The food and beverage sector is expected to see continued growth in M&A, following a second quarter in which dealmaking activity accelerated once more. Activity is being driven by a range of strong tailwinds, including private equity interest, strategic consolidation and major transactions.
According to the latest data from Grant Thornton, deal volume was up 30 per cent quarter-on-quarter during the second quarter of 2025, with 52 deals (at a disclosed value of £2.5 billion) compared to 40 in Q1. This was also a 40.5 per cent year-on-year increase when compared to the 37 deals completed during Q2 2024.
According to Grant Thornton Head of Consumer Industries Nicola Sartori, investor uncertainty over the impact of tariffs on UK businesses was partially overidden by strong private equity interest in the sector, strategic consolidation and improved margins.
Saying this was “the most positive I’ve been about M&A for years”, Sartori added that the sector was seeing “lots of interest from investors – both those with platforms looking for bolt-ons and others entering the F&B space for the first time.”
Overall, Q2 2025 represented the food and beverage sector’s best quarter for M&A activity since early 2021 - with the exception of Q3 2024, in which M&A was bolstered by owners seeking to complete deals before anticipated increases in capital gains tax.
Sartori stated that Q2’s strong figures were in part a result of ongoing pent-up demand following the COVID-19 pandemic and Russia’s war in Ukraine, as well as continuing portfolio optimisation by major companies in consumer packaged goods.
Big deals were a notable feature of the second quarter, with major transactions including Müller’s takeover of kefir and gut health brand Biotiful and Greencore’s proposed £1.2 billion takeover of fellow food manufacturer Bakkavor (a deal which is, however, currently subject to a Competition and Markets Authority inquiry).
While private equity dealmaking has remained somewhat reticent in many other sectors, amid ongoing economic and geopolitical headwinds, PE investors have demonstrated growing appetite for food and beverage M&A in 2025.
Private equity deal numbers jumped to 17 in Q2, up from 11 in Q1, with Sartori highlighting the significant dry powder that PE firms continue to hold, as well as the need for investors to exit long-held assets.
Sartori identified Swiss PE firm Partners Group’s £400 million June acquisition of pet food manufacturer MPM Products from 3i as a key deal, saying that such huge returns provide PE investors with “the confidence to enter and expand investment in the industry”.
The most active sector for dealmaking in the second quarter was alcoholic drinks, which saw 13 completed deals - albeit many that were smaller than average. There were seven deals in the dairy sector, while pet food remained a popular category, registering six deals.
The strong dealmaking momentum the sector has seen this year appears to be continuing during the third quarter. Already there have been a number of major transactions, including the merger of breadmakers Hovis and Kingsmill and Premier Foods’ recent acquisition of ready-to-eat grain and pulse pouch brand Merchant Gourmet.
There is also the potential IPO of canned fish and fruit giant New Princes Group, with the company revealing earlier this year that it was exploring a London Stock Exchange listing. Sartori said that this would be a major indicator of market confidence, providing “a seal of approval for the industry and a positive affirmation that dealmaking is back.”
“This also feeds down the line”, Sartori added, “and gives PE confidence that public markets can be a potential avenue for exit once again, driving firms to do more deals in the space.”
Find out more about the tailwinds bolstering M&A activity in the food and beverage sector
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