Food and beverage M&A update: H2 2024

H2 2024 food and beverage public market update

Food and beverage public market overview

The food and beverage public market showed mixed performance in 2024, with large disparities in subsector performance within the broader industry. Performance was driven by many of the same trends highlighted in the Baker Tilly Capital Insider: Food and beverage M&A update H1 2024; however, some factors such as the presidential election and economic factors (Federal Reserve rate cuts, inflationary pressures, etc.) posed unique challenges and opportunities in H2 2024.

One of the trends that remained the same in H2 2024 was consumers’ demand for products that align with their overall health and wellness goals. Consumers sought products with clear and natural ingredients, key nutrients and vitamins, and desired macronutrients (i.e.- proteins, fats, carbohydrates). Additionally, consumers increasingly tailored their diets to their specific health goals. For example, products geared toward gut health, women’s health, weight management, boosted energy, and improved cognitive function have seen accelerated growth relative to the rest of the industry.

Sustainability remains another key trend that is impacting operational and financial performance and driving M&A activity in the industry. Consumers are increasingly mindful of sustainability throughout the supply chain, from sustainable farming practices to recyclable packaging, and demand that the brands they buy adhere to sustainability standards. Companies who demonstrated their commitment to sustainability were able to capitalize on strong growth, particularly in the Millennial and Gen Z markets, who especially value sustainable practices. Per data from Nielsen IQ, products within the alcoholic beverage subsector that were labeled as “Eco Friendly Certified” saw year-over-year (YoY) sales growth of 28% in 2024.

Profitability remained a challenge in 2024 due to inflationary pressures and elevated costs associated with supply chain inefficiencies and labor. Moving into 2025, uncertainty surrounding tariffs and their impacts on supply chains remains present; however, a more favorable interest rate and inflationary environment along with investments in innovation could improve operating metrics and financial performance across the industry.