2025 Consumer Products & Retail M&A Industry Report

Overview: The Consumer Products & Retail sector has undergone significant merger and acquisition (M&A) activity as companies adapt to rapidly evolving consumer expectations. In recent years, dealmaking in this space has been driven by the need to embrace e-commerce and digital transformation, deliver more personalized experiences, and achieve greater scale and efficiency amid economic headwinds. Consolidation is a prevalent theme – from global luxury brand conglomerates to grocery and convenience store chains – as companies seek to broaden their reach and streamline operations. At the same time, strategic partnerships and targeted acquisitions (especially in marketing and data analytics) are enabling firms to better understand and engage the modern consumer. In this comprehensive report, we examine the key trends, drivers, notable deals, and outlook for M&A in Consumer Products & Retail through 2025, providing industry operators and investors with an in-depth view of the current landscape.

Recent M&A Landscape and Market Trends

Figure 1: Global Consumer Products M&A Deal Value vs. Deal Count (2014–2023). After peaking in 2015 and again in 2021, consumer sector deal volume fell to its lowest level in a decade in 2023, even as total deal value remained relatively high due to a few large transactions.

Deal Volume Slump, Value Resilience: M&A activity in consumer products and retail has been on a rollercoaster. Following record dealmaking in 2021, global transaction volumes plunged in 2022 and 2023 amid inflation, rising interest rates, and geopolitical uncertainty. In fact, 2023 saw the number of consumer product deals sink to the lowest level in over 10 years, reflecting a broad pullback by both corporate and private equity buyers. However, total deal value held up better than volume, buoyed by a handful of mega-deals and spin-offs. For example, Johnson & Johnson’s $40Bn spin-off of Kenvue (consumer health) in 2023 significantly boosted aggregate deal value despite the overall slowdown in deal count. Broadly, the past two years were challenging for consumer M&A – global deal volumes fell roughly 17% and values declined over 50% from the 2021 peak – but the headline numbers mask an important shift toward smaller, strategic deals rather than blockbuster mergers.

Mid-Market and Strategic Focus: With fewer large-scale mergers happening, activity skewed toward mid-sized acquisitions and bolt-on deals. Many consumer products companies favored targeted acquisitions of niche brands or capabilities instead of pursuing transformative mergers with direct competitors. This trend was driven by both necessity and opportunity: traditional scale mergers have become harder to execute (due to high valuations and regulatory scrutiny), while smaller deals allow companies to quickly capture emerging consumer trends or technologies. As a result, the mid-market proved more resilient – many of the deals that did occur in 2022–2024 were those in the $50–500 million range, often involving agile startups or brands with loyal followings being scooped up by larger players. Corporate acquirers with strong balance sheets had an advantage in this environment, as higher interest rates made leveraged buyouts tougher for private equity. Indeed, strategic buyers (big consumer goods firms, retail chains, and holding companies) accounted for a large share of recent deals, capitalizing on their access to cash and appetite for growth.

Macroeconomic Headwinds: The downturn in consumer M&A coincided with a difficult economic backdrop. Decades-high inflation in 2022–2023 drove up input costs and forced consumer companies to raise prices, testing brand loyalty. Meanwhile, rising interest rates increased the cost of financing acquisitions, and a potential recession on the horizon made some boards hesitant to pull the trigger on major investments. These factors led to a “wait and see” approach for many would-be acquirers. Valuation gaps emerged between what sellers expected (based on prior peak valuations) and what buyers were willing to pay in a more uncertain climate, causing some deals to be delayed or abandoned. Additionally, geopolitical tensions and supply chain disruptions injected further caution, especially for global consumer goods firms operating across markets.

Signs of Recovery: Entering 2024, there has been a cautiously optimistic shift. With inflation moderating and central banks signaling that interest rate hikes are slowing or pausing, financing conditions are stabilizing. Many consumer companies spent 2023 streamlining operations and refocusing on core brands, which left them better positioned to pursue growth opportunities going forward. Surveys of industry executives show a majority expect M&A activity to rebound in late 2024 and into 2025, provided the macroeconomic environment holds steady. In fact, over half of consumer products CEOs polled indicated plans to make at least one acquisition in the next 1–3 years. The first half of 2024 still saw deal volumes slightly down year-over-year, but momentum began picking up in Q3 and Q4 with a few headline-grabbing deals (detailed later in this report). Private equity “dry powder” remains near record levels as well, suggesting that once credit conditions improve, financial sponsors will also re-engage in dealmaking. Overall, the stage appears set for a gradual M&A recovery, driven by strategic necessity as much as by easing economic pressures.

Key Themes: Several themes have defined Consumer & Retail M&A in this period: (1) companies doubling down on digital and e-commerce capabilities; (2) acquisitions aligned to changing consumer preferences (health, sustainability, premiumization); (3) ongoing consolidation in fragmented subsectors like grocery, convenience, and specialty retail; (4) increased interest in data analytics, AI, and marketing tech deals to drive personalized customer experiences; and (5) a focus on portfolio optimization, with many firms selling non-core divisions and acquiring in growth areas. In the sections below, we explore each of these drivers and trends in depth, along with illustrative transactions.

Key Drivers of M&A in Consumer Products & Retail

1. Digital Transformation and E-Commerce Expansion

The boom in e-commerce and omnichannel retail is perhaps the most profound force reshaping the consumer and retail industry. As shopping increasingly shifts online and consumers demand seamless experiences across digital and physical channels, companies have turned to M&A to acquire the necessary technology and scale to compete.

Digital commerce drives retail M&A: Retailers are investing heavily in e-commerce, mobile shopping, and omnichannel capabilities to meet consumers online. Many have acquired tech startups or online-first brands to accelerate their digital transformation.

Omnichannel Imperative: Traditional brick-and-mortar retailers have spent the past decade adapting to an omnichannel world – one where customers expect to browse and buy across websites, mobile apps, social media, and stores interchangeably. Rather than build all these capabilities from scratch, retailers often acquire e-commerce companies or tech providers to jump-start their digital offerings. A notable example was Walmart’s acquisition of Jet.com for $3.3 billion (back in 2016), which aimed to rapidly expand Walmart’s online presence. While that deal is older, the logic endures: more recently, retailers have bought up niche direct-to-consumer (DTC) brands and online marketplaces to gain e-commerce talent and infrastructure. These acquisitions provide not only a ready-made online sales channel but also bring in expertise in areas like digital marketing, logistics, and web personalization – skills that legacy retailers may lack. The COVID-19 pandemic dramatically accelerated online shopping adoption, reinforcing that a robust e-commerce strategy is essential for retail survival. Thus, M&A has become a fast-track to omnichannel transformation, allowing incumbents to stay relevant as digital-native competitors proliferate.

E-Commerce Sector Deals: The e-commerce sector itself has seen brisk M&A activity, with many platform providers, online retailers, and e-commerce software firms combining forces. Companies that enable online shopping – from payment processors to fulfillment tech – have been highly sought after. For instance, Shopify and other commerce platforms have acquired smaller startups specializing in areas like AI-driven product recommendations or inventory optimization to enhance their service offerings. In 2024, e-commerce M&A volume ticked upward as private equity and strategics showed renewed interest in the space following the pandemic-era surge. Investors recognize that online sales now make up roughly 15–20% of total retail sales (in the U.S. and rising globally), and they are betting that this share will continue to grow. As a result, any business that helps facilitate or capture online consumer spending – whether it’s an e-grocery delivery service, a direct-to-consumer apparel brand, or a shopping app – could be a target for consolidation.

Cross-Border Expansion Online: E-commerce has also enabled cross-border retail expansion, often via acquisitions. Companies are purchasing online retailers in new geographic markets as a way to enter those regions without the heavy lift of building physical store networks. For example, Walmart’s ongoing investment in Flipkart (India) – it acquired a majority stake in 2018 and put in an additional $3.5 billion in 2023 – showcases how acquiring a domestic e-commerce leader can instantly give a global retailer a foothold in a high-growth market. Similarly, many Western consumer brands have acquired smaller international DTC brands (or vice versa) to access new customer bases through online channels. In essence, e-commerce M&A has become a key enabler of globalization for retail, allowing companies to extend their reach to digital consumers worldwide.

Technology Acquisitions: Beyond acquiring online retail businesses, Consumer & Retail firms are also buying technology companies outright. Notable examples include Nike’s acquisitions of tech startups (like a data analytics firm to personalize shopping, and a digital design studio for virtual products), as well as McDonald’s acquisition of Dynamic Yield, an AI personalization platform that helped the fast-food giant customize drive-thru menus based on time of day and customer preferences. These deals illustrate a broader trend of retailers and consumer product companies moving into the tech space to gain proprietary capabilities in AI, machine learning, mobile engagement, and data processing. Such tech-driven acquisitions blur industry lines – a consumer goods company may find itself owning a software development team post-deal – but they underscore that success in modern retail is increasingly about bits and bytes as much as products on shelves.

