space becomes more contested, brand clarity is becoming a more important source of advantage.
Examples discussed during the event showed that outperforming brands often combine a clear consumer proposition with disciplined execution: strong flavour credentials, wellness relevance, effective new product development, compelling marketing and smart channel strategy.
In categories where barriers to entry are lower and challenger brands can scale quickly, sustained success depends not simply on launching new products, but on building brands with repeat purchase potential and retailer relevance.
Moderation is creating new occasions
One of the liveliest discussions focused on changing alcohol consumption habits, particularly among younger consumers.
Moderation trends are reshaping demand patterns, with many consumers seeking balance rather than abstention. That is supporting growth in alcohol-free beer, adult soft drinks, functional beverages and products designed for social occasions without alcohol.
Rather than representing a simple substitution trend, no- and low-alcohol categories may also expand total consumption occasions by creating new use cases across weekday, wellness-led and mixed-group social settings.
For alcohol and soft drinks players alike, the continued blurring of category boundaries is opening new strategic options.
Health trends and the GLP-1 effect
The impact of GLP-1 medications, including popular weight-management treatments, on the drinks market was another lively topic.
Participants noted that in the near term beverage companies are capturing demand through adjacent “companion” categories such as protein-led products, hydration, reduced-sugar offerings and functional wellness beverages aligned with evolving consumer health priorities and preferences.
Attendees discussed whether innovation in beverage-based GLP-1 delivery formats may, over time, create new adjacent growth opportunities. While still an emerging theme and subject to regulatory and commercial developments, the discussion highlighted how external health trends can influence long-term portfolio strategy and product innovation across the sector.
Scale, M&A and geographic expansion remain key levers
Audience polling during the event revealed the priorities currently shaping boardroom agendas. Product innovation was identified as the most critical growth lever by 39% of attendees, followed by geographic expansion at 32% and M&A at 25%.
Those responses reflect a market in which many companies are balancing organic growth initiatives with selective inorganic opportunities. Acquisitions can accelerate entry into faster-growing niches, while international expansion offers access to new consumer pools beyond domestic markets.
With the European drinks market still fragmented across many subsegments, consolidation is likely to remain an important theme.
Execution still separates winners from the rest
Drawing on A.G. Barr’s experience, Euan Sutherland discussed how growth ultimately depends on consistent execution across commercial, operational and innovation priorities.
That includes investing behind core brands, expanding into adjacent categories, improving channel penetration and maintaining the supply chain capacity needed to support growth. In a market where consumer preferences can shift quickly, pace and adaptability are increasingly valuable capabilities. Strategy creates direction, but execution creates value.
Outlook
The European beverage market remains attractive, but growth is becoming more selective. Companies that can align portfolios to changing consumer needs, build distinctive brands and deploy capital with discipline are likely to outperform.
For investors and corporates, the next wave of value creation may come less from market growth alone, and more from backing the categories, capabilities and brands best positioned to capture changing demand.
Event Gallery
We’re excited to welcome Jens Rutten as Partner in our Zurich office.
Jens joins from Oaklins, bringing extensive expertise in successions and corporate divestments, with the majority being cross-border deals. He has an outstanding track record in the Industrials, Food & Beverage and Consumer sectors.
His appointment reinforces Investec’s commitment to strengthening its Swiss mid-market team, combining local presence with our global platform of 300+ M&A professionals worldwide.
We are pleased to present you the latest edition of our transaction and valuation update on the food and beverage sector.
With over 300 professionals and ~150 transactions worldwide in the last two years, we have a very good overview of the transaction market, valuations and relevant buyer interest in the food & beverage sector.
For the second half of 2025, we expect a further increase in transaction activity as well as rising valuations, as market participants have largely adapted to supply chain challenges and inflationary pressures.
We recently appeared on the M&A podcast “CLOSE THE DEAL” (a German language format) to discuss the topic of M&A in the food & beverage industry and key considerations for maximizing valuations in a sales process. Click here to listen
Do you have questions regarding M&A or (growth) financing?
We would be happy to schedule a call to discuss further.
After a challenging period, the Benelux Digital Consumer M&A market – with a focus on e-commerce and marketplaces – is improving again.
Over 20 private equity firms are already active in the Benelux market only, and with many holdings maturing, deal activity is expected to rise. At Investec, we’ve mapped the key players, KPIs, technology and valuation trends in a dedicated insight report.
As can be seen on the chart below, Marketplaces consistently trade at higher EBITDA multiples than traditional E-commerce players, with a peak in early 2021 driven primarily by the COVID-19 pandemic. However, since mid-2021, as economies reopened and consumer behavior normalized, both sectors have seen more stable multiples, with marketplaces typically maintaining a premium over traditional E-commerce due to scalability and an asset-light model.
There are numerous private equity platforms in the market looking for acquisitions and further scaling. Below you will find an overview of a selection of the Benelux private equity platforms active in the Digital Consumer market.
Curious to learn more? Get in touch with Maurits Odekerken for the full insight.
Helen Lucas | UK Jonathan Harvey | UK
Our 14th report comes at a crucial time for the industry, as GPs get back to the business of selling portfolio companies and raising new funds.
2024 was a tough year for private equity and the overriding view from our survey of 253 general partners (GPs)* is that 2025 will be different.
Our findings show an industry which, despite challenges over the past few years, is resilient, adaptable, and anticipating a more favourable period ahead.
Four in five GPs expect deal valuations to increase in 2025 as interest rates come down, helping to clear exit bottlenecks and accelerate investors’ distributions. The outlook for returns is also brighter, with improvements registered across geographies and fund sizes. Close to two thirds (65%) of investors see returns improving in 2025, up from only 24% in 2024.
Dealmakers still must navigate ongoing geopolitical and macroeconomic risk, as trade tariff tit-for-tats continue and conflicts in the Middle East and Ukraine remain unresolved. It is a complex market, but the backdrop for M&A is better than it was a year ago.
In 2024, 21% of respondents expected a down raise for their next fund: the 2025 research shows only 3% anticipating the same scenario.
There is also a large cohort of super-optimists – 38% expect their next raise will be a blockbuster increase of 25% or more over their previous fund.
