Food and beverage M&A update: H2 2025

Here are some key takeaways from the report:

Public market performance

The food and beverage sector experienced weak overall public market performance in H2 2025, influenced by persistent cost pressures, value‑driven consumer behavior and elevated raw material and tariff costs. Consumers increasingly sought savings by shifting to private‑label products while others gravitated toward better‑for‑you and functional offerings. Private label continued to outperform national brands, reaching record revenue levels. The no‑ and low‑alcohol category expanded significantly, supported by younger demographics and broader wellness trends, while functional beverages such as prebiotic sodas, nootropics and hydration products saw rising demand.

Subsector and valuation trends

Per the Baker Tilly Capital Food & Beverage Index, results varied widely. Agribusiness was the only subsector that grew, while beverage, branded packaged goods, natural/organic and snacks saw declines. Valuation multiples continued to soften from their 2021–2022 highs, with both EV/EBITDA and EV/revenue metrics trending downward across most categories. Despite industrywide compression, beverage and snack companies maintained the strongest relative multiples.

M&A market dynamics

U.S. food and beverage M&A activity in H2 2025 remained consistent with the first half of the year, with deal count increasing modestly but overall 2025 volume lower than in 2024. Deal value normalized to historical ranges due to fewer mega‑deals, with two large transactions, TreeHouse Foods and WK Kellogg Co, representing most of the total value. Food products companies accounted for the majority of deals, and California remained the most active state for buyer activity. Strategic buyers focused heavily on brands aligned with health, wellness, clean‑label positioning and functional benefits.

Health and wellness acquisition themes

Health and wellness continued to shape acquisition priorities, with established brands pursuing companies offering clean‑label, plant‑based, protein‑forward and functional products. Growth in the no‑ or low‑alcohol category, healthy snacks and ingredient‑transparent foods fueled portfolio reshaping. As consumers increasingly demand less‑processed products and clearer ingredient profiles, these trends are expected to accelerate M&A activity into 2026.

Trade spend considerations in due diligence

Trade spend (TS) remains a major factor in the financial health of consumer‑packaged goods businesses, covering both contractual fees and promotional incentives. Smaller brands, lacking specialized support, often struggle to manage TS effectively, exposing them to margin erosion and cash‑flow strain. During due diligence, assessing margin sustainability, the adequacy of TS accruals and the ROI of promotional spending is essential. Differentiating between essential and non‑essential promotional investments helps determine true profitability and long‑term financial performance.