Overall, the digital transformation driver means we will continue to see M&A that helps consumer-facing businesses scale up their e-commerce operations, improve their omnichannel logistics, and engage customers through new digital platforms. The urgency to meet consumers where they are (which is often on their smartphones or laptops) ensures that deals bridging retail and technology will remain a major theme in this sector.

2. Personalized Customer Experiences and Data Analytics

Hand-in-hand with digital expansion is the rising importance of personalized customer experiences. Today’s consumers expect tailored product recommendations, targeted marketing, and loyalty rewards that fit their individual tastes. Delivering this level of personalization requires robust data analytics and marketing technology – capabilities that many consumer and retail companies have sought to acquire through M&A.

Data-Driven Marketing: In recent years there has been a wave of acquisitions at the intersection of consumer products and advertising/marketing technology. Large consumer packaged goods (CPG) companies and retailers are buying up firms that specialize in customer data analysis, digital advertising, and AI-driven marketing. The goal is to harness data (purchase history, online browsing behavior, social media trends, etc.) to refine how they target and serve customers. For example, several big-box retailers have built out their own retail media networks – essentially advertising platforms that monetize the retailer’s customer data by selling ads on their websites or in-store. Walmart, Kroger, Amazon, and others now generate substantial revenue from these advertising businesses. To accelerate this, some have acquired or partnered with advertising tech firms. Walmart’s purchase of a startup called Polymorph Labs a few years ago (to bolster its ad targeting platform) and Kroger’s earlier acquisition of data analytics firm 84.51° (formerly part of dunnhumby) are illustrative moves. Even fast-food chains got in the game – as noted, McDonald’s bought an AI marketing company to personalize menus, and Starbucks acquired a small tech startup to enhance its mobile app personalization. These acquisitions reflect a broader strategy: owning the data and the tools to analyze it is now a competitive advantage in consumer industries.

Advertising & Agency Consolidation: The marketing and advertising industry itself has undergone consolidation driven by the need for data and digital expertise. Agency holding companies (WPP, Omnicom, Publicis, etc.) and consulting firms like Accenture have been voracious acquirers of digital agencies, analytics consultancies, and AI marketing startups. This is highly relevant to consumer products companies, because these agencies in turn serve the big brands. The 2022–2025 U.S. Digital Marketing & Advertising M&A Report details how dozens of boutique digital agencies have been rolled up to create full-service firms that can handle programmatic ad buying, influencer campaigns, and AI analytics under one roof. Many consumer brands have even in-housed some marketing capabilities via acquisitions – for instance, a CPG manufacturer might acquire a small social media marketing agency to create an internal content studio, ensuring their brand messaging stays on-point and data-driven. The upshot is that advertising M&A (driven by the quest for data and analytics) complements consumer sector M&A: together they enable personalized engagement. Companies know that if they can better understand and predict consumer behavior through acquired data science capabilities, they can curate product offerings and marketing in a way that increases loyalty and sales.

AI and Personalization at Scale: The advent of powerful artificial intelligence tools has further raised the stakes. Generative AI and machine learning can sift vast consumer data sets to find patterns, segment audiences, and even generate personalized content (like custom product recommendations or individualized promotions) automatically. Recognizing this, firms have been investing in AI startups or building internal AI teams via acqui-hire deals. In retail, we see AI being used for everything from personalized email marketing to dynamic pricing and store layout optimization. One interesting example: cosmetics companies integrating augmented reality (AR) tech – e.g., Estée Lauder acquired the AR company ModiFace to let customers virtually “try on” makeup shades personalized to their face. Meanwhile, grocery chains are exploring AI-driven shopping assistants and recipe recommendations based on past purchases. By acquiring tech companies with these specialties, retailers can incorporate personalized AI-driven features much faster. The end goal is a tailored consumer experience – when you shop, whether online or in-store, the assortment, pricing, and messaging you encounter could be uniquely tailored to you. M&A is serving as a vehicle to deliver that future by bringing cutting-edge data and AI capabilities in-house.

Privacy and First-Party Data: It’s worth noting that as third-party data (like cookies) become less reliable due to privacy changes, companies are doubling down on first-party customer data – which they collect directly via loyalty programs, apps, and purchase history. This makes owning customer relationships and data platforms even more vital. Some retail chains have acquired loyalty program providers or customer relationship management (CRM) platforms for this reason. Additionally, partnerships are forming between consumer brands and data-rich tech firms to share insights (often as an alternative to a full acquisition). The drive for personalization has thus spurred not only acquisitions but also strategic alliances centered on data sharing, such as retailers partnering with credit card companies or telecom firms to get better consumer insights. All these maneuvers highlight that in modern consumer markets, data is king – and M&A is a key way to get it.

3. Shifting Consumer Preferences – Health, Wellness, and Premiumization

Underlying many deals in the consumer products space is the need to align with shifting consumer preferences. Demographic changes and evolving tastes have created high-growth niches – often around health and wellness, sustainability, and premium quality – that larger companies are eager to tap into via acquisitions.

Health & Wellness Boom: Today’s consumers (especially Millennials and Gen Z) place greater emphasis on health, nutrition, and overall wellness. This has catalyzed M&A as big food and beverage companies race to acquire brands offering healthier or functional products. For example, the past couple of years saw large CPG players snap up supplement makers, plant-based food startups, and organic snack brands. Unilever’s acquisition of liquid IV (an electrolyte drink mix) and Nestlé’s string of deals in vitamins and meal replacements are indicative of this trend. Rather than develop new healthy products internally – which can be slow – legacy companies often prefer to buy emerging brands that already have traction with health-conscious consumers. The premium beverage space is also active: big beer companies have acquired kombucha and craft brew labels, and soda giants invested in low-sugar or immunity-boosting drink makers. Even in personal care, conglomerates have bought natural skincare and clean beauty brands to capitalize on wellness trends. This “better for you” movement is expected to continue driving M&A, as consumer awareness of ingredients and nutritional content remains at an all-time high.

Sustainability and Ethical Brands: Closely related is the rise of sustainability as a purchase driver. Shoppers increasingly support brands that demonstrate environmental and social responsibility. This has led to acquisitions of eco-friendly product companies – think recyclable packaging innovators, cruelty-free cosmetics lines, or vegan food brands. A case in point is Unilever’s earlier acquisition of Seventh Generation (known for eco-friendly home products) and more recently, its purchase of Welly Health (sustainable first aid products). Similarly, apparel retailers have acquired niche clothing brands that specialize in organic materials or fair-trade practices. Large corporations see value in adding these mission-driven brands to their portfolios, both to capture a growing customer segment and to bolster their own sustainability credentials. Some deals are also driven by the need to secure sustainable supply chains – for example, luxury groups buying up tanneries and farms to ensure ethically sourced materials. In short, the ESG (environmental, social, governance) factors are now influencing M&A strategy: acquiring a brand that resonates on sustainability can inject new life and goodwill into an established consumer company.

Premiumization & Brand Equity: Another pronounced trend is premiumization – consumers trading up for higher quality or more premium experiences in certain categories. Despite economic pressures, many shoppers are willing to spend more on items that offer superior quality, authenticity, or a status boost (while perhaps economizing elsewhere). This has spurred deals where companies invest in premium brands with strong cachet. A clear example is the flurry of acquisitions in the high-end spirits and wine industry (e.g., beer giant Molson Coors acquiring craft whiskey maker Blue Run Spirits to expand into premium liquor). Likewise, food companies have targeted artisanal and organic product brands – such as Campbell’s $2.7B acquisition of Sovos Brands, which brought the upmarket Rao’s pasta sauce into Campbell’s portfolio. These moves aim to capture consumers who increasingly ask “What is the story behind this product?” and are willing to pay for an elevated experience or trusted origin. Premium brands often also carry higher profit margins, making them attractive targets. Large companies can leverage their distribution muscle to scale up these smaller premium players, ideally without diluting the brand’s authenticity that made it successful.