Limited partners (LPs), however, are expected to remain highly selective in 2025. In 2024, according to PEI figures1, the ten largest funds to close in 2024 all secured more than $10 billion and absorbed more than a fifth of total fundraising allocations while a Coller Capital LP survey2 showed that the top focus for 98% of investors is that a new manager has a team with a strong track record.
Our survey findings tie in with this theme – close to a third of respondents (31%) expect an increasing number of GPs to move into wind-down. However, this does not mean the opportunity for new managers has passed; just 26% agreed that “very few new GPs will be launched”.
Although fundraising conditions are improving, LPs continue to consolidate GP relationships, focusing on managers of scale and mid-market specialists with differentiated investment strategies and exceptional returns.
The survey shows GPs are planning to up their commitment from the typical 2% to 3% to strengthen alignment with investors and boost fundraising momentum.
One in five GPs expect to commit 4-5% of their next fundraise.
One in ten expect their next commitment to be 6-10%.
8% expect to commit more than 10% in 2025.
Managers are taking a blended approach to financing these higher commitments including existing resources, reinvesting carried interest and external debt, which is gaining favour. Most are using two options to fulfil their obligations, with 13% expecting to use three options.
Where are commitments highest?
The findings reveal interesting regional variations when it comes to GP commitments.
UK managers are more likely to be asked for a big commitment: 22% were asked for more than 5% versus just 8% of managers in Europe. Managers in France, meanwhile, seem to be asked for a particularly slim commitment, with more than half expecting to be asked for less than 2%.
Overall, a significant minority of investors expect to up commitments in the future.
Debt markets are open for business with a substantial number of new lenders entering the market to provide GPs with enhanced financing optionality.
More than half (54%) of GPs say they will have new lenders to work with in 2024. This marks a shift from last year’s findings, when 56% of respondents saw a contraction in new lender activity. The majority of GPs who took part in our survey are working with credit funds and the top three reasons cited for working with a private credit included higher leverage levels and innovative financing solutions.
UK managers are hopeful that increasing competition will result in looser terms, with 54% of UK managers reporting either private debt narrowing margins or terms loosening generally. Outside of the UK, however, GPs are more cautious, with only 35% forecasting looser terms.
Despite these expectations, lenders are remaining disciplined. Well over a third of respondents (43%) report that leverage multiples have lowered from a year ago.
Competition is fierce for trophy assets in certain sectors, and these companies will be able to negotiate more favourable terms, but lenders will be highly selective.
Interest rates may have come down, but the risk-free rate remains elevated when compared with recent years, making additional leverage costly to service. Debt is available (European leveraged loan issuance climbed by more than 90% in 20243 and private debt managers have $126.4 billion of dry powder available to invest4), but the survey findings on leverage multiples show that capital structures remain relatively conservative.
Covenant flexibility
Even as interest rates have come down, GPs have still had to work hard to protect portfolio companies.
Some 87% of respondents say they have gone to lenders to request covenant flexibility for one or more portfolio companies. Broad economic issues (cited by 41%) and business underperformance (cited by 34%) are the main reasons for requesting flexibility.
Interestingly, close to a third of respondents (30%) have requested covenant flexibility to fund growth as GPs hold some portfolio companies for prolonged periods.
“We will always be open to a conversation about covenant flexibility. If a business is growing and wants to re-lever, or the sponsor wants to hold an asset for longer, loosening covenants can have a positive impact on supporting growth.” – Helen Lucas, Co-Head of UK Origination, Direct Lending, Investec
Lending landscape
As more lenders entered the private equity space, there has also been increased use of some newer debt products. Innovation continues; survey respondents expect ESG-linked lending, fund-level finance and asset-based lending to increase market share.
Around half of the respondents expect credit funds to do more business with their firm during the year, but banks remain highly competitive; almost a quarter (22%) say they expect to place more lending with banks in the next 12 months. Hybrid capital is gaining particular traction for smaller managers with assets of $250m or less, with a quarter of these saying this type of lender will gain the most market share at their firm in the next year.
NAV lending
Net asset value (NAV) finance has proven particularly popular with managers in an environment where liquidity has been constrained.
Four in five GPs said they used NAV finance in the last year, with distributions the most-cited use case (37%).
Uptake of NAV finance looks set to continue accelerating, with two thirds (65%) of respondents who had not used NAV finance previously saying they were interested in taking up NAV loans.
Deployment and operations
Less than half of GPs (49%) have deployed most of their capital in new deals during the past 12 months, with just over a fifth (21%) focusing efforts on smaller bolt-on acquisitions to support buy-and-build portfolios – down from 28% in our previous survey. An increase in the number of GPs deploying most of their capital in equity cures – up to 17% from 11% last year – further highlights the tough backdrop for managers during the past year.
The improving outlook means that the next 12 months should be more favourable for deployment. Somewhat surprisingly, the public-to-private outlook is mixed and not much changed from last year despite low stock market valuations, most notably in the UK5. Some 50% say they expect to look at more public-to-privates but 40% expect to look at less.
Big-ticket take-private deals during 20246 have ensured that P2P remains on the managers’ radars and may result in activity in this area.
“Private equity managers are ready to deploy, but it is taking much longer to originate deals. GPs will be forming relationships with management teams up to three years ahead of a formal process. During the last two years we have seen a number of processes fall over, and it does take time to rebuild before businesses come back to market.” – Kate Gribbon, Head of Financial Sponsor Coverage & Origination, Investec
One of the single biggest challenges for private equity managers through the rising interest-rate cycle has been to sell portfolio assets at valuations that deliver adequate returns.
In tepid IPO and M&A markets, GPs often opted to sit tight rather than offload assets at lower-than-hoped-for multiples. Hold periods remain above long-term averages, with the backlog of private equity-backed companies sitting at record levels7.
This has had repercussions on fundraising – slowing distributions to LPs have limited their ability to allocate to new funds.
Managers looking at exits will explore all options to crystallise returns, with the survey findings ranking expectations for different exit routes in a narrow band.
More than half of GPs (54%) think trade sales will be the busiest exit route during the next 24 months. But after a long barren spell the IPO is back in the frame again, with the typical manager optimistic that two portfolio companies could be an IPO candidate over the next two years.
The squeeze on other exit routes meant there has been greater use of continuation vehicles which are here to stay as a mainstream exit path: more than 40% of GPs say a continuation fund will be an exit option they are more likely to use in the next 12 months.
