KPMG Predicts Three Key Consumer & Retail M&A Trends in 2019

2019-05-21 12:25 1500

Companies with unique propositions, such as premium offerings and innovative technology, are more likely to be successful in the Chinese market

HONG KONG, May 21, 2019 /PRNewswire/ -- KPMG published its Consumer & Retail (C&R) M&A trends 2019 report in which KPMG professional provide market-leading research, insights and guidance to help businesses successfully navigate and make the right strategic decisions. Looking ahead, economic uncertainty and geopolitical tensions are expected to impact investor confidence and M&A activity. Global deal volume in 2019 will likely decline amid pockets of growth in attractive categories and markets. KPMG expects that the Asia Pacific region (ASPAC) will be included in global corporates' strategic growth planning as they pursue more investment and M&A opportunities.

In the report, KPMG identifies three key trends shaping the global consumer and retail M&A landscape in 2019, namely portfolio optimization; health, ethical and authentic-driven businesses; and digital transformation.

  • Portfolio optimization

Portfolio optimization remains a key theme in C&R deal making, as corporates reshape portfolios in response to changing consumer behaviors. Some are consolidating in parallel or investing in adjacent high-growth categories, while others are deploying capital to core businesses by disposing non-core operations.

  • Business driven by pursuit of health and wellness

Rising trend of green and quality consumption has sparked greater interest among investors. Health and wellness are multi-dimensional for the entire industry and meeting customer expectations is a key challenge for today's C&R businesses. The key is for each player to rapidly develop a productive strategy in the race to remain competitive and profitable.

Therefore, KPMG believes the number of health-and-wellness driven deals will grow in the year ahead. KPMG expects activity to be dominated by the food-and-drinks subsector, especially in the non-alcoholic beverages space, followed by cosmetics and pet products.

  • The race for game-changing digital transformation continues

In 2019, while businesses are investing in digital to expand distribution channels and customer reach, improving the customer experience across all channels is also critical, enhancing and extending it from in-store shopping to all sales channels in ways that ensure customer satisfaction and brand loyalty.

KPMG predicts that retailers will continue to transform their business models either through acquisition of tech/digital-enabled assets or through alliances and partnerships with tech players.

Investment activities by foreign corporates in Asia expected to continue to be robust

ASPAC appears to have piqued investors' interest in 2018, and is likely to gain more attention over the coming years. In 2018, M&A growth was largely driven by inbound investments by non-ASPAC acquirers. ASPAC is considered a particularly attractive investment destination, offering a wide spectrum of growth opportunities. Rising disposable income supports continued high consumption and shifting behavior among Asian consumers. Furthermore, rapidly expanding mobile-phone usage and Internet penetration rates are changing the consumption landscape, with tech-savvy consumers demanding an enhanced customer experience and multi-channel offerings.

Wei Lin, Partner, Global Strategy Group, KPMG China said, "From an inbound investment perspective, companies with unique propositions such as premium offerings and innovative technology will have market success in China as they offer competitive advantages against local players. Such players will explore a wider set of market entry options to traditional M&As and equity JVs, including greenfield investments, alliances and partnerships with cross-industry players."

About KPMG China

KPMG member firms and its affiliates operating in Mainland China, Hong Kong and Macau are collectively referred to as "KPMG China"

KPMG China is based in 21 offices across 19 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi'an, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 153 countries and territories and have 207,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG's appointment for multi-disciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.

Source: KPMG
Keywords: Retail