Portfolio Reshuffling: The pursuit of trendy premium or wellness brands often goes hand-in-hand with divesting legacy brands that no longer fit growth priorities. Many big CPG firms have been pruning their portfolios – shedding slower-growth or commoditized lines (like sugary cereals or mass-market beauty brands) while acquiring in faster-growing segments like gluten-free snacks, craft beverages, or luxury skincare. For instance, Coca-Cola cut loose niche brands (like Odwalla juices) but took stakes in fast-growth ones (like BodyArmor sports drink before fully acquiring it). This portfolio optimization theme means that M&A is not just about expansion, but also about strategic focus. Companies are asking: which segments will drive our growth for the next decade? And if the answer is “high-protein snacks” or “natural pet food” or “luxury fragrances,” then they’ll seek M&A opportunities to build up presence there quickly. Conversely, they might sell or spin off divisions that don’t align (creating opportunities for others or for private equity to acquire those carved-out units).

In summary, changing consumer tastes – from wellness and sustainability to a penchant for premium quality – have directly influenced M&A strategies in the consumer products realm. We can expect firms to remain on the lookout for the next hot brand that embodies these trends, whether it’s a non-alcoholic craft beer, a vegan cosmetics line, or a tech gadget that promotes personal health, and to pursue acquisitions accordingly.

4. Pursuit of Scale and Cost Efficiency

While many recent deals are about innovation and new capabilities, some of the largest M&A moves in Consumer & Retail are still fundamentally driven by scale and cost synergies. This is especially true in subsectors with slim margins or where competition is intense. Companies are merging to create efficiencies in procurement, manufacturing, and distribution, thereby improving profitability. This classic motive remains very much alive in certain corners of the industry.

Grocery and Mass Retail Consolidation: Nowhere is the scale motive more apparent than in the grocery retail sector. Grocery chains operate on razor-thin margins, and the pressures of inflation (raising supplier costs) and consumer price sensitivity have squeezed profits. In response, grocers have pursued mergers to gain bargaining power and reduce overhead. A headline example is the proposed merger of Kroger and Albertsons – two of the largest supermarket operators in the United States – announced in late 2022 for around $25 billion. This blockbuster deal (if approved by regulators) would combine thousands of stores under one company, theoretically yielding economies of scale in purchasing, supply chain, and technology investments. Similarly, in Europe, Carrefour’s planned acquisition of Rival chains (like its 2023 deal to buy over 170 stores from Louis Delhaize’s Cora and Match banners in France) is aimed at consolidating market share in a mature market. Even discount grocers are at it: Aldi US acquired 400+ grocery stores from Southeastern Grocers (Winn-Dixie and Harveys supermarkets) in 2023 to expand its footprint in the Southeast. These moves illustrate a clear trend: grocery retailers are bulking up to spread costs over a larger base and improve competitive position (especially against Walmart, Costco, and Amazon). The synergy targets often include distribution network consolidation, better terms from suppliers due to higher volumes, and SG&A cost cuts by eliminating duplicate regional offices or IT systems.

Convenience Store Roll-ups: The convenience store (c-store) and fuel retail segment is another arena of heavy consolidation. Over the past few years, major c-store operators have been on acquisition sprees to grow their networks. For instance, 7-Eleven (owned by Japan’s Seven & i Holdings) made a splash in 2021 with its $21 billion purchase of Speedway’s 3,800 convenience stores across the U.S., instantly increasing its scale by about 40%. Its rival, Canada-based Alimentation Couche-Tard (owner of Circle K), has likewise been gobbling up competitors; in 2024 Couche-Tard agreed to acquire the 200+ store GetGo chain from Giant Eagle for $1.6 billion – the largest c-store deal of that year – to deepen its presence in the U.S. Midwest and gain expertise in made-to-order food service (GetGo is known for its fresh food and loyalty program). Couche-Tard even made an audacious $38.5 billion offer in 2024 to purchase Seven & i (7-Eleven’s parent) outright, which would have created the world’s dominant convenience retailer – though that bid was ultimately rejected over antitrust concerns. The rationale for these deals is straightforward: more locations and geographic reach equal greater fuel purchasing power, better economies in distribution, and higher brand recognition. Additionally, with electric vehicles and other trends threatening the long-term gasoline business, c-store operators are diversifying their revenue (food service, groceries, etc.), and acquisitions can accelerate that transition by adding new capabilities. The convenience segment’s consolidation is expected to continue, albeit under the watchful eye of regulators if the biggest players attempt to combine.

Global Scale in Consumer Goods: Scale synergies are also a factor for consumer product manufacturers, especially in packaged foods and household goods. As growth slows in core developed markets, companies seek to merge to cut costs and maintain earnings growth. A recent milestone example is Mars, Inc.’s agreement to acquire Kellanova (the newly spun-off Kellogg’s snacks and cereals division) for nearly $36 billion in 2024, one of the largest food industry deals ever. This merger will bring together Mars’s confectionery and pet food empire (brands like M&M’s, Snickers, and Royal Canin) with Kellanova’s leading snack brands (Pringles, Cheez-It, Pop-Tarts, etc.). The combination is squarely aimed at achieving greater scale in the packaged food business – Mars’s CEO emphasized that the enlarged company could better absorb costs and hold prices stable for consumers in an inflationary environment. With food input costs up over 20% in recent years, having a broader portfolio allows more flexibility to weather commodity swings. Moreover, as consumers pivot to cheaper private-label alternatives in some categories, branded food companies believe that being bigger (with more diversified products and efficiencies) will help them defend market share. Industry analysts have noted that after a period of “portfolio pruning” and divestitures in 2021–2023, large food conglomerates like Mars, Nestlé, PepsiCo, etc., are now shifting back toward an “offense” strategy – using acquisitions to drive growth and cut unit costs at the same time. We may thus be entering another wave of big food & beverage consolidation.

Synergies vs. Innovation Balance: It’s important to highlight that while scale deals can yield cost savings, they are often viewed as offering less top-line innovation. Many big mergers of equals in consumer goods (for example, past mega-mergers like Kraft-Heinz or AB InBev’s series of acquisitions) have sometimes struggled with growth after the initial cost cuts. This has made some companies cautious about pure scale plays. The current trend therefore is a mix – companies still want cost synergies, but they try to pair scale with a growth story. In the Mars-Kellanova case, the growth story is snacks (one of the better-performing categories in packaged food) and international expansion. In grocery retail, the growth angle is often improved customer experience and added services (like a merged Kroger-Albertsons could leverage combined data to launch better loyalty programs or private brands). Nevertheless, regulators are closely scrutinizing these large deals for their potential impact on competition and consumers. Antitrust challenges have already emerged (e.g., U.S. regulators have sued to block the Kroger-Albertsons merger and even intervened in the fashion/luxury space with Tapestry’s attempted acquisition of Capri Holdings, which we discuss below). So while scale and efficiency remain key M&A drivers, not every proposed consolidation will succeed; companies must convincingly show benefits and often agree to divest some overlapping assets to appease regulators.

5. Strategic Portfolio Optimization and Shareholder Value

A more strategic driver behind M&A in this sector is the ongoing portfolio optimization by large conglomerates and the influence of shareholders (including activist investors) in shaping M&A agendas. Many consumer products giants are effectively rebalancing their business mix – using divestitures and acquisitions in tandem to exit low-growth areas and double down on high-growth opportunities. This proactive portfolio management is a crucial backdrop to recent deal activity.

Divestitures Creating Deal Opportunities: In 2022–2024, a number of prominent companies sold off divisions or brands, which in turn became M&A targets for others. For example, Johnson & Johnson’s decision to spin off its consumer health division (Kenvue) not only created a standalone company but also possibly set the stage for future acquisitions by Kenvue in the OTC medicine/cosmetics space. Similarly, Kellogg’s split into Kellanova (snacks) and WK Kellogg Co (cereals) effectively put the cereal business in play for consolidation in the future (cereal being lower-growth). Another case: in the beauty sector, Shiseido sold off its mass-market personal care unit to private equity, and that unit later merged or partnered with other brands. This pattern of carve-outs shows how big firms are pruning – which provides “supply” for M&A markets as those carved-out brands often need new homes or investment. Private equity has been very active in scooping up divested assets from consumer conglomerates, with plans to streamline or bolt them onto other portfolio companies. For instance, Coca-Cola European Partners (bottling) saw its major investors drive consolidation among Coke bottlers, and in retail, activist investors pushed department store chains to consider splitting their e-commerce operations. All of this reflects a climate where shareholders are pressuring management teams to constantly justify each part of the business, leading to sales of underperforming or non-core units and acquisitions to bolster the remaining core.

