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Challenge
The high value-added plant-based ingredients supplier has benefitted from the rise in flexitarianism, where consumers are increasingly incorporating vegetables and other plant-based products into their diets for health, sustainability and financial reasons.
With a strong emphasis on becoming a trusted supplier to high-quality destination brands and top-tier B2B operators, Natural Innovations has successfully established itself as a reliable partner in the foodservice industry, as well as manufacturers and meal kit suppliers such as Hello Fresh. By consistently delivering exceptional service and innovation, Natural Innovations has earned the trust and loyalty of its customers, solidifying its reputation as a go-to provider.
Approach
Assessing Natural Innovations’ niche market value
Natural Innovations and its owners, Perwyn, required a third party to complete commercial due diligence of the business, ahead of it entering a sale process.
As an innovative market leader in a relatively niche industry, it was critical to Management and Perwyn that the strength of Natural Innovations’ position in the market and the value it offered to customers was fully evaluated and communicated to potential investors.
In addition, an impartial assessment of Management’s business plan, based on robust evidence and stress-testing any assumptions made, was critical.
Some of the challenges faced included:
- Accurately sizing the addressable market for Natural Innovations given its niche, premium positioning
- Assessing the growth prospects of a high value-added plant-based ingredients supplier, taking into account economic, societal and consumer trends
- Identifying the headroom for growth across key channels and any potential barriers
- Understanding and illustrating the unique advantage gained through Natural Innovations’ specialist Food Innovation capability
- Validating with customers their feedback on the service received and their continued commitment to the business and its products
STRAT7 Advisory was commissioned to complete the due diligence. Our knowledge of the sector and extensive foodservice expert network were key reasons we were chosen ahead of our competitors.
How our commercial due diligence unveiled Natural Innovations true potential
- We undertook an exhaustive programme of research and analysis, ahead of delivering a report that anticipated and addressed the key questions potential buyers would have before investing in Natural Innovations. Our work included:
- Understanding and articulating the Natural Innovations value proposition and clearly defining the customer and competitor ecosystem in which it operates, to help audiences new to the business quickly get up to speed
- Evaluating the total and target addressable markets for Natural Innovations, including their dynamics and structure, size, historical performance and growth prospects, backed up by clear and compelling evidence
- Robustly evaluating how well the business serves its current customers and their attitudes towards it, including past performance and future intent
- Assessing the current strength and future longevity of Natural Innovations’ customer value proposition through a holistic assessment of expert, customer, market and commercial perspectives
- Providing a detailed examination of past trading performance, including customer retention, acquisition and NPD, detailing any exceptions
- Contextualising Natural Innovations’ performance with a detailed assessment of competitor propositions and performance
- Impartially evaluating Management’s business plan in the context of past performance and future growth prospects, identifying any areas of concern as well as potential upsides to the plan, based on our research
Our methodology included an extensive foodservice operator survey, customer reference calls, market research and modelling, trading data analysis, Management interviews and expert interviews.
Impact
Our due diligence report was shared with prospective bidders and lenders and our team subsequently held Q&A sessions with interested parties during the sales process.
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