Like the broader market, the food and beverage industry had its challenges in 2024, from inflation impacting consumer spending to interest rates limiting growth and spending. Yet the food and beverage industry is nothing if not resilient and despite the year’s challenges, there were bright spots – including dealmaking. Strategic buyers pursued opportunities across the food and beverage landscape, while private equity was largely sidelined by the rate environment. Overall, there was a healthy amount of dealmaking throughout the year, offering a positive signal for 2025.
Below, we highlight trends that drove M&A activity in food and beverage in 2024:
- In Food Distribution, Buyers Focus on Fresh
Food distribution has always had its place in the M&A market. Large corporates have pursued acquisitions to increase their market share, grow their customer base, and/or expand their footprint. Financial acquirers have been drawn to the sector’s stable cashflows and opportunities for consolidation.
Sunrise Produce, a California-based produce distribution platform of Investcorp, acquired Moceri Produce, a specialty produce distributor based in San Diego. The acquisition expands Sunrise’s footprint in the Southern California region and the company continues to seek acquisitions, focusing on family businesses or founder-led companies.
FreshEdge, a fresh foods distribution platform backed by Wind Point Partners, acquired Frontier Produce, an Oklahoma-based produce distribution company. FreshEdge is no stranger to M&A – the deal with Frontier Produce represents FreshEdge’s seventh acquisition since Wind Point’s initial investment in 2022.
GrubMarket, one of the most active buyers of food distribution companies, continued expanding its network with several acquisitions throughout the year, including purchasing grocery delivery companies Good Eggs and FreshGoGo. It also scooped up several produce distributors including JC Cheyne, a supplier of potatoes and onions in Northern California, and Performance Produce, a North Carolina-based provider of produce and specialty foods.
- Bakery Heats Up M&A
Baked goods know no boundaries. From celebratory desserts to everyday snacks, the category’s products appeal to a wide variety of consumer tastes and needs. The bakery category is also incredibly resilient. These characteristics, coupled with bakery manufacturers’ ability to continually innovate and adapt to consumer trends, have attracted investors and boosted M&A activity in recent years.
In the third quarter alone, eight bakery deals were announced including Platinum Equity and Butterfly’s acquisition of Minnesota-based Rise Baking Company, a commercial baker backed by Olmypus Partners. Other notable deals during the year included private equity firm Tide Rock purchasing Glenn Wayne Wholesale bakery, a family-owned and operated full-line bakery manufacturer located in New York; Midwest Growth Partners-backed French Gourmet’s merger with ShellsbyDesign, maker of sweet and savory frozen tart shells and ready-to-eat (RTE) frozen desserts; and Encore Consumer Capital acquiring California-based Chalet Desserts, a specialty manufacturer of frozen desserts and baked goods.
- The Appeal of Health and Sustainability Endures
Even as consumers feel the pinch from rising grocery costs, many are willing to pay a premium for products that promote social and environmental benefits – from foods that advance regenerative agriculture to items that are ethically produced. Demand for these products is expected to increase with Millennials and Gen Z – the two largest cohorts in the United States – leading the shift.
As consumers prioritize health and sustainability in the food and beverage segment, buyers are taking note. Manna Tree Partners, a private equity firm focused on improving human health, acquired a controlling stake in Verde Farms, an organic beef brand that offers consumers a more nutrient-dense and sustainable protein option. The investment strengthens Manna Tree’s presence in the sustainable food category and gives its exposure to the better-for-you beef segment.
Earlier in the year, Neutral Foods, the first certified carbon neutral foods company in the U.S., merged with Missouri-based Zeal Creamery, a premium grass-fed dairy milk brand. The combined company offers both Zeal’s grass-fed milk, butter, and cheese for retail and Neutral’s certified carbon neutral milk and beef for foodservice.
Looking ahead to 2025, the FOCUS Food & Beverage team expects M&A to continue gaining momentum, boosted by lower interest rates, easing inflation, and buyers on the hunt for acquisitions.