M&A as a Growth Mandate: Shareholder expectations also mean that many publicly traded consumer companies view M&A as essential to meet growth and profitability targets. In sectors where organic growth is slow (e.g., packaged foods often grow low single digits annually), acquisitions can provide an immediate boost to revenue and earnings. Studies have shown that frequent acquirers in consumer industries often outperform those that stay on the sidelines. This has instilled a sort of M&A mandate for some firms – they plan for a certain number of bolt-on acquisitions each year as part of their strategy. CEOs of major beverage, food, and apparel companies regularly discuss looking for “tuck-in” deals on earnings calls. In some cases, if a company isn’t active enough in pursuing deals, activists might agitate for change (either urging acquisitions or pushing for a sale of the whole company). We’ve seen instances where underperforming brands became acquisition targets themselves after pressure – e.g., an activist campaign led to the sale of Avon Products (beauty) a few years back, and more recently some investors have suggested large consumer companies consider breaking up or merging with peers to unlock value. Thus, capital markets dynamics are an indirect but powerful driver of M&A: management teams know that smart dealmaking can be a lever to satisfy investors in terms of growth, and conversely, failing to optimize via M&A can make them a target.

Creative Deal Structures: With the economic fluctuations of the past couple of years, companies have also gotten creative in how they execute portfolio moves. Some deals have involved joint ventures, minority stakes, or earn-outs instead of straight acquisitions, especially when valuation gaps existed. For example, a company might take a 30% stake in a target with an agreement to buy the rest later (this happened in luxury fashion with Kering taking 30% of Valentino in 2023 with an option for full ownership in a few years – a staggered approach to manage debt and integration risk). In retail, some have pursued franchising or partnerships in lieu of immediate M&A; for instance, international franchises allow expansion without a full acquisition of a foreign peer. These alternative structures often precede a full merger once conditions improve. The key point is that strategy and financial engineering are intersecting: legacy companies are continually reshuffling their brand portfolios and using whatever deal structures necessary to achieve the optimal mix. This means a steady churn of assets, which in turn keeps the M&A environment active even when mega-deals temporarily slow.

In essence, portfolio optimization is the chessboard on which consumer M&A plays out. Every brand or business line is being evaluated for how it fits into the future vision, and acquisitions or divestitures are executed accordingly. This strategic pruning and growing will persist as companies strive to remain agile and relevant in a consumer market that can change quickly.

Notable M&A Trends by Subsector

Breaking down M&A activity further, we can observe distinct trends within various subsectors of Consumer Products & Retail. Below, we highlight a few key segments – Grocery Retail, Convenience Stores, Luxury & Fashion, Packaged Consumer Goods, Beauty & Personal Care, and Direct-to-Consumer brands – each of which has experienced unique drivers and landmark deals.

Grocery Retail: Consolidation for Survival

The grocery industry has been one of the most consolidation-prone sectors in retail, as discussed. Notable developments include:

Mega-Mergers: The pending Kroger–Albertsons merger (announced October 2022) stands as a potential game-changer. At roughly $25 billion, this deal would unite two top-five US grocers, combining well-known banners like Kroger, Ralphs, Harris Teeter (from Kroger’s side) with Albertsons’ network including Safeway, Vons, Jewel-Osco, and others. The primary motivation is to gain national scale to compete with Walmart and Amazon and to generate an estimated $1B+ in cost synergies (via improved supply chain efficiency and administrative cost cuts). However, the deal faces intense antitrust scrutiny – regulators and lawmakers have raised concerns that the combined entity could reduce competition in certain regions, possibly leading to higher prices for consumers. The companies have preemptively proposed divesting several hundred stores to address overlaps (and even lined up a buyer for those spinoff stores), but as of late 2024 the merger’s fate remains uncertain. Its outcome will set the tone for future large retail mergers. If it proceeds, we might see other regionals pair up; if it fails, it could cool big retail M&A for a time.
Regional Acquisitions: Outside of mega-deals, numerous regional grocery acquisitions have occurred. Aldi’s purchase of Southeastern Grocers’ stores (the Winn-Dixie and Harveys chains in the US Southeast) in 2023 instantly expanded Aldi’s presence by 400 stores, pushing it into the ranks of the top supermarket operators in the country. This deal also underscores how European discount grocers are aggressively expanding in the U.S. through M&A. In another example, H-E-B (a Texas-based grocer) acquired some smaller independent grocery chains in 2022 to enter new local markets. In Europe, beyond Carrefour’s deals in France, the UK saw Morrisons acquire the McColl’s convenience store chain (2022) to convert many to Morrisons Daily outlets, and Asda purchase fuel/grocery assets from Co-operative Group (2023) to enhance its convenience footprint. These deals are about filling geographic gaps and achieving density. The more stores under one umbrella in a region, the better utilization of distribution centers and marketing spend.
E-Commerce and Delivery Integration: Grocers have also made acquisitions related to online grocery and delivery services. The pandemic pushed grocery into e-commerce quickly, and players that lagged often decided to buy rather than build. For instance, Ahold Delhaize (owner of Stop & Shop, Food Lion, etc.) acquired a majority stake in FreshDirect (an online grocer in the Northeast US) in 2021 to boost its e-commerce capabilities in a key market. Kroger entered into a long-term partnership with UK-based Ocado to build automated warehouses, essentially an alliance, but other smaller grocers simply acquired local delivery startups to own that last-mile service. Additionally, international deals like Uber Eats acquiring Cornershop (Latin American grocery delivery app) show the interplay between tech platforms and grocers. While not a grocery chain acquiring another, it demonstrates how the ecosystem is consolidating – the lines between retailer and delivery provider are blurring through M&A and partnerships.

Outlook for Grocery: Expect consolidation to continue, but likely through small to mid-sized acquisitions rather than giant mergers, unless Kroger-Albertsons paves the way. Margins will likely remain tight due to price-sensitive consumers and competition from warehouse clubs and dollar stores, so grocery chains will keep looking for scale deals that promise cost savings. Another impetus is the growth of private label (store brands) – larger scale allows grocers to invest in better private label products at lower cost. Internationally, distressed situations (like the restructuring of France’s Casino group) may present acquisition opportunities for rivals or private equity to pick up assets. Technology will also be part of M&A: grocers might acquire tech firms for checkout automation, inventory optimization, or AI-driven demand forecasting to run more efficiently. All said, survival in grocery often means being big, and that will drive further M&A.

Convenience Stores & Gas Retail: Race to Global Dominance

As highlighted, convenience store operators have been extremely active consolidators:

Global Players, Local Deals: The c-store industry has a few global giants (7-Eleven/Seven & i, Couche-Tard/Circle K, BP’s AMPM, EG Group, etc.) competing to acquire regional chains. 7-Eleven’s acquisition of Speedway (2021) was transformative, extending its lead in the U.S. market. Following that, 7-Eleven in 2024 acquired the remaining stake in Sunoco’s Stripes convenience stores (204 stores in Texas and surrounding states) for about $1 billion, completing its ownership of that network. Not to be outdone, Couche-Tard not only bid for 7-Eleven’s parent but also executed the GetGo deal (270 stores) and previously in 2023 bought several hundred convenience stores in the U.S. South from True Blue and other sellers. Casey’s General Stores, a big player in the Midwest U.S., made its largest-ever acquisition in 2024 by buying 198 stores from Fikes (CEFCO convenience chain) for over $1 billion, pushing Casey’s further into the Southern states. These transactions show an unmistakable “land grab” for store count.
New Entrants via M&A: The sector has also seen new entrants use M&A to enter markets. A great example is FEMSA’s entry into the U.S. convenience market: FEMSA, which operates the massive OXXO convenience chain in Latin America, acquired 249 convenience stores from Delek US in 2024 for $385 million, marking its first major foothold in the United States. FEMSA will rebrand those stores to OXXO over time. This kind of move – a foreign operator buying an existing chain to expand abroad – indicates that no region’s convenience market is off-limits. Similarly in Asia, Japan’s Seven & i (7-Eleven) and others have bought chains across Southeast Asia and Australia. And in Europe, Couche-Tard has a presence via acquisitions like Statoil Fuel & Retail years ago. So, cross-border acquisitions are very much part of the c-store consolidation story, as cash-rich operators look globally for growth.
Integration of Foodservice and Loyalty: A driving force in c-store M&A is the push to improve in-store offerings (beyond fuel and snacks). The Couche-Tard/GetGo deal is telling: GetGo’s stores, owned by a grocery chain, are known for fresh food and robust loyalty programs. Couche-Tard explicitly wanted that foodservice expertise and loyalty data to enhance Circle K stores. Similarly, 7-Eleven in recent years acquired smaller food-centric retailers (e.g., bakery-cafés in Japan) and has heavily promoted its 7Rewards loyalty app – some of that development came via acquiring tech startups. The trend is that gas station convenience stores are evolving into quick-serve restaurants and mini-markets, and acquisitions help accelerate that evolution by bringing in new product offerings or loyalty systems.