The UK IPO question
Private equity-backed portfolio company IPOs haven’t always been crowd-pleasers, particularly on UK markets8, but the survey findings show managers warming to the UK stock market – albeit with some reservations.
Some 65% of UK managers who expect to list a portfolio company in the next two years consider the UK a potential venue – although they will also look at other venues such as Amsterdam or New York.
The size of the manager and portfolio is a factor in stock market selection. Larger managers with bigger assets to float think a UK IPO is less attractive, indicating that larger IPOs are considered more challenging for UK public markets.
According to Pitchbook figures, GP-to-GP M&A reached record highs at the end of 20249 and the survey points to a long runway of further deals, with 79% of respondents expecting some kind of change to their firm’s structure.
In addition to GP consolidation deals, new teams are forming in spinouts and minority stake investment is proliferating.
Indeed, 38% of GPs say some partners could leave their firm via a spinout in the next 24 months. This is reflective of a tougher fundraising environment, particularly for smaller managers with assets under management (AUM) below $1bn, where spinouts are more likely as junior partners explore other options when fundraisings stall.
Getting ready to capture growth
Historically, the main driver for taking on third-party capital or merging with another firm was likely to unlock liquidity and facilitate succession. While this reason was selected by 22% of respondents, the majority see a transaction as a tool to provide capital for growth or expand service lines and scale.
Ideally, twice as many managers say they would like to be the acquirer rather than target in a consolidation scenario.
What is also worth noting is that when it came to continuation vehicles, our survey showed that 40% of GPs think there will be more single-asset continuation vehicles over the next 24 months and over 25% thought they are likely to become more specialised. Single-asset continuation vehicles allow GPs to remain invested in a prized portfolio company and could potentially lead to a spin-out by a manager.
This report is based on 253 responses to an online survey conducted between 7 January and 22 January 2025. Respondents were sourced from a prequalified panel and no PE firm was represented more than once.
178 were based in the UK, 75 in Europe including 22 in Germany, 14 in Spain and 11 in France. Some 34% of respondents were investment directors, other eligible job titles were CFO, VP of finance, director of finance, principal and manager of finance/investments.
INCREASING HEALTH AWARENESS AND CHANGING LIFESTYLES HAVE LED TO A SURGE IN DEMAND FOR DIETARY SUPPLEMENTS. THIS DEMAND HAS FURTHER INCREASED DURING THE COVID-19 PANDEMIC, WITH A STRONG GROWTH FORECAST FOR THE MARKET VOLUME IN EUROPE IN THE NEXT TEN YEARS.
In recent years, notable transactions and innovations have characterized the supplement market in Germany. The number of start-ups in the sector has been at a high level, as they were able to quickly gain significant attention and market share through targeted marketing, for example through social media.
For Germany, we identified more than 400 relevant companies in the sector. From these, we have summarized what we consider to be the 40 most attractive in a ranking. To accomplish this task, a comprehensive review of all 400 companies was conducted, assessing them based on five key factors deemed relevant to our evaluation criteria: revenue, revenue growth, employee growth, web traffic, and diversity of distribution channels served. In all areas, a higher number correlated with a more favorable ranking.
In order to be included in our ranking, companies had to possess a unique characteristic that sets them apart from their peers. This could be anything from an extraordinary story or an emerging trend, to a unique market approach or growth pattern. Our Fabulous 40 list consists only of companies that have this unique quality. This means that even smaller companies have the potential to make it to the top of our Fab40 list. It is worth noting that all companies on our list are considered to be among the top 10% of companies in their sector.
Investec has acquired a strong expertise in the Healthcare sector by accompanying large groups, entrepreneurs, and mid-caps in their sales processes, acquisitions, and financings. Together with Investec as a significant majority shareholder, Investec has a global reaching network of M&A professionals.
Interview
As we enter 2024, the M&A landscape shows signs of recovery, albeit cautiously.
In the episode of the February 20, 2024 of No Ordinary Wednesday, Jeremy Maggs in conversation with Investec experts Jürgen Schwarz, Marleen Vermeer, and Kilian de Gourcuff, Investec’s Head of Cross-Border Finance and International Advisory Charles Barlow, on what key sectors, trends and risks to keep an eye on in 2024.
Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.
Extensive track record combined with deep industry knowledge
Interview with Jürgen Schwarz, Managing Partner of Investec about the role aggregators play in the e-commerce market:
How is the client’s situation?
How is the e-commerce market structured?
How can we operate the sales process?
Giving an example
This video answers these questions and give you an idea and overview in a few minutes.
The dynamic and rapidly changing consumer goods sector is facing major challenges due to advancing digitalisation and the emergence of new disruptive business models. We drill down into sub-sectors that show strong growth potential and/or an increase in consolidation.
In the context of this fiercer competition and increasing consolidation activity, we support you in identifying and realising entrepreneurial opportunities.
The majority of our transactions are cross-border – within Europe and beyond – and are carried out by an international team of experienced advisors with extensive sector and transaction expertise.
Financial restructuring for Shareholders & Lenders
Helping clients to navigate uncertainties while putting their businesses back on track
Interview with Jürgen Schwarz, Managing Partner of Investec about Restructuring with the help of a M&A process:
How did the market change in recent years?
What is your approach?
Giving an example
This video answers these questions and give you an idea and overview in a few minutes.
Sale from insolvency
Due to our pan-European presence and track record we are well placed to advise on international and cross-border restructurings.
Our international sector teams implement more than 50 transactions p.a. and in many sectors they know the active buyers, the acquisition criteria, the behaviour of individual decision makers. We also have an up-to-date overview of the market prices paid, which vary considerably over time and depending on the positioning in the sector.
Investec has direct access to numerous international equity and debt capital providers and has carried out numerous restructurings ranging from approximately 10 million Euros to several billion Euros.
Financing and Market trends | 2023
Why the German industry has a great need for investment.
German industry is facing significant challenges, including the effects of digitalization, the shift from analogue to digital business models, the need for environmental protection measures and sustainable production processes, as well as demographic change, which is leading to a shortage of skilled workers and an ageing workforce. In order to successfully master these processes, significantly higher investment efforts are required than in the past.
