Food & Beverage M&A Year-in-Review — 2023
Climate change is the biggest issue for food brands in the post-WWII era. (Photo: Shutterstock)
Tamarack Partners released its 2023 Food & Beverage M&A Year-in-Review. The major challenge for sector participants in 2023 was inflation, albeit significantly moderated than in 2022. The U.S. economy also avoided a recession this year, as interest rate hikes seemed to have tamed inflation without ushering in the recession many predicted.
Inflation and the resulting price increases have served as a “cheat sheet” for consumer packaged goods (CPG) companies to grow dollar sales while, in many cases, turning in lower unit sales. From 2020 to the present, CPG giants have had a great run and valuations soared. This will change as economists predict deflation in 2024, which will force operators to put a renewed focus on unit sales growth. Just days into the new year, grocer Carrefour pulled Pepsi products from its shelves in France, Spain, Italy and Belgium due to “unacceptable price increases”.
The Federal Trade Commission (FTC), with its increasingly aggressive enforcement stance against CPG and food retail M&A, challenged several notable deals this year. The agency tried to block the Kroger-Albertsons merger and is currently conducting an antitrust review of Campbell’s $2.7 billion acquisition of Sovos Brands. Sector players can expect more FTC scrutiny in 2024 than at any time in recent history.
The pandemic deprioritized environmental issues as supply, food safety and price became the primary concerns of U.S. consumers. However, with COVID-19 in the rear-view mirror and food inflation waning, climate change has resurfaced as the biggest issue for food and agribusiness in the post-World War II era. Brands must address climate change, water and plastic packaging or risk sales declines and an erosion in brand equity.
Also included in this report:
M&A commentary by sector and acquirer group
Insight from cannabis lawyer Carol Moss
Spotlight on notable deals
Listed transactions
Tamarack Partners provides M&A advisory services to owners of lower middle market companies. For more information on this report or to speak with one of our transactional advisors about your business, Contact Us.
