Food Processing Business Valuation Issues

Food is one of the great constants of life - we can't live without eating.  So the food processing and food manufacturing industry has seen consistent growth - but not across all sectors. 

 

Over the past two decades tastes and markets (both domestics and overseas) have changed and this has influenced revenue growth, with the size of some sectors such as bread and cereal manufacture declining and meat processing increasing by more than 6%

​

The food manufacturing industry is exposed to similar issues as the general manufacturing sector, such as:

• New technology 

• Low cost of manufacture (mainly from labour costs) from overseas competitors

• Lowering of import tariffs exposing industry to global competition

• Increased production costs in Australia such as raw materials, labour and freight costs.

​

In general the industry has opportunities with:​

• Design of own products

• New manufacturing technology and automation

• Export to emerging and established economies including South East Asian countries, China, India and other regions.

 

Most food processing business valuations will attract similar EBITDA multiples (or in some cases higher EBITDA multiples) to that of manufacturers as long as there is reasonable size and scale, product differentiation, effective use of technology and access to new markets.

​