2025 Food & Beverage Industry: Mergers And Acquisitions To Increase

Now that the confetti has been cleaned up in Times Square and the celebrations are done, what was your New Year’s resolution, and have you broken it already? Ask F&B executives to mention their resolutions, and you can bet two big letters loom large among a good number for 2025: M&A.

Rising valuations, slowing inflation, subsiding Covid-19 supply chain problems, PE in search of deals, and a medley of interest rate cuts, lowering borrowing costs, all bode well for M&A, including, and even in particular, for F&B.

“We’ve seen an uptick in M&A activity in the food and beverage CPG space over the past six months to a year,” Billy Roberts, a senior food and beverage analyst with CoBank, told Food Dive. “That’s going to continue and get even greater, proliferate a bit in 2025.”

While M&A is a factor in every industry, it’s particularly prominent in F&B, where major deals have been redrawing the map for years. The past year alone saw multi-billion-dollar mega deals as well as many smaller ones.

In 2024, Mars bought Pringles maker Kellanova for about $36 billion, expanding its sweet spot beyond candy in the snack space. Campbell’s Soup acquired Sovos Brands for $2.33 billion, expanding into the pasta sauce market with Rao’s.

PepsiCo acquired Siete Foods, a Mexican-American brand of chips, tortillas, sauces, and more, for $1.2 billion in October 2024. The hunger for ethnic food continues to drive some deals, as does a desire to snap up brands that promote health.

Meanwhile, General Mills is selling its North American yogurt business to Lactalis, which is acquiring the U.S. business, and Sodiaal, which is acquiring the Canadian business. The deals, valued at $2.1 billion, are expected to close in 2025.

While M&A exists in every industry, the F&B sector is one where big companies often expand into new or secondary areas or grow their core business by buying rather than beating what could be the competition.

“The food and beverage industry has seen some of the most significant mergers and acquisitions over the past two decades,” according to XTalks.com. “These deals have reshaped the industry, consolidating power among a few key players and driving global market growth.”

Bit By the Merger Bug

The merger bug isn’t likely to hit only F&B but will be widespread. Jason Wallace, managing director and head of M&A Advisory for Citizens Bank, said in their “Citizens 2025 M&A Outlook ” that they see signs of an uptick amid strong sentiment supporting M&A transactions.

Their study found that “buyers and sellers are perceived to be on fairly equal footing in the current market,” making it more likely they’ll reach deals. Private equity executives see company valuations rising amid a “bullish sentiment.”

Lower inflation and expected interest rate cuts are fueling optimism, although many sellers are looking at selling part of, not the entire, company.

About half of larger companies believe a better economy will boost their M&A activities, compared to only 14 percent of smaller companies, according to Citizens Bank.

The number of F&B mergers per quarter actually dropped below 500 in 2024, nearly 40 percent under the 2021-2023 average, according to CoBank. However, the bank also sees signs that 2025 will likely be the year of the merger in F&B.

Just days into 2025, Flowers Foods reached a deal to acquire Simple (which makes crackers, cookies, snack bars, and baking mixes) for $795 million in cash.

“With Flowers’ resources, we will be well positioned to broaden distribution, accelerate innovation, and amplify brand awareness,” Simple Mills CEO Katlin Smith said.

Blockbuster Deals of the Past

M&A has been a big force in F&B for decades, with multi-billion-dollar or blockbuster deals regularly making news. Some deals grow a core business, while many expand the offerings.

In the beverage space, Keurig Green Mountain acquired the Dr Pepper Snapple Group for $21 billion in 2018, while General Mills bought Blue Buffalo Pet Products for $8 billion.

A few years before that, H.J. Heinz, in 2015, acquired Kraft Foods Group for $46 billion with the help of Berkshire Hathaway. Kraft Foods acquired Cadbury for $19.6 billion in 2010 and Danone’s Biscuit Business for $7.2 billion in 2007.

Nestlé has been a big seller and buyer, selling its U.S. confectionery business, including brands like Butterfinger and Baby Ruth, to Ferrero for $2.8 billion in 2018. Meanwhile, Nestlé grew its baby food business by acquiring Pfizer’s infant nutrition business for $11.85 billion in 2012

Mars Landing

Few, if any, companies have been as busy riding the M&A bandwagon as Mars, whose takeover of Kellanova is hardly their first rodeo. They are a case study of growing the business by leaps and deals.

