Merger mania cooled last year among food companies, but interest in unique options, easing credit and interest in synergy may be about to turn up the heat, experts told The Food Institute.
The comments came in the wake of what Mondelēz CEO Dirk Van de Put told the Consumer Analyst Group of New York Conference recently. Food Dive reported desperation for growth has pushed valuations ever higher, making acquisitions less appetizing.
Acquisition activity slowed last year considerably from 2024’s pace while deal values rose 16.3% to $61.5 billion, according to PitchBook.
Don Johnson, principal for strategy and execution at Ernst & Young Parthenon, told FI company data shows M&A activity this year in the food and beverage industry down 13% from historical averages and overall economic conditions likely will push “more intense portfolio shaping and focus.
“Food companies are prioritizing deals that fill specific needs. As disruptive forces reshape consumer buying behavior, those who evaluate and upgrade their portfolios with discipline are better positioned to compete and win,” Johnson said.
Under Van de Put’s tenure, Mondelēz has been especially aggressive, acquiring about a dozen companies in the last decade, many of them viewed as premium brands, Food Dive noted.
“Acquisitions really have to offer us a unique competitive advantage or really lift our growth rate in whatever the geography is we’re looking at,” Van de Put said. “Otherwise, it’s really not worth [it] for us to do it.”
Pamela Grinter, partner and co-chair of the food and beverage practice group at Fox Rothschild LLP, told FI, companies are looking for “strategic acquisitions.”
“M&A activity continues for the right deals, including the health-oriented segment, a trend that is expected to continue, as well as add-on brands that bring something strategically needed to the buyer’s platform, utilizing under-used operational assets or otherwise increasing efficiency,” Grinter said.
David Washburn, partner and co-chair, mergers & acquisitions and private equity at Katten Muchin Rosenman LLP, said the outlook for M&A activity in the food and beverage industry is largely dependent on credit markets, especially in the middle market which has been battered by tariffs and where companies seek funds from private lenders.
Private equity funds are likely to be a driving force, Washburn said.
“Many of our clients remain focused on identifying regional and national restaurant items that are appropriate for CPG,” he said, citing sauces and condiments as especially likely targets. “At one time, restaurant owners believed that going to the grocery market would cannibalize sales. Now, restaurant owners realize that grocery is a separate purchasing decision and that they can capitalize on their brand equity without diminishing in-store sales.”
George Barsom, founder and managing director at Auxo Capital Advisors, said the slowdown may be coming to an end, noting the food and beverage sector is among the most resilient because of strong consumer loyalty, differentiated products and pricing power.
“In fact, our own research covering consumer packaged goods and food and beverage M&A trends has recently generated some of the highest search impressions and reader engagement on our site, which suggests there’s still significant interest in consolidation across the industry,” Barsom said.
“Much of that attention,” he added, “is focused on fragmented niches such as better-for-you products, specialty foods, and emerging challenger brands where strategic buyers see opportunities to scale distribution.”
The Food Institute Podcast
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Foodservice manufacturers might develop option paralysis with all the data available in the current day, but what kind of focus can really help drive marketing returns? Suzanne Cwik of Tibersoft and Eric Anderson of Conagra help break down data best practices to develop a foodservice marketing engine for food away from home manufacturers.