Digitalization and Industry 4.0: At present, Germany ranks at best in the middle of the EU in terms of the use of digital technologies in the economy1. German industry must invest in digital technologies and automation to remain competitive. However, in order to catch up with comparable countries, IT and digitalization investments in Germany would have to double or triple from EUR 49 billion to EUR 100 to 150 billion annually. In the SME sector alone, digitalization expenditure would have to increase from EUR 18 billion in 2019 to EUR 35 to 50 billion per year.
Sustainability and environmental protection: Companies are increasingly focusing on environmentally friendly technologies and processes in order to achieve sustainability goals and reduce their environmental impact. These investments not only serve to protect the environment, but also contribute to long-term competitiveness. A recent study commissioned by KfW puts the climate protection investments required to achieve the goal of climate neutrality by 2050 at around EUR 5 trillion or around EUR 190 billion per year1. This enormous sum makes it clear that considerably greater efforts will be required to achieve the target than has been the case to date.
Thorsten Gladiator, Managing Partner Investec: As corporate finance advisors, we see the importance of ESG in general and sustainability aspects in particular in almost every transaction, both in M&A situations and in financing mandates.
Equity and debt investors place a strong focus on ESG compliant investments in the interest of their financiers and / or due to investment criteria that are binding for them.
For business sellers as well as CFOs, this has pricing and process consequences:
A clearly defined and documented ESG strategy creates confidence among investors and the company’s other stakeholders
The same applies to the (early) implementation of legal requirements for sustainability reporting (CSRD)
A focus on sustainability aspects provides positive differentiation features compared to competitors and can thus have a value-creating effect
The lack of a corresponding strategy can lead to price discounts in the valuation as well as higher financing costs
In the due diligence phase of a transaction, lack of ESG information leads to prolonged processes, higher management burden and the withdrawal of investors with clearly defined ESG investment criteria
The following article from AIM – Advice in Motion highlights the various aspects for medium-sized companies and shows examples of successful ESG strategies.
Opportunities and challenges of sustainability for smaller and medium-sized enterprises
The sustainability performance of a company today is the decisive factor for its competitiveness tomorrow. In this context, medium-sized companies in Germany in particular are faced with tasks whose extent has not yet been fully recognized in many cases and which involve major challenges in terms of resources, time and expertise.
Even though sustainability is a ubiquitous and much-discussed topic that is omnipresent both in the media and in public debate, it is by no means a new issue. Rather, sustainability has a long and exciting history that spans centuries and has been shaped by various actors and concepts.
Where do the roots of sustainability lie?
As far back as the Middle Ages, the moral ideal of the honorable merchant played a decisive role in promoting sustainable principles. Many a family entrepreneur rightly sees himself or herself in the tradition of the honorable merchant and aligns his or her business conduct with principles such as honesty, responsibility and sustainability.
In the 18th century, the Saxon chief miner Carl von Carlowitz coined the term sustainability in his work “Sylvicultura Oeconomica.” He introduced the idea that forest resources should be managed sustainably by cutting only as much wood as can naturally grow back. What was interesting about Carlowitz’s concept of sustainability was that sustained yield was precisely not antithetical to sustainability. Rather, forestry yield acted as the cornerstone for this oft-cited source of the concept of sustainability. The mining area of the Erzgebirge was simply dependent on the sustainable use of wood for construction, mining and smelting purposes.
Another significant milestone in the development of sustainability was the Brundtland Report, published in 1987 under the title “Our Common Future”. The report defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Here, sustainability clearly went beyond a purely economic consideration. The report emphasized the need to integrate economic, social and environmental aspects to create a sustainable future.
Since then, the understanding of sustainability has evolved to encompass a variety of dimensions. One key concept is ESG (environmental, social, governance) criteria, which encompass environmental, social and governance-related factors. Differentiation of individual sustainable development goals is achieved through the United Nations Sustainable Development Goals (SDGs), which were adopted in 2015. The SDGs include 17 global goals to promote sustainable development at the economic, social and environmental levels by 2030. These goals range from poverty reduction, health, education and gender equality to renewable energy and sustainable cities.
The SDGs are an excellent framework for linking the principle of sustainability with economic, ecological and social development and provide a suitable orientation framework for a company’s sustainability strategy:
SDGs as guidelines for sustainable management
Alignment of products and services with the SDGs
Business activities can contribute directly to achieving the SDGs
Nowadays, at the current edge of development trends around sustainability, so to speak, ESG expression is thus considered a leitmotif and fundamental approach for responsible and sustainable development. It is about combining economic, social and ecological aspects in order to create a world worth living in for present and future generations.
The individual SDGs are suitable targets for integrating ESG into corporate strategies, as they are more concrete and easier to measure using indicators than the more fundamental ESG concept.
Importance of the midmarket
As the backbone of the economy, the SME sector comprises a large number of companies that operate both regionally and internationally. It is of great importance for economic performance and employment in the country. Around 2.5 million companies in Germany belong to the Mittelstand, in the definition of a small and medium-sized enterprise (SME). These range from microenterprises to medium-sized companies with up to 250 employees, which generate around one-third of total sales for Germany and employ more than half of all employees.
Expectations around an ESG expression of the SME business model arise in a wide variety of internal and external stakeholder groups. Typical stakeholders include shareholder families, employees, customers and suppliers, financiers (EC and FC), NGOs and the media, and to an increasing extent regulatory policy.
The reasons for which companies address ESG requirements also vary. The most common motives include:
The assumption of ecological and social-societal responsibility,
Ethical reasons and intrinsic motivation,
Requirements of customers and employees,
Cost reduction and expectation of increasing sales,
Requirements of capital providers,
And last but not least, the increasing regulatory requirements.
The majority of companies are in the early stages of sustainability management.
Pressure to act and status quo around ESG in SMEs
The pressure to develop and implement ESG strategies is immense and relevant stakeholders are demanding this. In addition to opportunities of an ESG orientation such as cost reduction, successful positioning of the company, revenue and profitability advantages, there are clear business risks of a lack of consideration of sustainability requirements up to the withdrawal of the “license to operate” (violation of regulatory requirements, exclusion from supply chains, lack of financing or perspective withdrawal of insurance coverage).
If, against this background, surveys come to the conclusion that, despite pressure to act and explicit expectations of the relevant stakeholders, only around half of the companies in the SME sector have developed and implemented ESG strategies, the question arises as to why.
