Top Food and Drink Categories for M&A in 2025

The experts are predicting that food and drink merger and acquisition (M&A) activity will continue to rise in Europe in 2025, as long as market conditions stay favorable. James Scallan, managing director at Houlihan Lokey, points to private equity as a key player in this trend, noting that lower interest rates make leveraged buyouts more attractive. With inflation easing, there’s increased investor confidence in profit sustainability, which opens up more growth opportunities.

Consumer preferences for convenience, value for money, and health are expected to drive the continued popularity of snacking and frozen food categories. Additionally, the demand for world foods, with their diverse tastes and ideas, is on the rise and likely to continue into 2025. Big companies like Unilever are expected to shed certain brands to focus on a smaller portfolio of power brands, creating opportunities for private equity and strategic buyers to acquire established brands with growth potential.

In 2025, portfolio rationalization will be a significant driver of M&A activity in the food and drink industry. Javier Chiquero, vice president at Houlihan Lokey, sees a growing interest in functional drinks as consumers seek healthier alternatives. Sustainability will play a crucial role for both food and drink categories, as ethical sourcing and recyclability become more important to consumers and investors.

Overall, the experts anticipate a wave of new brands with fresh products, concepts, and formats entering the market in 2025. This influx of innovation is expected to create exciting opportunities for investors, particularly private equity and venture capital firms, who can leverage their expertise to support these brands’ growth and deliver strong returns.