Beverage industry valuation multiples are slightly higher than the food industry valuation multiples.
The average revenue multiple for the beverage industry is 2x whereas the average revenue multiple for the food industry is 1x.
In the dataset of 33 public beverage companies in the US, Canada and the UK, only 4 companies have a revenue less than $100 million.
I remember seeing an episode of Shark Tank where a beverage company was pitching their business for an investment, and almost all the sharks were immediately out, because they said the beverage industry is highly competitive and it is near impossible to survive unless you are one of the main players like Coca-Cola and PepsiCo.
Not surprisingly, 19 of the 33 companies have revenue over $1 billion.
To maintain a healthy margin selling beverages, the capital and operating cost of the manufacturing and processing plant has to be far outweighed by sales and prices.
Beverage Industry Valuation Multiples
Across the different sizes of companies in the beverage industry, valuation multiples are in similar ranges.
The average revenue multiple for the beverage industry is 2x.
The average EBITDA multiple is ~16x.
The average earning multiple is ~27x.
Beverage Industry Net Profit Margins
The average gross margin for the beverage industry is 38%.
The average EBITDA margin for the beverage industry is 17%.
The average net profit margin for the beverage industry is 7%.
The profit margins are also in similar ranges across the different sizes of beverage companies, except there is a slight increase in EBITDA and net profit margins as the companies get larger.
This may be explained by the high capital and operating cost of the plant and that with economies of scale, the more they produce and sell, the more revenue can cover the fixed costs.
To see the food industry valuation multiples and profit margins, go to this post here.
To see the food processing companies’ net profit margins, go to this post here.
How To Use Valuation Multiples To Value a Company
Now that you have the valuation multiple, how do you use it to value a company?
For those who are not familiar with using valuation multiples to value companies or those who are but need a refresher, I wrote posts detailing exactly how you can do that.
Hopefully you can use them as helpful guides. Click on the link below to go to the post.
- How to value a company based on revenue
- How to value a company based on EBITDA
- How to value a company based on earnings
- How to find your own valuation multiples
- Other posts on how to value a company
Download Data Set
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Thanks for reading as always and leave a comment if you found it useful!