A ´decisive factor is the lack of time and resources in many SMEs to deal with the challenges and requirements of sustainability. Time is traditionally a scarce commodity, especially in owner-managed companies. Teams and specialists for ESG strategies and sustainability cannot simply be plucked out of the ground: the market for ESG specialists is empty and salary expectations are correspondingly high.
Support from external consultants is the obvious choice, but here, too, capacities are stretched and for many a large consulting firm it is obvious and more lucrative to advise the large DAX companies with entire teams of consultants before they delve into the peculiarities of the business model of a geographically decentralized SME.
AIM – Advice in Motion GmbH
This is where AIM, as an independent sustainability consultancy and partner in the Investec network, can provide effective support. AIM thinks and speaks medium-sized. Their clients include medium-sized companies from a wide range of industries in Germany, France, Portugal, Luxembourg and Switzerland. AIM supports with:
Creation, coordination and implementation of ESG strategies in medium-sized companies,
Preparation for mandatory sustainability reporting (CSRD),
Directive-compliant calculation of the carbon footprint of companies (CCF) and products (PC),
Preparation of climate strategies, derivation of targets and measures from the climate footprint,
Communication around ESG and climate protection: avoidance of reputation risks.
Examples of successful ESG implementation in medium-sized companies:
I. Initial situation: Sustainability requirements for a medium-sized company in the wood industry in Germany with around 1,200 employees. In addition to the intrinsic motivation of the shareholders, a major impetus for action arose from the initiative of the industry association, which demands the implementation of climate protection measures for all member companies. Another impetus for action was for the company, as a supplier in the value chain of a large trading house, to support its ambition (climate protection and other social goals throughout the supply chain). AIM supported the development of a climate strategy, the calculation of the corporate carbon footprint and the compensation of unavoidable emissions in order to achieve climate neutrality.
II. Initial situation: market positioning of a 5-star resort hotel in Provence with its own vineyard. A key impetus for action was to reconcile a luxury resort with sustainability requirements and climate change mitigation measures. AIM developed an ESG strategy for the resort. This was based on a selection of sustainable development goals (SDGs) to which the resort can contribute. Corresponding measures were defined and implemented. At the same time, climate neutrality was achieved for the resort by offsetting unavoidable emissions. (AIM has implemented a comparable project with a resort in Portugal, which has since been nominated for the Sustainability Award of the Portuguese Tourism Association).
III. Initial situation: product positioning for a manufacturer of high-quality competition racing bikes from Switzerland. The company wants to make competitive sports compatible with sustainability and climate protection in particular. In order to provide buyers and users of the competition bike with an assessment of the carbon footprint of the racing bike product, AIM calculated the product-related carbon footprint for the bike, taking into account all phases of the life cycle of the racing bike, from cradle to grave.
IV. Initial situation: A medium-sized holding company with around 1000 employees in Germany will be subject to mandatory sustainability reporting in accordance with CSRD for the first time from the calendar year 2024. The extended reporting affects around 15,000 companies in Germany. The company’s sustainability performance will be considered from two perspectives: the impact of sustainability aspects on the corporate business model and the impact of the company’s activities on the environment and stakeholders. At the same time, the company aims to create a comprehensive ESG strategy that brings together all the actions taken to date to support sustainability goals. AIM has worked with the company to develop an ESG strategy that is aligned and parameterized with metrics to best prepare for upcoming sustainability reporting.
The development of company specific ESG and climate strategies and the requirements associated with the expansion of sustainability reporting pose major challenges for entrepreneurs in the SME sector. We support your company effectively in the sustainable transformation to ensure together with you the future and the competitiveness of your company for you and future generations.
Author: Andreas Kuschmann, Founding Partner AIM – Advice in Motion GmbH.
Unlocking Working Capital potential to fuel operational growth
Amidst the aftermath of the COVID-19 pandemic, geopolitical tensions, and persistent inflation, it is crucial for companies to prioritize efficient working capital management (WCM) in order to navigate near-term uncertainty and foster growth during the economic recovery. We identified four key reasons that make WCM crucial:
1.Economic headwinds are expected to be persistent: Despite the recovery of most advanced economies to pre-pandemic levels of output, growth in 2023 is projected to be sluggish. Recent downward revisions in growth forecasts highlight the challenges that lie ahead. For instance, the GDP growth forecast for the EU has been reduced to around 0.75%, a mere one-fifth of the previous year’s growth1. The IMF has also predicted that Germany will be the second weakest G7 economy next year, following the UK, with an anticipated GDP contraction of 0.11%1. Moreover, recent data reveals that the German economy contracted slightly for two consecutive quarters, by 0.5% in Q4 2022 and 0.3% in Q1 20232.
2. Inflationary pressure remains high until at least 2024: The Russian invasion of Ukraine has led to skyrocketing energy and food prices, resulting in persistent inflationary pressures. Additionally, rising material costs and supply chain challenges pose a threat to inventory levels, leaving businesses susceptible to supply shortages and price fluctuations. Although the IMF predicts a decline in inflation in Germany from 8.7% in 2022 to 6.1% in 2023, a return to the 2% target is not expected until at least 2025. Consequently, some companies have turned to forward buying and speculative upstocking. However, this strategy strains working capital and depletes cash reserves.
3. Interest rate peak has probably been reached: Central banks across the world have continued to tighten monetary policy and roll back quantitative easing to defeat red-hot inflation. In Europe, the ECB has raised its key interest rate by 0.25 percentage points to 3.5% in June, marking the eighth consecutive increase since July 2023. This rate-hiking cycle is the fastest in the ECB‘s history. ECB President Christine Lagarde announced further rate hikes in July, indicating an ongoing trend. According to a survey conducted by Bloomberg, it is projected that the peak will be reached at 4% in September 2023. Consequently, financing and working capital is becoming increasingly expensive.
4.Corporate cash flows are coming under increasing pressure: According to PwC, Days Cash on Hand of companies decreased by 10% in 20214. In 2022, the intensified efforts of central banks worldwide to combat inflation by raising interest rates have significantly impacted corporate cash flows. Mounting challenges stem from factors such as cost inflation, supply chain disruptions, and geopolitical events like the war in Ukraine, which have also influenced lender sentiment and global debt markets. In Europe, institutional loan issuance suffered a decline of 42% so far in 2023 compared to the previous year (as of July)5. As a result, the management of liquidity and working capital has become increasingly important.
