Rising U.S. immigration rates, coupled with consumers wanting to try new types of cuisines, is driving up demand for ethnic foods. What does this mean for private equity and M&A? A lot.
With increasing demographic shifts, particularly among the Hispanic and Asian populations in North America, there is a huge opportunity for food manufacturers to cater to these cohorts to remind them of what they used to eat in their native countries. There is also rising demand from a broader set of consumers to try different cuisines.
People are eating out more in global cuisine restaurants. In addition, people are eating more at home and it’s a perfect to time to try these types of foods in a convenient, ready-to-eat type format.
Put it altogether, it means it will drive M&A.
“All these trends support strong and growing demand for an increasing variety of ethnic foods, which in turn attracts the attention of growth-focused M&A investors,” says Harris Williams Managing Director Ryan Freeman. “A large and fragmented market of ethnic food manufacturers makes the opportunity even more attractive.”
In June 2023, LongueVue Capital invested in Global Gourmet Food Solutions, a manufacturer of ready-to-cook and ready-to-eat food products with a focus on Asian, Latin cuisines. Global Gourmet makes egg rolls, burritos, flautas, taquitos, enchiladas and battered, breaded and fried chicken products.
In February 2023, ICV Partners LLC acquired the Desi Natural and Noga brands from Raymundo’s Food Group LLC, a portfolio company of AUA Private Equity Partners LLC, to form Desi Fresh Foods.
PE Firms Investing in Ethnic Foods
AUA Private Equity
ICV Partners
LongueVue Capital
Desi Fresh Foods is a producer of dahi, or South Asian yogurt, and lassi, a drinkable South Asian yogurt. Dahi is used as an ingredient in South Asian meals, side dishes and beverages.
In addition to Asian and Hispanic foods, Freeman sees strong interest in Indian and Mediterranean cuisines, as well as in niche areas that play into long-term consumer trends of eating healthy.
For example, interest in the Mediterranean diet supports consumption of foods within that category, while ethnic brands incorporating clean-label approaches stand to benefit from that trend, he says.
“The U.S. is steadily becoming more ethnically diverse,” Freeman adds. “More diversity naturally drives more consumption of ethnic foods, as does an increasingly international and sophisticated palate among U.S. consumers in general.”
Reach Freeman at: [email protected]