Outlook for C-Stores: The convenience segment will likely continue consolidating at a brisk pace. Scale matters for negotiating fuel prices and for spreading the cost of technology upgrades (like EV charging stations, which many are now installing). We could see more attempts at blockbuster mergers – perhaps Couche-Tard revisiting a bid for a major competitor, or one of the oil majors spinning off and consolidating retail networks. One wild card is the eventual decline of gasoline demand (due to electric vehicles): this might actually spur more consolidation as companies try to capture as much of the remaining fuel volume as possible and diversify revenues. Also, private equity has shown interest in c-stores due to their steady cash flows – for instance, the UK’s EG Group merged with Asda’s petrol station business in 2023 in a PE-backed deal. In sum, the race to be the last big player standing in convenience retail is on, and M&A is the weapon of choice.

Luxury & Fashion: Building Brand Empires

The luxury goods and fashion industry has seen headline-grabbing M&A as the biggest players seek to assemble stables of premium brands:

Luxury Conglomerates Grow: European luxury conglomerates like LVMH and Kering have long used acquisitions to expand their houses of brands. LVMH’s purchase of Tiffany & Co. (completed in early 2021 for $15.8B) was a landmark, bringing an iconic jewelry brand under its umbrella. In 2023, Kering acquired a 30% stake in Valentino (the Italian fashion house) for ~€1.7B, with an option to buy the rest by 2028 – a strategic move to eventually add Valentino to its roster alongside Gucci, Saint Laurent, etc. Kering also acquired Creed, a high-end fragrance brand, in 2023 to strengthen its position in luxury perfumes. These deals reflect a strategy of full-spectrum dominance in luxury: owning brands across fashion, jewelry, cosmetics, and even hospitality (LVMH has acquired luxury hotels and champagne houses in the past) to cater to affluent consumers’ every lifestyle aspect. The motivation is not only revenue growth but also control over brand heritage and distribution. Conglomerates can invest in global expansion for these brands (new stores in China, e-commerce development, etc.) more efficiently than standalone companies might.
American Luxury Merger (and Challenge): In the United States, 2023 saw an attempt to create a U.S.-based luxury powerhouse: Tapestry (owner of Coach, Kate Spade) agreed to acquire Capri Holdings (owner of Michael Kors, Versace, Jimmy Choo) for $8.5B. This deal would have combined some of the best-known accessible luxury and high-fashion brands under one roof, potentially creating synergies in sourcing, retail storefronts, and customer data across the brands. The strategy was to better compete with the European giants by achieving scale and a diverse brand portfolio. However, in a twist, the U.S. Federal Trade Commission moved to block the Tapestry–Capri merger in 2024, arguing that combining Coach and Michael Kors (which compete in the same handbag/apparel segments) could reduce competition in the “affordable luxury” market. Facing the legal challenge, the two companies ultimately called off the merger. This was a surprising development because fashion deals historically haven’t seen much antitrust interference (due to the fragmented nature of the market and strong brand differentiation). The blocked deal underscores that regulators in the current environment are broadly cautious about consolidation, even in areas like luxury fashion where one might assume plenty of alternatives exist. For the industry, this may cool ambitions of U.S. players forming large conglomerates, or at least force them to attempt smaller serial acquisitions rather than one big swoop.
High-End Beauty and Watches: Adjacent to fashion, the beauty and cosmetics sector and high-end watch/jewelry sector have also consolidated. Estée Lauder Companies made a splash by acquiring the Tom Ford brand in 2023 for about $2.8B, securing the Tom Ford Beauty line (which it was licensing) and also branching into fashion (via a partnership to license out the apparel business). In the watch world, Rolex acquired Bucherer (a major luxury watch retail chain) in 2023, a somewhat unusual move for a storied watchmaker to buy a distributor – likely to tighten control over sales channels and protect brand positioning. These moves show luxury players ensuring they have control over their vertical integration and brand presentation in an era where even the highest-end consumers are changing how they shop (more online, more global travel retail, etc.).

Outlook for Luxury/Fashion: The luxury sector has proven resilient even during economic headwinds, often maintaining high margins and strong demand from affluent customers worldwide. Thus, big players will continue to use their financial strength to acquire coveted brands or strategic assets (like manufacturers, suppliers, or retail channels). We may see additional cross-category acquisitions – for example, a fashion house buying a jewelry maker or a cosmetics line to broaden their lifestyle offering. There’s also the prospect of more private equity exits: in recent years, many luxury brands (like Versace, Moncler, etc.) saw PE involvement, and those investors eventually look to sell – often to the big luxury groups. So LVMH, Kering, Richemont, Prada Group and others will have opportunities to snap up independent brands that come to market. One dynamic to watch is Chinese players: as China is a huge luxury market, Chinese luxury groups or investors might start acquiring Western luxury brands (some smaller deals have already occurred). Additionally, if regulatory hurdles persist in the West, companies might focus on acquiring minority stakes or forming partnerships first (similar to Kering’s Valentino approach) to test the waters. In any case, luxury’s mantra of scarcity and exclusivity is somewhat paradoxically achieved through ever-larger corporate families, so the trend of luxury M&A is far from over.

Packaged Consumer Goods (Food, Beverage, Household): Focused Expansion

Large packaged goods companies (spanning food, beverage, household care, and personal care) have been actively reshaping through M&A:

Mega-Deals Return: After a lull, 2024 saw the return of mega-deals in food. The standout is again Mars, Inc.’s $36B acquisition of Kellanova, which signals that huge, bold moves are on the table to redefine portfolios. This deal, closing in 2025, will create one of the world’s largest snack and confectionery companies. Similarly, there was speculation around PepsiCo or Coca-Cola pursuing large acquisitions (rumors swirled about Coca-Cola eyeing a major stake in Celsius, an energy drink maker, after it invested earlier – though no full acquisition has materialized yet). The Mars-Kellanova combination might spur peers to consider their own big plays to keep up – for instance, one could imagine other conglomerates eyeing parts of each other (there were rumors of General Mills exploring selling some units, etc.). The key drivers for these big deals are scale (cost synergies) and category leadership (dominating the snack category in Mars’s case).
Continued Bolt-Ons: Apart from mega-deals, the bread-and-butter of CPG M&A is the bolt-on acquisition of emerging brands. We discussed earlier how companies are buying brands in trending categories. To list a few notable ones in the last 1-2 years: P&G acquired Mielle Organics (a fast-growing maker of textured hair care products popular among multicultural consumers) in early 2023, enhancing P&G’s beauty portfolio in an inclusive direction. Mondelez acquired Clif Bar in 2022 for $2.9B, expanding into the energy bar segment (tying into healthy snacking). General Mills acquired TNT Crust (a pizza crust maker) to boost its frozen foods, and Post Holdings bought Peter Pan peanut butter from Conagra. In beverages, Coca-Cola acquired full control of BodyArmor sports drink in 2021 after an initial investment. Each of these deals is relatively small on the scale (hundreds of millions to a few billion), but collectively they reshape the acquiring company’s growth profile. Often these acquired brands continue to be run somewhat independently to preserve their entrepreneurial spirit and brand authenticity, while benefiting from the parent’s distribution might.
Private Equity in CPG: Private equity firms have been both buyers and sellers in this space. On one hand, PE groups have acquired brands that big strategics divested – for example, when Unilever sold its Tea business (Ekaterra) in 2021, PE (CVC Capital) bought it. On the other hand, PE has also sold brands back to strategics at a profit when the time is right. A case is JAB Holding (a European investment firm) which built a coffee and beverage empire (Peet’s, Keurig, Dr Pepper, etc.) via acquisitions and then took some public or merged them. One trend to note is the rise of SPACs and IPOs in 2020–21 that took some consumer brands public (e.g., nutrition and organic food companies), but with volatile markets in 2022–23, some of those could become M&A targets if their public valuations fell – making them attractive to an acquirer. Also, family-owned legacy brands without a clear succession plan continue to be targets (often bought by either bigger competitors or PE-backed roll-ups). In summary, the packaged goods arena is very active with both corporate M&A and financial sponsors engineering deals.

Outlook for Packaged Goods: Going forward, expect packaged goods firms to pursue M&A that gives them exposure to high-growth niches (like plant-based proteins, functional beverages, etc.) and to global emerging markets (brands popular in Latin America or Asia). We might also see more consolidation in the pet food sector, which has grown hugely since the pandemic pet adoption boom – big players like Mars and Nestlé could acquire smaller premium pet food brands, and indeed in 2023 Post Holdings (cereal company) acquired Perfection Pet Foods to expand in private-label pet food manufacturing. Additionally, companies will use acquisitions to navigate around challenges like sugar reduction (e.g., buying companies with sugar alternatives or healthier treats if sugar taxes expand). On the divestiture side, expect them to continue selling underperforming or non-core lines (creating opportunities for mid-market M&A by specialized companies or PE). One example: in late 2023, Colgate-Palmolive was reported to be exploring sale of its Hill’s pet food unit – which, if sold, could spark a bidding war among consumer companies or PE, given pet products attractiveness. All told, constant portfolio rebalance will define this space, so both bolt-ons and the occasional transformative merger will be in play.