Thorsten Gladiator, Managing PartnerInvestec: Supply chain issues and increasing (raw) material prices lead to higher funding requirements in working capital. A variety of working capital financing products allows for tailor-made solutions.
This report focuses solely on the automotive downstream market, i.e. the sale and use phase of a car.
Next to tremendous changes in the automotive downstream market environment, consumer demand for more flexibility in mobility as well as holistic and environmentally sustainable mobility concepts are gaining more importance.
Therefore, market participants need to adapt and rethink their business models in order to strengthen their market position, diversify their revenue streams and create stronger customer relationships.
M&A is a key instrument for both traditional automotive downstream players, to gain (digital) expertise and expand their footprint across the value chain, as well as new market participants, who are trying to gain scale, market share and international footprint quickly by leveraging their digital competencies.
In 2021, the global M&A activity in the Automotive Downstream sector experienced an increase of 15% (by number of deals).
The proportion of cross-border deals has increased from 36% in 2019 to 47% in H1 2022, underlining the trend of seeking international footprint.
Deal activity is strongly driven by strategic buyers, with 65% of global M&A activity in 2021 involving a strategic buyer.
We expect financial investor involvement to increase over the coming years, as younger companies develop towards attractive platforms for consolidation.
Valuations range from <1x Sales for smaller traditional businesses up to ~8.0x Sales for established high-growth digital businesses.
“A high degree of innovation and shifting consumer demand pose a variety of challenges for traditional automotive downstream players while creating chances for disruptive new market entries. The fight for scale and market position has only just begun.”
It was a banner year for beauty deals in 2019, as strategic investors and others looked to bring new brands and innovations in-house. Premium skincare, in particular, attracted a wide range of buyers:
led by the beauty giants, who secured several innovative high-growth brands – eg. acquisitions by Coty (Kylie), Estee Lauder (Have and Be) and Shisiedo (Drunk Elephant);
personal care corporates, attracted by the high margins and growth trends (Colgate-Palmolive acquired Filorga, and Unilever acquired Tatcha and Garancia);
fragrance players, who widened their strategic focus (L’Occitane acquired Elemis);
and financial investors, who also ramped up investments (EQT acquired Nestle Skin Health, Sofina invested in Nuxe).
In 2020, we expect private equity and strategic investor enthusiasm to persist. Popular product categories include skincare brands with proven scientific efficacy, sustainability credentials, and young customer bases. Haircare is also popular.
The beauty giants are seeking high-growth brands that access strategically important consumer demographics, while the personal-care corporates are looking to expand their beauty and skincare portfolios. For example, Unileverhas become a serial acquirer, highlighted by the Tatcha and Garancia deals. (Acquisitions account for the main share of growth within Unilever’s skincare portfolio, which includes Murad, Dermalogica, REN Clean Skincare, Kate Somerville, Living Proof, and Hourglass.) Likewise, Colgate Palmolive is finally engaging in focused acquisitions in skincare to grow its beauty portfolio and develop outside oral care.
Private equity investments are on the rise in beauty and skincare. These savvy financial investors are attracted by the high gross margins, repeat purchase trends, alternative sales channels, and the large international markets that provide additional runways for growth. Private equity was responsible for almost half of the deal activity in the Beauty sector in 2019.
The Swedish private equity firm EQT Partners (a subsidiary of the Abu Dhabi Investment Authority) led a consortium to acquire Nestle’s non-core ‘skin health’ business (rev: $2.7bn) in a deal reportedly worth $10bn. This transaction followed a fiercely competitive sales process in which private equity firms KKR, Advent International and Cinven were other high-profile suitors, as were Unilever and Colgate-Palmolive.
Premium natural cosmetics specialist L’Occitane International acquired the luxury skincare company Elemis (UK; 2018 rev: $140m) for $900m. Elemis is the leading independent British skincare brand, one with strong cross-generational consumer appeal, including the millennial demographic, but has been working to establish itself in new channels and geographies.
Coty acquired a majority 51% stake in Kylie Cosmetics (US; 2018 rev: $170m) for $600m. Kylie Cosmetics was founded by the 22-year-old ‘mega-influencer’ Kylie Jenner, who has no less than 163 million followers on Instagram. The deal makes Coty the first major strategic beauty company to buy into the influencer life. Coty plans to expand the brand geographically and into new beauty categories.
The German consumer goods group Beiersdorf (owner of Nivea) acquired the sun-care brand Coppertone (US; 2018 rev: $213m) for $550m. The deal strengthens Beiersdorf’s position in North America and “adds complementary expertise to its brand portfolio”. The company is actively seeking acquisitions and sitting on a cash pile of more than 4 billion euros.
Estée Lauder acquired full control of Have & Be Co. (KOR; 2019 rev: c. $500m), the Seoul-based skincare company behind Dr. Jart+ and men’s grooming brand Do The Right Thing. This is Estée Lauder’s first acquisition of an Asia-based beauty brand. Have & Be is growing rapidly, renowned for its leading and fast-moving innovation pipeline that offers a wide variety of high-performing skincare products that appeal to a broad range of consumers, including millennials in Asia and the US.
The French wine & spirits group made six key acquisitions in 2019, designed to strengthen its premium brands portfolio.
The premium segment of the Alcoholic Beverages market is forecast to grow at c. 5% CAGR between 2019 and 2023, compared to just 0.4% for ‘standard-and-below’ spirits over the same period.*
“The acquisition strategy is leveraging booming categories and reinforcing must-win, key strategic markets,” explains Pernod Ricard’s CEO Alexandre Ricard, who has made the group one of the most acquisitive in the industry.
When Alexandre Ricard became CEO of Pernod Ricard in 2015, the world’s second largest wines & spirits group was experiencing sluggish sales and the stock price was flatlining. Since then, the group’s sales have increased by c. 25% (FY19 rev: €9.2bn) and the stock price by c. 60%.
His thoughts on the premiumization trend:
“I think premiumisation is here to stay and is still by far a big value creation lever. People are trading up to higher quality brands all over the world, led by the US. People always aspire to ‘better’ and that is the story of civilisation…That is the area we want to play in. We do not see any strategic interest in the trade down part (standard and value-for-money segments). We like selling premium products that have a story.”
And on organic & external growth:
“Last year, for the first time, more than half of the world’s population had enough disposable income to be categorized as middle class. By 2030, there will be 2 billion more middle-class people in this world…People are drinking less but drinking better – and we expect the premiumization of our brands, our strong position in luxury spirits, to be one of the factors accelerating our growth.”
