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.

The BT Capital Food & Beverage Index underperformed the S&P 500 and outperformed the S&P Food & Beverage Select Industry Index in 2024. The S&P 500’s strong performance was driven by the “Magnificent Seven” technology stocks, so the underperformance of the BT Capital Food & Beverage Index is expected, as it did not participate in these gains. Relative to the S&P Food & Beverage Select Industry Index, the BT Capital Food & Beverage Index outperformed due to strong performance in the natural/organic subsector.

H2 2024 food and beverage spotlight

2024 BT Capital Food and Beverage Index performance and select multiples

Within the BT Capital Food & Beverage Index, the natural/organic subsector realized strong share price increases of 56.6% for the year. This offset losses in the agribusiness and snack subsectors of -23.1% and -12.0%, respectively. The beverage and branded packaged goods subsectors were mostly flat in 2024, increasing 0.9% and 1.1%, respectively.

EV/EBITDA multiples continued a downward trend in H2 2024 from 2022/2023 highs while EV/revenue multiples showed signs of a rebound in H2 2024, though remained below 2020/2021 peaks. Beverage and snack names continue to show the strongest multiples of all subsectors.

BT Capital Food and Beverage Index

Median TTM revenue growth rates ( % )

H2 2024 food and beverage M&A insights

Food and beverage M&A insights (U.S.)

Food and beverage M&A activity increased in H2 2024 and was driven by larger players in the space divesting non-core assets while growing organically through investment in core products and inorganically by adding smaller companies with healthy product offerings to their portfolios. Such transactions were particularly common in the branded packaged goods subsector as companies in the space must be agile in adapting to shifting consumer preferences. There continues to be modest deal flow in the agribusiness subsector due to volatile commodity prices and higher input costs. Moving forward into 2025, a more favorable interest rate and inflationary environment, coupled with the need for companies to adapt to consumer preferences and innovate to drive operational efficiencies, could drive deal flow.

Food and beverage M&A activity (U.S.)

Per Capital IQ data, U.S. food and beverage M&A activity increased in H2 2024, with 165 deals closing for a combined value of $40.8B. Deal count in H2 2024 (165 deals) increased when compared to H1 2024 (147 deals) and H2 2023 (131 deals). Deal volume continues to increase after seeing deal activity plateau in 2022 and 2023.

M&A deal value in H2 2024 was $40.8B, representing nearly a 600% increase from H1 2024. This was driven by the $36 billion acquisition of Kellanova by Mars, Incorporated in August 2024. If this transaction is removed from the analysis, aggregate deal value would decrease to $5 billion, reflecting a 15.9% decrease in deal value compared to H1 2024 and a 54.8% decrease compared to H2 2023.

Food and beverage M&A activity – deal breakdown (segment)

Food products companies were the most sought after by buyers in H2 2024, accounting for 67% of closed deals in the period while beverages companies accounted for 33% deal volume.

Food and beverage M&A activity – deal breakdown (geography)

California proved to be the most popular state for buyers to pursue deals, with 24 deals closed in H2 2024. Illinois, Texas, Florida and Washington made up the rest of the top five.

H2 2024 Select food and beverage M&A spotlight

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