Beauty & Personal Care: A Hotbed of Deals

The beauty and personal care segment warrants special mention due to the flurry of M&A there:

Legacy Beauty Giants Buying Indies: The Estée Lauders, L’Oréals, Shiseidos, and Cotys of the world have been extremely acquisitive in picking up indie beauty brands. As mentioned, Estée Lauder made a big move with Tom Ford and previously with DECIEM (The Ordinary skincare) and Frédéric Malle fragrances. L’Oréal has perhaps been the most aggressive, acquiring a string of brands: in 2023 alone it agreed to buy Aesop, an Australian luxury skincare brand, for $2.5B (from Brazil’s Natura &Co) – a hefty price but Aesop’s trendy natural image and high margins justified it. L’Oréal also acquired Youth to the People (clean skincare), and years back, IT Cosmetics, CeraVe, etc. The strategy is clear: big beauty firms use M&A to stay on top of trends – whether it’s “clean beauty,” direct-to-consumer distribution, or celebrity brands. They have the scale to take niche labels global. Notably, celebrity beauty lines (such as Kylie Cosmetics, which Coty bought a majority of, or Rihanna’s Fenty Beauty, which is in partnership with LVMH) have been part of the action too, blurring entertainment and beauty sectors.
Retail and Distribution Deals: In beauty retail, there have been interesting partnerships (like Ulta Beauty partnering with Target to put mini shops inside Targets) and some acquisitions like Boots (UK pharmacy retailer) buying a minority stake in a fast-growing online beauty retailer. While pure M&A of retail chains here is less (aside from last decade’s CVS acquiring Target’s pharmacies, etc.), the collaborations and investments highlight how traditional retailers are aligning with specialty beauty to draw in customers. Also, the e-commerce shift is big in beauty, so companies have acquired DTC beauty subscription services (Ipsy merged with BoxyCharm; Birchbox was acquired by FemTec then sold again as it struggled). These moves are about controlling distribution channels and data on customer preferences.
Wellness Crossover: The personal care segment overlaps with health and wellness, and that’s reflected in deals. For example, Unilever acquired brands like SmartyPants (vitamins) and Liquid I.V. (hydration) which sit at the border of supplement and personal wellness. Procter & Gamble grabbed Native (natural deodorant) and This is L. (organic tampons) a few years back. As self-care trends grow, consumer giants see these purchases as bolstering their presence in the daily routines of consumers. Expect more such cross-category acquisitions (like oral care companies buying skincare or vice versa, given the convergence around holistic wellness).

Outlook for Beauty: The beauty sector is expected to remain a hot M&A market, because it’s fragmented (lots of indie brands emerging continuously) and tends to have high margins and brand loyalty – very attractive characteristics for acquirers. We will likely see more Asian companies acquiring Western brands and vice versa, because trends can originate anywhere (K-beauty wave, for instance, led to some Korean brands being acquired by multinationals). Also, as the tech aspect grows (think AI skin diagnostics, at-home devices, etc.), tech firms might even acquire or partner with beauty companies (e.g., gadget makers teaming with skincare). All said, the formula of big firms buying breakout brands will continue, meaning a steady stream of deals in makeup, skincare, haircare, fragrance, and new niches we don’t even know yet (perhaps metaverse/virtual beauty?). Private equity is also deeply involved here, often incubating brands and selling to strategics down the line. Beauty is a rare consumer category that has shown resilience and strong growth globally, so expect intense competition for prized targets, driving valuations high.

Direct-to-Consumer (DTC) Brands: Exits and Integration

Finally, it’s important to discuss the fate of the many direct-to-consumer brands that proliferated in the past decade. These digitally-native brands (often started online, bypassing traditional retail) were once hailed as disruptors – Warby Parker in eyewear, Dollar Shave Club in razors, Glossier in cosmetics, and hundreds more in categories from mattresses to meal kits. Over 2022–2025, we have seen a shakeout and corresponding M&A activity:

DTC Exits via Acquisition: A number of DTC darlings have found homes in larger companies. For example, Unilever’s $1B acquisition of Dollar Shave Club back in 2016 was an early signal. More recently, Unilever acquired Dr. Squatch (a fast-growing natural men’s personal care DTC brand) in 2023 for a reported $1.5B, showing that big CPG is still hungry for successful DTC brands in high-demand niches. Walmart had acquired several DTC brands (Bonobos, ModCloth, Eloquii) around 2017 as it sought to diversify its e-commerce offerings – interestingly, by 2023 Walmart decided to divest those to refocus on core, selling Bonobos to Express, Inc. and Eloquii to FullBeauty Brands. This highlights that integrating DTC brands can be challenging if they don’t fit the acquirer’s main business; however, it doesn’t mean the model failed, just that different owners might extract the value differently (Bonobos under Express aims to broaden its menswear reach, for instance). Nike acquired DTC shoe company RTFKT (focused on digital and physical sneakers, tapping into the hype culture) to reach younger, online audiences. All these acquisitions indicate that many DTC startups ultimately view being acquired as the optimal exit (especially after the IPO market cooled post-2021).
Fire-Sales and PE Roll-ups: Not all DTC brands have acquirers lining up; some have hit growth or profitability walls and ended up in distressed sales. The Retail Dive analysis in mid-2023 noted brands like Scotch & Soda (fashion) filing bankruptcy and then being acquired by brand management firm Bluestar Alliance, and Forma Brands (parent of Morphe cosmetics) being taken over by lenders through bankruptcy for $690M. These are instances where the DTC or trendy retail boom of the 2010s encountered a correction – brands that expanded too fast or lost favor had to restructure. Often, private equity or brand consolidators will buy these at a discount, aiming to turn them around. We also see roll-up strategies: firms like THG (The Hut Group) in beauty or Xcel Brands in fashion have acquired multiple DTC or small brands to combine back-end operations and make a multi-brand platform. The success of such strategies varies, but it’s a notable part of the M&A landscape: aggregating DTC brands to achieve some economies of scale (particularly in marketing spend and distribution).
Integration into Omnichannel: For the acquiring companies, one challenge has been integrating DTC brands into a broader omnichannel strategy. Some brands, born online, later realized they needed a physical retail presence too – for example, Warby Parker and Bonobos opened stores, and Casper (mattress) went into wholesale with Target. Acquirers often help facilitate this omnichannel expansion. When a legacy company buys a DTC brand, they bring expertise in physical retail distribution, which can significantly scale up the acquired brand’s reach (putting it on supermarket shelves or department stores). The flip side is ensuring the brand’s identity and loyal online following are preserved. Many acquirers adopt a hands-off approach on front-end brand decisions while bolstering back-end capabilities like sourcing and supply chain. For instance, after Mars acquired NomNomNow (a DTC pet food startup), it largely let NomNom continue its online subscription model but provided support with manufacturing.

Outlook for DTC Brands: We anticipate continued consolidation of DTC brands, as the venture capital that once funded them has pulled back, and sustainable profitability often requires partnering with bigger platforms. Well-known DTC names that remain independent could be acquisition targets if the price is right (there’s always speculation around companies like Glossier or Allbirds – though Allbirds went public, its struggles could invite a buyer). Meanwhile, big consumer companies will keep cherry-picking DTC players that fill a gap in their portfolio or give access to a coveted customer segment (e.g., a Gen Z-focused skincare line, or a pet tech gadget). Importantly, the lessons learned from earlier DTC acquisitions (like needing a clear integration plan and keeping what customers loved about the brand) will make future combinations smoother. DTC brands have proven adept at building communities and personalized marketing; acquirers want that DNA to infuse into their overall business. So, rather than every consumer company trying to build a DTC arm from scratch, they will acquire and integrate. In summary, the DTC phenomenon is maturing – the stand-alone era is giving way to an era of DTC within larger ecosystems, courtesy of M&A.