“From an M&A point of view, our strategy is clear and simple. Number one is to leverage dynamic categories. The gin and whisky categories and bourbon in particular. It drove us to do Smooth Ambler [acquired in 2017], TX Whiskey [acquired Firestone & Robertson Distilling Co in 2019], Rabbit Hole [acquired in 2019], and Castle Brands [acquired in 2019]…Some of these US whiskey brands are designed to stay regional, others to be national, and of course travel retail will be an opportunity for some of these to go beyond the US market…Where we see ‘demand spaces’ that we are not in, and believe we ought to be in, we will look to new products, bolt-on acquisitions or partnerships where the entrepreneur who created this new brand is still driving the business. This is what we have done with Smooth Ambler bourbon and artisanal mezcal producer Del Maguey Single Village…”
Is Nike’s ‘Zoom X Vaporfly’ the fastest running shoe on the planet?
Technological leaps in running shoes are rare, but Nike’s ‘Zoom X Vaporfly’ is a genuine game-changer in the massive EUR 13 billion running shoes market.
When the first version of the Vaporfly was launched in 2016, Nike called it “a racing shoe that breaks records”, which sounded like marketing, but it wasn’t. The shoe is literally breaking records. Too many, according to the International Association of Athletics Federations (IAAF), creating controversy within the running community and forcing the sporting goods market to innovate or face losing market share.
What’s so special about the Zoom X Vaporfly?Before the Vaporfly, little had changed in the footwear for elite marathon runners in 50 years. Previously, running shoes only had to be light and thin, and were usually constructed from thin slabs of rubber. The Vaporfly is very different: constructed with light-weight foam that is stacked high and containing a carbon fibre plate, which is the feature mentioned most prominently in Nike’s patent application. Runners say it feels like the shoe is propelling them forward, and the evidence supports this.
In 2019…
In the six world marathon majors, 31 of the 36 podium positions were won by athletes wearing Vaporfly.
Kenyan runner Eliud Kipchoge wore Vaporfly in the first marathon ever completed in under two hours, which was considered a time mark that could not be broken.
Brigid Kosgei used the Vaporfly to break the women’s world marathon record.
The New York Times conducted a study on the Vaporfly and found that it did make runners faster, by around 4%.
Following these events, and after several professional runners voiced complaints about the technology within the Vaporfly, the IAAF was forced to update its rules.
It is now prohibited to use “soles thicker than 40mm”, and to use “more than one carbon-fibre plate, or similar item, in the sole”. It means that Nike’s controversial Vaporfly range remains compliant and is permitted for use – the ‘Zoom X Vaporfly 4%’ and ‘Zoom X Vaporfly Next%’ running shoes both have a 36mm midsole. However the prototype model worn by Eliud Kipchoge to break the two-hour marathon record is now banned, as it provides too much of a performance advantage with its even chunkier sole and three carbon-fibre plates.
The new rules make sense, given that without clear restrictions, it was only a matter of time before someone developed a runner with more powerful springs, or footwear that we don’t even recognize as shoes.
“It is clear that some forms of technology would provide an athlete with assistance that runs contrary to the values of the sport.” IAAF
Running shoes is a $13 billion market that is expected to grow at a CAGR of 7% over the next five years. Nike is the clear leader, holding 51% of the market, while Asics is its biggest rival, with a 15% market share. Meanwhile, shoes account for about 47% of Nike’s total revenues, so an increasing share within a rapidly growing market will meaningfully affect Nike’s revenue growth going forward.
The stock price of Nike’s largest competitor in the running market, Asics Corp, dropped c. 10% when Kenyan runner Eliud Kipchoge became the first human to run a marathon in less than two hours. (Nike is reportedly adjusting the banned prototype design used in this race to make it competition legal before the Tokyo 2020 Olympics.)
This innovation race in running shoe design is only getting started, as Nike’s competitors have started launching high-tech running shoes of their own:
New Balance Athletic has launched a line of shoes with technical foams and carbon fibre plates that its runners can wear in Tokyo, and is “very concerned by the fact that these rules were adopted without meaningful consultation involving sporting goods industry”.
Saucony launched a new model in late 2019 called the Endorphin Pro, which Runner’s World magazine called the “closest approximation we’ve seen” to the Vaporfly.
Brooks has a new running shoe called the Hyperion Elite that goes on sale Feb. 27, according to the brand. Like Nike’s Vaporfly it is a light-weight shoe made for breaking records and includes a carbon-fibre plate sandwiched in the midsole foam to promote propulsion.
Sporting goods brands lead the pack
The global sporting goods market continues to perform exceptionally well, supported by rising levels of sports participation in both mature and emerging markets, as well as casual fashion trends (‘athleisure’). More than ever, the consumer is king and brands are finding new ways to engage with them – developing smarter omni-channel strategies and more compelling and innovative customer offers and journeys. In the M&A market there is a healthy appetite for acquisitions. Buyers are using deals to expand product portfolios (cost and distribution synergies), and to extend geographic footprints.
The sporting goods market was valued at $471bn in 2018, and is forecast to reach $627bn by 2023, growing at a 7% CAGR2017-2023.
Growth rates vary widely between different product groups. In 2018, the highest YoY rates were basketball (+11%), running (+7%), football (+7%), cycling (+6%) and gym-wear (+6%); while the largest by size were cycling ($62bn), gym-wear ($49bn), walking/hiking/camping ($39bn), and running ($33bn).
The market benefits from excellent industry fundamentals, however positioning is still key. Some of the leading strategies include growing women’s lines, outdoor, exclusivity & customization, eco-credentials, and direct-to-consumer channels.
The top 20 global players and private equity are highly acquisitive. The most active region for deal-making is Europe (c. 50% of total deals), where market consolidation is accelerating. Cross-border acquisitions are also rising, as brands look to grow their international customer bases.
There were some headline grabbing deals in 2019. Most notably, the Chinese leader Anta Sports’ (rev: $3.6bn, rising 44% YoY) acquisition of the giant Finnish sports equipment maker Amer Sports (rev: $3.2bn) – a deal that extends Anta’s overseas reach, fulfilling a core strategy to grow by acquiring international brands that complement the Chinese home market.
