By Bill Bowler, Opus Connect
The food and beverage industry is shaped by changing consumer preferences, economic conditions, and innovation. We spoke with several leading investment bankers to help shed light on the direction the market is heading and the opportunities that lie ahead. Below, they share insights into emerging food & beverage trends.
Shifts in Private Equity Deals
Robert Schmidt, Managing Director at Bridgepoint Investment Banking, highlights a shift in the approach to food and beverage private equity deals. According to Schmidt, “In this environment, there’s fewer food & beverage private equity deals, but firms are doing roll-ups and in some cases acquiring their own platform, bringing the value chain in-house.”
This shift suggests that companies are focusing on operational efficiency and control, leveraging vertical integration to manage costs and streamline supply chains. Roll-ups—the acquisition and consolidation of smaller companies—continue to be a favored strategy for scaling businesses within the sector.
Bo Briggs, Managing Director at Croft & Bender, highlights the resilience of valuations in the food and beverage space. He mentions that “we aren’t seeing a negative impact of value even from traditionally high watermarks for businesses that are highly sought-after.” Briggs also cites a food distribution deal structured as an add-on acquisition with an EBITDA multiple just below double digits, along with a platform deal well into double digit multiples. He adds “this demonstrates that PE funds continue to pay up for platforms where add-on acquisitions can be bolted on during the hold period.”
Premiumization and the “Better-for-You” Movement
A significant driver of activity in the food and beverage industry is the “Better-For-You” trend. Schmidt notes, “The biggest thing that is going to drive broader activity is ‘better-for-you’ as a theme. There’s a growing trend towards ‘premiumization’ in the industry, and there’s a number of sub-verticals within that broad theme.”
Consumers are increasingly prioritizing healthy living and active lifestyles, creating demand for premium, health-focused products. Emerging food & beverage trends that are driven by additional health benefits are expected to thrive as companies innovate to meet these preferences.
Health & Wellness and the Evolving Plant-Based Market
Justin Karr, Managing Director at Transact Capital Securities, LLC, emphasizes the enduring appeal of the health and wellness category. “Everything in Health & Wellness continues to be a big trend, which I certainly think is permanent,” says Karr. However, he points out that plant-based alternatives to meats have “fallen out of favor because they’re likely not that healthy.”
While plant-based products face challenges, other segments within the health and wellness space, such as healthy snacking, present opportunities—albeit in a crowded market. “There’s only so many natural fruit-based snacks that can be on a shelf at any given supermarket,” Karr observes, underscoring the need for differentiation and innovation.
The Rise of Private Label and Conscious Consumption
Private label products are gaining traction as consumers look for high-quality, cost-effective alternatives. “I think you’ll see more private label businesses emerging. Consumers are increasingly accepting of private label products that are essentially the same products at a lower cost,” says Karr. This emerging food & beverage trend aligns with a broader shift toward cost-conscious shopping amid economic pressures.
Additionally, Karr points to a growing focus on reducing food waste and making better use of leftovers. “People are being more conscious of food waste and are using leftovers more,” he notes, highlighting a shift in consumer behavior that reflects both economic and environmental awareness.
From the “better-for-you” movement and premiumization to private labels and conscious consumption, companies that adapt to emerging food & beverage trends are well-positioned for growth. With roll-ups and add-on acquisitions gaining momentum, the sector remains ripe for engagement by investment bankers.
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