Strategic Partnerships as an Alternative Path

While our focus is on mergers and acquisitions, it’s worth noting that not all strategic growth in Consumer & Retail comes from outright purchases. Many companies form strategic partnerships, joint ventures, and alliances as alternate routes to achieve similar objectives – often when M&A is too costly or complex. A few examples illustrate this:

Retailer Collaborations: Big retailers have partnered to broaden offerings without M&A. For instance, Target’s partnership with Ulta Beauty (placing Ulta mini-shops inside Target stores) gave Target a boost in beauty category appeal and Ulta access to Target’s traffic – all without an ownership change. Likewise, Kohl’s partnered with Sephora for a similar store-within-a-store concept. These deals achieve some synergies (shared customer base, increased basket size) that a merger might, but they’re simpler to execute and unwind if needed. We’ve also seen grocery stores partner with third-party delivery services (like Kroger with Instacart early on, though later Kroger built its own capabilities).
Brand Licensing and Distribution Deals: Instead of buying a brand, a company might license it or enter distribution agreements. A major one was Nestlé’s licensing deal with Starbucks: Nestlé paid Starbucks $7B in 2018 for rights to sell Starbucks-branded packaged coffees and teas globally. This essentially gave Nestlé a new premium brand in its coffee portfolio without acquiring Starbucks outright. In fashion, luxury brands sometimes enter joint ventures for certain regions (e.g., a luxury house partnering with a local distributor in China rather than buying them). These partnerships can sometimes be precursors to M&A (if the relationship proves lucrative, one party might later acquire the other’s stake).
Joint Innovation Ventures: Some companies collaborate on technology or product development. For example, PepsiCo and Beyond Meat formed a joint venture (The PLANeT Partnership) to develop plant-based snacks and beverages. This gave PepsiCo a toe-hold in plant-based innovation without acquiring Beyond Meat. In retail tech, a group of retailers might invest together in a tech startup that benefits all (e.g., a consortium investing in an anti-fraud e-commerce platform). These arrangements allow shared risk and reward.
Cross-Industry Alliances: Consumer companies also partner with tech firms, financial institutions, and others to enhance experiences. Retailers partnering with payment providers (like Amazon partnering with Affirm for buy-now-pay-later financing at checkout) or with social media (Walmart’s pilot with TikTok for shopping) show how collaboration can provide capabilities that an acquisition might otherwise bring. With the rise of the metaverse and experiential retail, we might see alliances between gaming companies and retail brands to create virtual shopping experiences, for instance.

The prevalence of partnerships underscores that M&A is not the only game in town. Often, partnerships are pursued where flexibility is needed, or where outright acquisition is not feasible (due to cost or regulatory reasons). They can achieve similar strategic goals – entering new markets, accessing new customers, or obtaining technology – albeit with less permanence. However, partnerships sometimes evolve into mergers if the alignment is strong and the value is proven. Therefore, the world of strategic growth should be seen as a continuum: companies may start with partnerships and, if successful, deepen the relationship via equity stakes or full mergers.

Challenges and Considerations in Consumer & Retail M&A

Executing mergers and acquisitions in the Consumer Products & Retail sector comes with a unique set of challenges that companies and investors must carefully manage:

Regulatory and Antitrust Hurdles: As noted in several examples, antitrust enforcement has become more assertive in the current environment. Deals that significantly consolidate market share (especially in staples like groceries or essential consumer goods) are facing greater scrutiny. Regulators worry about reduced competition leading to higher prices or fewer choices for consumers. The blocked Tapestry–Capri fashion deal and the tough review of Kroger–Albertsons highlight this trend. Companies now often need to prepare divestiture packages or behavioral remedies (promises about pricing, for instance) to get deals through. The process can be lengthy, causing uncertainty. In cross-border deals, regulatory approval in multiple jurisdictions adds complexity (e.g., a global food merger might need U.S., EU, China approvals etc.). Firms must also consider foreign investment review laws for international transactions, which have tightened in some countries. Mitigating these risks requires thorough competition analysis upfront and sometimes pre-emptively reducing overlap by selling units during the deal negotiation.
Integration Risks: The classic challenge post-M&A is integrating the acquired company effectively. In consumer sectors, integration is delicate because of the importance of brand identity and customer experience. If a big company acquires a quirky indie brand, heavy-handed integration could alienate that brand’s core customers or creative team. For retail mergers, integrating IT systems, loyalty programs, and supply chains is a massive undertaking (as seen in past deals like Albertsons’ integration of Safeway or Ahold’s integration of Delhaize – these took years). Cultural clashes are common too: retail employees and headquarters staff might have very different cultures that need unifying. Poor integration can erode the value that justified the deal – for instance, if two merging retailers can’t unify their logistics in time, they might miss synergy targets and see margins suffer. To counter this, many companies now plan integration meticulously, sometimes bringing in external consultants or experienced executives. Phased integration (keeping some operations separate for a period) is also a tactic, especially when the acquired entity has a successful formula one doesn’t want to disrupt (e.g., keeping a subsidiary as a distinct division).
Consumer Perception and Brand Management: Unlike a purely industrial merger, consumer-facing deals play out under the watch of the general public. Consumers often react emotionally to news of beloved brands being acquired or stores merging. There can be backlash if, say, quality is perceived to drop under new ownership or if a heritage brand loses its cachet. Companies have to manage PR carefully – reassuring customers that the acquisition will enhance their experience, not diminish it. For example, when smaller authentic brands are bought by multinationals, there’s frequently skepticism among loyal fans (“Will they ruin the formula?”). Smart acquirers often let such brands operate with a degree of independence to maintain authenticity, and even incorporate customer feedback in transition decisions. In retail, consolidation can raise fears of store closures or less community presence; companies sometimes pledge not to close stores or to keep local favorite elements to ease concerns. Overall, maintaining brand equity and customer trust during M&A is a soft factor but crucial. Missteps can lead to loss of market share if customers defect because they don’t like the new parent company or changes made.
Economic and Market Volatility: Timing can be everything in M&A. The consumer sector is sensitive to economic swings – during a downturn, sales may falter, making acquisitions riskier or cheaper (depending on perspective). The high inflation period made forecasting future earnings for targets more difficult, complicating valuation. Currency fluctuations also affect cross-border deal values. Moreover, financing costs soared with interest rate hikes, which could derail deals that rely on borrowed money. We saw many buyers in 2022–2023 insist on valuation adjustments or earn-outs due to uncertainty – e.g., paying part of the price later contingent on performance, to bridge differences in outlook. For private equity-backed deals, higher interest rates meant lower leverage and thus lower bid prices, causing some would-be sellers to hold off until conditions improve. On the flip side, as inflation eases and if interest rates stabilize or fall in 2024–2025, we could see a more favorable climate for deal-making. Buyers who sat on the sidelines may re-engage, and sellers might find market conditions good enough to fetch desired valuations. Companies must be agile, sometimes even repricing or restructuring deals if conditions change mid-transaction (there have been cases of renegotiated prices when a target’s performance dipped sharply between signing and closing).
Geopolitical and Supply Chain Factors: The past few years taught companies that global supply chains can be fragile (COVID disruptions, trade wars, etc.). This has made some acquirers more cautious about targets that rely heavily on far-flung production or single-country sourcing. Part of due diligence now is looking at how resilient a target’s supply chain is and whether there are geopolitical risks (tariffs, sanctions) that could bite. For instance, a brand that sources a key ingredient only in one country might be deemed riskier. Also, the Russia-Ukraine conflict in 2022 led many consumer companies to exit Russia – any M&A involving multinationals now factors in which markets are off-limits or might become so. Meanwhile, some Middle Eastern and Asian investors have become active buyers of consumer assets (like sovereign wealth funds investing in retail/food companies), which adds a geopolitical angle. Companies doing deals must navigate these aspects carefully, ensuring they comply with any international regulations and also planning for worst-case scenarios in key markets.

Despite these challenges, the reward for successful Consumer & Retail M&A can be high: increased market share, new growth avenues, and strengthened competitive position. The most savvy players approach deals with a clear thesis (why this target, how it will add value), perform rigorous due diligence, and have a robust post-merger plan. As the industry evolves, those that master the art of acquisition – while avoiding the pitfalls – will be the ones that thrive.

