10 | M&A trends in consumer brands and retail: fewer deals, higher conviction in a more volatile world
What is happening?
M&A in consumer brands and retail is still happening, but it has become more selective. In a less stable macroeconomic environment – where supply chain disruption risk, input-cost volatility and uneven consumer demand are back in focus – buyers and sellers are treating deals less as a race for scale and more as a way to reshape portfolios, protect margin and acquire capabilities quickly, with dealmakers prioritising strategic fit, operational resilience and speed-to-market.
Key themes emerging from recent deals include:
Selective acquisitions to reposition portfolios for growth
Buyers in the food and drink industry have responded to changing consumption habits resulting from increased GLP-1 use and consumer focus on gut health and wellbeing by carrying out targeted acquisitions or “bolt-on” transactions, with a particular interest in protein, fibre and satiety-led formats that match consumers’ evolving priorities. Danone’s €1bn acquisition of meal-in-a-bottle brand Huel is a clear example of this repositioning logic: using M&A to quickly access a product format designed for modern diets and convenience.
Portfolio resets to sharpen focus
Large groups continue to simplify – disposing of brands and businesses that no longer fit strategic priorities while concentrating leadership time and capital on products and platforms that look durable and scalable under stress-tested assumptions. Unilever’s disposal of its ice cream division and smaller targeted sales of local European food brands including the Vegetarian Butcher and Graze exemplify the mix of structural separations and single-brand exits being used by retailers to reshape portfolios.
Capability enhancement
A growing share of transactions are motivated by the way in which a business runs rather than solely what it sells, with technology, data, AI and logistics as deal drivers. In volatile conditions, the ability to forecast demand, manage inventory, optimise fulfilment and execute pricing and promotions with discipline can be decisive. These capabilities are hard to develop quickly in-house – particularly where legacy systems and siloed data slow delivery – so M&A becomes the fastest route to step-change improvement. These deals are often smaller than brand acquisitions but can be strategically decisive, particularly for omnichannel retailers where conversion and fulfilment economics make or break profitability. IKEA’s acquisition of AI-powered logistics software company Locus is an example of this capability-first rationale.
In logistics-heavy sectors, combinations are being justified as much by resilience as by growth: procurement advantages, strengthened supply chains, distribution optionality, better stock management and the ability to absorb cost shocks.
How might it impact your business?
- The M&A market has evolved from a pursuit of scale to a search for strategic fit, operational focus and capability enhancement.
- In the current environment, acquisition processes are taking longer and diligence is going deeper. More deals are being restructured mid-process to bridge valuation gaps, allocate geopolitical or supply risk and hardwire downside protection.
- Despite the increasing geopolitical uncertainty, companies that use M&A to actively tailor their portfolios and strengthen operational foundations are likely to be better placed to meet future challenges.
Practical tips for consumer brands and retailers
1) Look for opportunities to shape your portfolio
Identify acquisitions which will allow you to enter growth markets and build capabilities and resilience quickly, while using disposals to focus resources where competitive advantage is strongest.
2) Be transaction-ready
Keep governance, approvals and integration or separation playbooks current to enable quick execution when opportunities arise.
3) Prepare your portfolio story early
If selling: be clear why the relevant brands can perform better in a new home, and get ahead of “orphan” questions (management involvement, systems, supplier contracts). If buying: be equally clear what you will stop doing post-completion as well as what you will invest in.
4) Stress-test your deal thesis against disruption scenarios
Assume volatility: shipping delays, ingredient substitution, labour constraints and uneven consumer demand. Build a downside case that is operationally specific.
5) Expand scope of due diligence
Consider how pricing power and margins may be affected by inflation and supply chain disruptions. Include cyber resilience and AI strategy, governance and integration readiness within the scope of your review.
6) Anticipate deal-protection friction
Longer deal timetables increase the importance of allocation of risk. Plan for more negotiation around what happens if conditions deteriorate between signing and completion (including termination rights, interim operating covenants and insurance gaps).
