M&A activity in the global food and drink sector increased by 9 per cent last year, to $110.9 billion (approx. £82.7 billion), but dealmaking in the mid-market area of the industry was relatively flat in a more selective environment.
New research from Baker Tilly International showed the global food and drink sector continuing a multi-year recovery that has seen it bounce back from 2022, when just $59.4 billion-worth of deals were completed (approx. £44.3 billion).
However, the sector continues to be defined by a more cautious approach, with growth in 2025 significantly lower than the overall recovery across all M&A sectors, where deal value increased by 45 per cent.
Particularly notable was the flat performance of the mid-market food and drink sector (which, in the report, spans deals valued at between $15 million and $500 million). In this area of the sector, Baker Tilly International found that deal value had increased just 1 per cent year-on-year from 2024, rising to $20.4 billion (approx. £15.2 billion).
Deal volume, meanwhile, fell by 1 per cent, according to the report, in contrast to an increase of 4 per cent in deal volume across all mid-market sectors.
According to Baker Tilly, this demonstrates the cautious nature of the recovery in food and drink dealmaking, with investors willing to commit capital, but more selective in their transactions. The report highlighted how buyers were increasingly focusing on targets with a clear strategic fit, differentiated offerings and pricing power.
Another major trend noted in the report was the growing gap between strategic and financial buyers in the sector. While private equity activity has been cautious in many sectors over recent years, the food and drink sector saw a marked weakening in activity, with both value (down 35 per cent) and volume (down 31 per cent) dropping significantly.
Strategic buyers were comparatively more active, with strategic dealmaking boosted by strong balance sheets and a continued focus on using M&A to boost scale, portfolio optimisation and long-term growth.
Portfolio optimisation has emerged as a key trend within food and drink M&A, particularly among large corporates, as buyers increasingly move capital from low-growth areas to higher-margin categories in a shift that is encouraging portfolio rationalisation and divestments.
Despite the dip in mid-market volume and flat value, this trend is driving a solid pipeline of mid-market carve-out opportunities, as well as increasing competition for high-quality assets.
As in many other sectors, technology is proving a key value driver, as buyers focus on targets enabling AI-assisted demand forecasting, inventory optimisation, data analytics, deeper customer engagement and supply chain efficiency.
Geographically, Western Europe saw consistent dealmaking, accounting for 24 per cent of mid-market deal value and 23 per cent of volume last year. While value was up 15 per cent year-on-year, volume grew more modestly, at 2 per cent.
The largest share of mid-market activity was held by Asia Pacific, which made up 41 per cent of deals and 39 per cent of value in the mid-market. North America, meanwhile, accounted for 21 per cent of mid-market value and 17 per cent of volume. The region saw sharp year-on-year drops in both areas, however, with value down 27 per cent and volume falling 24 per cent, amid uncertainty over tariffs and regulations.
With the food market accounting for 76 per cent of value and 82 per cent of volume across the wider sector last year, key sub-sectors highlighted by Baker Tilly International included healthier products, convenient formats and premium offerings. These areas are expected to continue to shape M&A throughout this year and into the next.
While food deals dominated the sector, beverages were also flagged as an emerging area of interest, with investor attention focused on health-conscious markets such as low- and no-alcohol drinks and functional beverages.
Looking ahead to the rest of 2026, Baker Tilly International say that dealmaking is expected to continue to be defined by the reshaping of corporate portfolios and demand for assets focused on health and wellness.
While activity could be boosted by an improving financial backdrop, the report adds that cross-border dealmaking could recover at a slower rate. However, it notes that the sector’s fundamentals continue to drive attractive dealmaking opportunities for strategic investors.
Harsh Maheshwari, global advisory services leader at Baker Tilly International, said: “F&B dealmaking is entering a more selective phase. Buyers are looking beyond scale to clear consumer relevance, pricing power and resilience. In the mid-market, this creates strong opportunities for brands built around health, convenience, premiumisation and supply chain resilience.”
“As confidence improves, the most attractive assets will be businesses that sit closest to changing consumer demand and are agile enough to scale through new channels, markets and technology.”
“What makes mid-market F&B so compelling right now is the diversity of deal flow. Mature markets are producing carve-outs and succession-driven opportunities, while high-growth markets are surfacing younger, faster-growing targets in categories that barely existed a decade ago. Both offer real opportunities for different reasons.”
Check out some of our recent interviews on private equity activity and M&A in the food and beverage sector:
Mid-market bolt-on deals fall sharply from 2024 peak
Food and drink M&A dips but remains resilient in 2025
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