Trading multiples are c. 14.8x EBITDA in 2019, on average. In the European mid-market, double-digit EBITDA is ‘the new norm’.
I’m happy to share Jean Paul Agon’s thoughts on the big questions facing L’Oréal, including the rise of Digitally Native Vertical Brands, growth through acquisitions, his views on e-commerce, digital disruption, the Chinese market, and the future of beauty.
Since Jean Paul Agon became CEO of L’Oréal in 2006, revenues have grown by more than 3x and the stock price by more than 4x. According to Agon, the 112-year-old French beauty conglomerate has strengthened its position as the undisputed leader in the global beauty market due to a healthy appetite for acquisitions, as well as a robust and well balanced business model that covers all circuits, all categories, all price points and all consumers.
The below Q&A is taken from a collection of interviews conducted in 2019.
I – On M&A – growth through acquisitions:
“Our model is, and has been for 50 years, to buy a brand at an early stage because we think it can become a globally successful player. For example, we bought Kiehl’s in 2000, when the business was generating $20 million annually. It was a single store in New York City and had a few counters at Saks (department store). Then, for 20 years, we built the business and now it is a $1.37 billion business. The way we grow is exactly this combination of buy-and-grow – not buy or grow. And that’s what we do every year. Once the brands have been acquired, they are brands that we build.”
“We are looking every year at all opportunities, and we continue to do this. Make-up, skin care, hair care, hair colour – everything.”
“We currently have 35 international brands. L’Oréal is just one of them, but it’s obviously the one that we started with, and it represents around 25% of our sales. And, in fact, it’s the only brand that we didn’t buy.”
II – On e-commerce:
“There is a clear and very powerful movement towards e-commerce, which is very good, because it allows us to reach more consumers and it’s also pretty profitable.”
“E-commerce is currently about 10% of our total [global] sales, already almost three billion euros, so it’s not irrelevant. And it’s growing at 35% a year. We don’t see any slowdown in e-commerce beauty sales across the globe.”
“In China, where e-commerce is the most advanced, it’s huge – it’s more than 30% of sales.”
“With the new digital augmented services (which look at skin colour, hair colour and skin diagnosis) there is another tool to support online sales in the future.”
III – On digital disruption – in 2018, L’Oréal acquired Modiface, an ‘augmented reality’ company that digitally shows consumers the make-up they can wear. This is the first time that L’Oréal has acquired a pure tech company.
“We really believe that the future of beauty will be digital, and in this we are well ahead of the game. For us it is priority number one. In all aspects – social media, e-commerce, data, artificial intelligence. In terms of services, facilitating greater choice for consumers, helping them use products, individualizing products, etc. With digital, the possibilities become limitless. We are only scratching the surface of what will be possible.”
“Since we accelerated our digital initiatives we have seen profit margins increase, so there is a clear correlation between margin improvement and digital.”
“In the case of Modiface, the business case was obvious because this company is the best at what they do in terms of augmented reality, virtual simulation and obviously when you sell make-up, hair colour and skin care this capacity to simulate virtual reality is absolutely critical. It gives us a competitive advantage that is immense. Modiface helps all our brands to create new [augmented] services for consumers on their own sites or e-commerce sites. It is more an ROI thing, rather than a business itself.”
IV – On the future of beauty:
“The future is still about brands, more than ever. In a world of hyper choice and hyper segmentation, what consumers have on their minds in the end is brands. For example, when we acquire technology companies it’s not for business per se, it’s to serve the business.”
V – On competition from new direct-to-consumer brands on social media platforms:
“It’s true that it’s easier for new brands to enter the market because the barriers to entry have disappeared. However most, or 99.9%, of the new brands that enter the market will stay small because the barriers to scale up still exist. And on the contrary, digital is boosting the power of big brands. Our biggest brands – Lancôme, Yves Saint Laurent, Armani, Kiehl’s, L’Oréal, Maybelline – have all had their best years ever in 2019.”
VI – On China:
“We started in China in 1997, which was a bit late as many of our competitors were already there. We started in an apartment with 10 people. (I was based there then as well.) And now I’m very happy to say that we are number 1 in China and China is a major part of our growth and business.”
“China has always been about skincare, compared to the rest of the world. Most people in China use a skincare product. So, number 1, skincare is still growing in China. But the interesting news is that consumers are now also going for make-up. Previously, make-up was very small in China, and 40 years ago it was almost forbidden. And now young consumers are excited about wearing make-up. And the lucky thing for us is that younger consumers in China are starting by going directly to luxury make-up brands. In a tier 3 or tier 4 city, it’s common for teenagers to go straight to the Armani or Yves Saint Laurent counter to buy their lipstick, mascara or powder. They are starting directly with more expensive products. It’s one of the reasons for the extraordinary boom we are experiencing in China.”
VII – On sustainability and ethics:
“We are recognised as a number 1 company on sustainability. The Carbon Disclosure Project (CDP), which is the authority in terms of the environment, awarded L’Oréal for the third year in a row the ‘AAA’ recognition. ‘A’ for forest, for water and for carbon impact.”
“When I took over as CEO, I understood that ethics would be something very important for the future. Again, I decided with the team that L’Oréal should be, and could be, the number one company in ethics. If you think about it, it’s not that difficult for L’Oréal to be a great company in terms of sustainability. Also, ethics is not really a problem in our industry. And gender equality also. We could have said, ‘it’s not difficult for us, let’s do something else’. On the contrary, what we said is, ‘it’s not that difficult, so let’s be exemplary, and be number one in the world’.”
[In 2019, L’Oréal was named for the 10th time as one of the World’s Most Ethical Companies. The Covalence ESG (Ethical Quote reputation index) also awarded L’Oréal the #1 ranking out of 581 of the largest listed companies worldwide.]
VIII – On the key shareholders of L’Oréal:
“We have two great shareholders – the Bettencourt family, who own 33% of the shares; and Nestle, with 23% of the shares. These large investors give us the possibility to think really long term, to be very strategic, and I think that it’s also part of the success of L’Oréal.”
When Alexandre Ricard became CEO of Pernod Ricard in 2015, the world’s second largest wines & spirits group was experiencing sluggish sales and the stock price was flatlining. Since then, the group’s sales have increased by c. 25% (FY19 rev: €9.2bn) and the stock price by c. 60%.