As part of its push to provide healthy foods, Mars in 2023 acquired Kevin’s Natural Foods, reportedly worth $800 million. Mars said that Kevin’s lets consumers “eat healthily within minutes.”

Mars said the nutritious meal company would operate as a standalone business within its Food & Nutrition segment.

That was only part of Mars’ M&A method of expanding into healthier food. Mars in 2020 acquired Kind in a $5 billion deal, rolling it out to 30 new markets, according to Food Dive.

Mars also teamed on acquisitions, in 2008, joining Warren Buffett to buy gum giant Wm Wrigley Jr. for $23 billion. Mars made Wrigley a separate subsidiary and in 2016 bought out Buffett to become the sole owner.

Mars bought VCA in 2017 in a deal the company said was valued at $9.1 billion, including $1.4 billion in debt. VCA joined Mars Petcare, one of the world’s leading pet care providers, and has been part of Mars for over 80 years.

Deal Difficulties

If Mars seems happy with its M&A method, not all F&B deals have had positive results. The prevalence and prominence of deals only make it more important to understand why some work and some go south.

Quaker Oats bought Snapple in 1994 in a deal valued at $1.7 billion. Just as some marriages end in divorce, so do some mergers. Quaker sold Snapple in 1997 for much

less after it ran into trouble marketing and distributing the iced tea brand.

Sapporo’s $85 acquisition of Anchor Brewing Co. went south, leading to its divestment soon after. Some said Sapporo lost sight of Anchor’s core customers, and Sapporo seemed to conclude that the brand wasn’t big enough to justify the effort.

Hamdi Ulukaya, founder of Greek-style yogurt Chobani, acquired Anchor Brewing’s assets in 2024 through a liquidator for an undisclosed sum after Sapporo shut down the brand.

He said he plans to bring Anchor Brewing Co., founded in 1896, “back to life.” The relaunch hasn’t happened yet, so it’s too early to tell how it will play out. And it’s not Ulukaya’s first foray into M&A.

Chobani in 2023 acquired La Colombe for $900 million, entering what it called the “high-growth ready-to-drink coffee category” and helping transform Chobani “into a diversified next generation food & beverage company.”

Deal, No Deal

While some deals soar and some fizzle, some never go through, ending in the wonderful world of what might have been. Back in 2016, Mondelez International sought to acquire Hershey’s for $23 billion.

Hershey’s board unanimously opposed the offer, unhappy with the valuation and possible regulatory problems. Still, more of a courtship might have helped make the marriage happen.

And Kraft Heinz’s $143 billion merger with Unilever in 2017 became the biggest deal not to happen. Unilever shot down the offer amid concerns about corporate culture, cost cutting, and short-term focus.

If both companies focused on achieving a shared vision, differences over culture and dollars might have been overcome.

And let’s not forget about the failed $25 billion Kroger Albertsons deal, which was called off after the Federal Trade Commission and two federal judges said, “No, you don’t,” before the two companies got to say, “I do.”

Lessons Learned

While every deal is different, it’s essential for buyers and sellers to get specialists involved early, such as investment bankers, accountants, and lawyers. Both need business valuations and quality of earnings reports, which can be more helpful than audits.

Sellers need to organize their financial records and create a detailed story about their company. And then there’s whether management wants to stay or leave.

Buyers need to arrange financing and set up an integration plan. Without the dollars, there’s no deal. Of course, structuring the deal is key regarding whether it will be an asset purchase or a stock purchase. Earnouts align existing management’s interests with the company’s future. Companies also need to look at how they can expand the existing business.

We can also learn from what went wrong when acquisitions turn into distractions. Deals aren’t just about the dollars but the process of making an offer and uniting companies and boards. Businesses ideally work together on mergers, achieving a shared vision.

Artwork Flow says brand consistency, being true to acquired brands, and communication as deals progress is important. “Effective communication is crucial during M&As,” according to Artwork Flow. “However, there can be gaps, leading to misinformation or missed opportunities.”

Mergers and acquisitions will remain a key part of the F&B industry. It isn’t about whether they will happen but how and when. More companies will be walking down the aisle together. One key question is whether companies will learn from the deals that happened before. It’s likely, though, that by year’s end, the industry will look different, not just because of the economy but because of deals.

Sentiment is clearly up going into 2025, and that could mean healthy M&A activity—or it could even mean surging M&A activity. According to David Dunstan of Citizens, companies that are planning M&A this year should consider “how their strategy would change.” Moving too fast or too slow will be costly, so careful strategic planning becomes a key ingredient for a successful acquisition.