Outlook: Trends and Opportunities Ahead

As we look toward 2025 and beyond, M&A in Consumer Products & Retail is poised to accelerate again, albeit with a different complexion than the frenzy of 2021. Several factors contribute to an optimistic outlook:

Macroeconomic Stabilization: With interest rates potentially peaking and inflation coming under control in many regions, the financial calculus for deals should improve. Lower borrowing costs and more predictable input prices can revive deal financing and valuation confidence. Companies that postponed acquisitions due to volatile conditions may re-enter the market. If a mild recession occurs, some distressed opportunities might also arise at attractive prices, spurring opportunistic buys. In essence, assuming no new major economic shocks, the deal climate is likely to become more favorable over the next 12-24 months.
Renewed Strategic Urgency: Many consumer companies have spent recent years improving their balance sheets, cutting debt, and refocusing strategy. They are now prepared to pursue growth more aggressively. The secular challenges – digital disruption, changing consumer demographics, rising ESG expectations – haven’t gone away, so the urgency to adapt via M&A is as strong as ever. Executives often comment that organic growth alone won’t meet their targets or won’t transform the business fast enough. Therefore, we anticipate a wave of strategic dealmaking aimed at transformation: companies acquiring to reinvent themselves for the next decade’s consumer landscape. This could mean a traditional food company buys a tech-enabled nutrition platform, or a fashion retailer acquires a resale/recommerce startup to get into the circular economy trend. These types of boundary-pushing deals are likely as firms look to where the consumer is headed.
Hotspots of Activity: Certain subsectors will be especially active:
- Grocery and Convenience: Continued consolidation as discussed – possibly second-tier regional grocers combining, more c-store chain sales, and perhaps rerunning of blocked deals in modified ways.
- Health & Wellness Consumer Brands: Any brand that taps into health (think supplements, healthy snacks, active lifestyle products) will be highly sought after. Also expect more pet sector deals (as pet humanization trend endures).
- Luxury and Premium Goods: The big luxury groups will continue cherry-picking brands. If stock prices of luxury firms stay high, they have strong acquisition currency. And if some smaller luxury brands struggle in a China slowdown or similar, they become targets. There’s also the open question of Richemont’s ownership of YOOX Net-a-Porter (YNAP) – as an e-commerce luxury platform, will it merge or be acquired by another (there were talks of Farfetch involvement)? The digital side of luxury may see M&A too.
- Digital and Marketing Services: Following on the advertising M&A trend, one can foresee retailers acquiring ad-tech companies or data analytics firms to further build retail media capabilities. Also, big consumer brands might acquire content creation platforms or studios to fuel their constant marketing needs (imagine a large apparel company buying a digital content agency outright).
- Sustainability Solutions: To meet sustainability goals, companies may acquire firms that specialize in recyclable packaging, carbon offset services, supply chain traceability tech, etc. These are adjacent to core consumer products but increasingly vital to operations and brand story.
Role of Private Equity: Private equity funds still have a large amount of capital to deploy and will likely ramp up acquisitions in consumer/retail as valuations normalize. We expect PE to be active in carve-outs (buying divisions that big corporates shed) and in take-private deals for underperforming public consumer companies. For instance, a struggling retail chain with good brand equity but a beaten-down stock could be bought by PE, revamped, and potentially merged with another. The years 2024-2025 might see some notable take-privates in retail fashion or food manufacturing, especially if those companies’ boards feel they can’t realize value in public markets. PE firms will also continue consolidating fragmented areas – for example, there are PE-backed platforms rolling up fast-casual restaurant chains or wellness product brands. With the IPO window still relatively cool, selling to PE or a strategic is the primary exit path, so that sustains deal flow.
Cross-Sector Convergence: We anticipate more blurring of industry lines. Tech companies might buy consumer brands (e.g., if a tech giant wants to own a wearables brand or a gaming platform that sells merch). Conversely, consumer companies might make atypical acquisitions – imagine a retail chain acquiring a fintech startup to offer innovative payment and loyalty options, or a beverage company buying a stake in a biotech that’s developing lab-grown ingredients. These deals at the edge of traditional definitions will likely grow as businesses seek unique differentiators. A real example in recent memory: IKEA (home furnishings retail) acquired TaskRabbit (a gig economy platform) to help customers assemble furniture – not a typical retail acquisition, but a strategic one to improve customer experience. We could see similar moves where the connection is not immediately obvious but makes strategic sense to enhance the consumer proposition.
Global Shifts: Emerging markets will play a role both as sources and targets of M&A. Multinationals will continue to acquire local brands in high-growth markets (Southeast Asia, Africa) to capture expanding middle-class consumption. Meanwhile, companies from China, India, and the Middle East with global ambitions will be shopping for Western brands. Already, we’ve seen Indian conglomerate Reliance Brands acquire stakes in or franchise dozens of foreign luxury and consumer brands for the Indian market; more outright acquisitions could follow. Middle Eastern wealth funds have also shown interest in consumer assets (e.g., investing in Aston Martin, or in retail ventures) as part of diversification. Cross-border M&A flows in consumer industries are thus likely to increase, adding to overall volume.

In conclusion, the Consumer Products & Retail sector remains a dynamic arena for M&A, driven by an imperative to keep up with the fast-changing consumer culture and competitive landscape. Companies are leveraging deals to become more digital, more personalized, more efficient, and more globally integrated. While the past couple of years introduced some caution, the fundamental need for growth and innovation is bringing M&A back to the forefront of corporate strategy. We expect 2025 to usher in a renewed wave of deal activity – one characterized not just by size, but by strategic ingenuity. Founders of emerging consumer brands, executives at established firms, and investors alike should prepare for a busy deal market, where preparedness and clarity of vision will distinguish the winners. Those who can smartly acquire and integrate will position themselves to delight the next generation of consumers and create lasting value.

Resources

2025 Healthcare & Life Sciences M&A Industry Report – Legacy Advisors: Comprehensive analysis of M&A trends in the healthcare sector, providing context on how consolidation and innovation are driving deals in an adjacent industry. (legacyadvisors.io)
2022–2025 U.S. Digital Marketing & Advertising M&A Report – Legacy Advisors: In-depth look at advertising and marketing industry M&A, useful for understanding data-driven deal strategies that intersect with consumer trends. (legacyadvisors.io)
Technology M&A Report 2025: Trends, Drivers, and Outlook for Tech Founders – Legacy Advisors: Overview of tech sector M&A, highlighting digital and AI trends that are increasingly relevant to consumer companies pursuing technology acquisitions. (legacyadvisors.io)
2025 Financial Services M&A Industry Report – Legacy Advisors: Insights into M&A in financial services, another consumer-facing sector, shedding light on parallel consolidation and fintech partnerships that could influence retail (e.g., payment technologies). (legacyadvisors.io)
KPMG – “M&A Trends in Consumer & Retail (Q1 2024)” (Report): Analysis of recent consumer/retail deal activity and executive sentiment, noting the expected uptick in late 2024 and examples of Q1 2024 deals and challenges (interest rates, valuation gaps).
PwC – “Global M&A Trends in Consumer Markets: 2024 Outlook”: Global perspective on consumer markets M&A, identifying grocery retail consolidation, portfolio optimization by food/beverage firms, and the trend toward smaller deals and creative deal structures given financing costs.
Bain & Company – “Can Consumer Products Companies Master the Small Deal?” (2024 M&A Report): Discusses the decline in large consumer deals and the rise of targeted small acquisitions, as well as the need for portfolio focus and divestitures in 2024 – valuable for its data on deal value vs. volume trends.
Clarkston Consulting – “2024 M&A Deal Trends in Consumer Products”: Highlights four themes in consumer products M&A (premiumization, portfolio restructuring, adjacent category expansion, and mid-market activity especially in pet products), with examples of 2023 deals illustrating each trend.
C-Store Dive – “Recapping the Biggest C-Store Acquisitions of 2024”: Article summarizing major convenience store deals in 2024, including Couche-Tard’s GetGo acquisition, FEMSA’s entry into the U.S., 7-Eleven’s purchase of Stripes stores, and Casey’s expansion – showing the consolidation momentum in that subsector.
Retail Dive – “A Look at DTC Acquisitions in 2023 So Far”: Report on direct-to-consumer brand M&A in first half 2023, noting how despite overall slowdown, several DTC brands (from apparel to beauty) found buyers or merged due to strategic refocus or distress – provides specific case studies of DTC exits.
Reuters – Coverage of Mars/Kellanova Deal (2024): News report detailing Mars Inc.’s $35.9B acquisition of Kellanova, including context on food industry challenges (inflation, private label competition) that motivated the merger and expected benefits in scale and category leadership.
Reuters – Coverage of Seven & i (7-Eleven) and Couche-Tard: Article on Seven & i rejecting Couche-Tard’s $38.5B takeover bid in 2024, highlighting antitrust concerns in convenience retail and the continued interest of global players in consolidation attempts.
Various news releases and industry publications (2023–2024) on notable deals: e.g., Tapestry’s attempted $8.5B Capri Holdings acquisition and its regulatory blockage, L’Oréal’s purchase of Aesop, Estée Lauder’s acquisition of Tom Ford, and other specific transactions that illustrate key points in this report. These sources include press releases, SEC filings, and business news outlets which reported financial details and strategic rationale for the deals mentioned.