FOOD & BEVERAGE M&A MARKET DYNAMICS
- Q4-25 U.S. and global transactions fell 25% and 38%, respectively, compared to the same quarter in the prior year. In addition to the downturn in Q4, full‑year 2025 recorded the lowest transaction volumes in five years across both U.S. and global markets.
- The 2025 shortfall was driven by tariff and regulatory uncertainty under the new administration, ongoing supply-chain pressures (including rising ingredient, packaging, and logistics costs), and uncertainty around shifting consumer preferences amid inflation-driven wallet pressure and dietary changes linked to increase GLP-1 adoption.
- A recovery in 2026 appears likely due to moderating inflation, continued supply-chain recovery, improved regulatory clarity, greater emphasis on innovation and premiumization, and a broader pivot from cost control to proactive growth strategies.
What We’re Discussing With Clients
Investing in Automation
Companies across the Food & Beverage industry are investing in new equipment and automation as they look to address labor challenges and improve overall efficiency. Operators are adopting technology that reduces manual work, supports a smoother workflow, and keeps production running reliably. These upgrades help streamline operations, limit downtime, and create more consistent output, which in turn strengthens margins. This operational maturity is particularly attractive to investors who value businesses with strong processes, predictable performance, and scalable infrastructure already in place.
Consumer Preferences Reshaping the Alcohol Landscape
The alcohol industry is undergoing a structural reset as legacy brands struggle to remain relevant amid shifting consumer preferences. Younger demographics are increasingly gravitating toward no- and low-alcohol alternatives, functional beverages, and ready-to-drink (RTD) products, which are shifts driven by a heightened focus on wellness and evolving social habits. These high-growth segments have become attractive to strategic acquirers seeking portfolio diversification. Similarly, private equity investors show interest in these segments because they bypass the capital-intensive aging cycles of traditional spirits.
Distributor Selectivity
The Food & Beverage landscape is becoming increasingly crowded as new brands flood the market and private‑label offerings continue to gain share, especially in today’s value‑driven economy. As competition intensifies, distributors are becoming more selective, prioritizing brands with truly differentiated positioning and a compelling commercial narrative. In this environment, success increasingly depends on a strong go‑to‑market strategy, meaningful digital visibility, and clear evidence of in‑market traction.
