Food and beverage M&A insight: Winter 2024

Announced M&A activity in food and beverage - annually

Source:  Zephyr   

2024 was the second year running in which deal numbers increased. The food and beverage sector continued to distance itself from 2022 when monthly inflation rates not seen since the 1980s hit input costs and consumer wallets.

M&A continued the return to business as usual, as large corporates disposed of subsidiaries, private equity (PE) continued platform building, and trade buyers snapped up smaller competitors.

There were two mega-deals (£1 billion-plus) in the second half (H2) of the year. In July 2024, Carlsberg expanded its soft drinks offer through the £3.3 billion acquisition of LSE-listed Britvic. Then, in August, PE firm Cinven bought a stake in Vitamin Well, valuing the healthy drinks producer at £2.5 billion, according to press reports.

There was a flurry of activity towards the end of the year as owners rushed to sell ahead of anticipated increases to capital gains tax (CGT) in the Autumn Budget on October 30. Of the 98 transactions in H2, 79 were announced before the end of that month. We anticipate seeing a less frenzied repeat of this ahead of changes to Business Asset Disposal Relief and Carried Interest Tax Rate Adjustment in April. 

Announced M&A activity in food and beverage - biannually

Source:  Zephyr

Deal volumes and value 

The 98 transactions in H2 versus 81 in the first half (H1) contributed to a 9% year-on-year uplift in deal volumes, from 164 in 2023 to 179 in 2024. 
Total 2024 disclosed deal value was £11.1 billion, bolstered by the Britvic and Vitamin Well mega-deals.

Debt drives deals

The debt market opened up as 2024 progressed, and interest rates began to fall. For food and beverage M&A, this translated into improved pricing and better loan terms.

In a tricky consumer environment, lenders backed F&B businesses with manufacturing capabilities, a consistent client base (such as the large supermarkets), and a broad range of products. Equally, we’ve seen large appetites from asset-based lenders who will lend against stock, even short shelf-life goods. 

Private equity activity 

Announced PE activity in food and beverage - biannually

Source:  Zephyr

PE interest in the sector grew as the year progressed, accounting for 31 deals versus 20 in H1.

For the entire year, PE was responsible for 28.7% of food and drink transactions, slightly above the ten-year average of  27.7%.

CapVest strengthens chocolate platform

In September 2024, CapVest-owned chocolate manufacturer Natra bought fellow confectioner and ingredients supplier Gudrun from Investindustrial. Gudrun has six production plants in Europe. The deal will expand its global reach while enhancing Natra’s Belgian chocolate offering.

PLC activity

While Carlsberg’s Britvic take-private was another example of overseas buyers swooping in on London’s listed companies, UK PLC was also an active food and beverage acquiror.    
 
In November 2024, LSE-listed Tate & Lyle acquired CP Kelco, a pectin and speciality gums provider, from USA-based JM Huber Corporation. Tate & Lyle paid JM Huber in shares, giving them a 16.59% minority stake in the UK sugar business, valued at £556.5 million at the time the deal was announced. This form of ‘paper deal’ is common for acquisitive large companies with a strong market value. However, it can also be an option for smaller companies.  

ABF buys allergen-control specialist 

In August 2024, AB Mauri, the ingredients division of LSE-listed Associated British Foods, bought Romix Food.  The firm specialises in allergen-safe bakery mixes for professional and craft bakers. AB Mauri said it will help them meet the increasingly complex demands of the markets it serves. Grant Thornton provided financial due diligence for the transaction.

Trade focuses on core assets

In the wake of a challenging inflationary environment, food and drinks companies focused on streamlining non-core assets.

In January 2025, Diageo sold Cacique rum to La Martiniquaise to focus on its core portfolio. It follows the sale of Pampero rum to Gruppo Montenegro in July 2024. 

In September 2024, William Grant & Sons reached an agreement to purchase The Famous Grouse and Naked Malt brands from Edrington. The carve-out allows Edrington to focus on premium brands, such as The Macallan. 

Health and wellness continue to drive functional foods

Functional was the most active subsector in H2 2024, as demand for natural ingredient and health and wellness products shows no signs of slowing.  

Other deals in the subsector included Comitis Capital’s buyout of Tofoo and Hero Group’s acquisition of Deliciously Ella. 

Functional foods are a magnet for growth investors targeting innovation – of H2’s 16 functional food deals, seven were minority stakes. These included the Isle of Skye’s Kaly Group, a seaweed cultivator and processor, securing £300,000 funding from TRICAPITAL Angels with participation from Scottish Enterprise Glasgow.

Pet food goes green

Investors piled into pet food following the lockdown boom in cat and dog ownership. Interest has now evolved into niche offerings. Four of the eight deals involved firms with a focus on sustainability or natural pet food.  

There’s also a growing interest in lab-grown meat for pet food. In February 2025, VC-backed Meatly launched Chick Bites, reportedly the world’s first cultivated pet food, in Pets at Home.

• In July 2024, Pets Choice agreed to acquire HOWND, a UK-based vegan dog food manufacturer, from Power Pet Brands Ltd
  
  

2024 cross-border activity 

Cross-border ratio analysis of deals

2024 saw the highest number of cross-border deals since 2014 – 47% of transactions involved either UK companies buying overseas or overseas companies investing in the UK.   
 
This was driven by a significant increase in UK companies buying overseas, which accounted for 26.7% of total deal share in 2024 compared to 16.5% in 2023. 
 
One example is Valeo Foods Group’s acquisition of Slovakia’s IDC Holding, an independent producer of wafers, biscuits, confectionery, and chocolate. The move advances Valeo’s ambition to be the “major sweet treats player of Europe”.  

What to expect in 2025

The food and beverage business is certainly not immune to macroeconomic factors such as inflation or politics, and like others, food and drink businesses will also be subject to increases in employer National Insurance Contributions (NICs) and the National Minimum Wage (NMW). However, compared to other consumer sectors, there’s a consistently steady base of deal volumes during times of stress. 

There will always be demand for consolidation in a highly-fragmented sector, and changing eating habits, such as health and wellness – which are also subject to regulatory influence, such as sugar taxes, – will continue to drive dealmaking.  

For more insight and guidance, get in touch with Nicola Sartori.