Food & Beverage 1Q 2025 Report

In the first quarter of 2025, mergers and acquisition (M&A) activity showed a mixed picture. Food and beverage dealmaking slipped in Q1 compared to the previous quarter, down 11% with a total of 93 deals announced or closed. Industry activity mirrored the broader M&A market, which has experienced a cautious start due to a mix of economic, policy, and market factors. Yet demand in the food and beverage sector remains stable thanks to limited tariff issues and stability amidst economic uncertainty. Deal activity in Q1 reflected this sentiment as food and beverage M&A maintained momentum from late 2024.

Several major deals closed or were announced in Q1, spanning various segments of the food and beverage industry. PepsiCo announced its purchase of prebiotic soda brand Poppi for nearly $2 billion, while Celsius acquired female-focused energy drink brand Alani Nutrition for $1.8 billion. The Q1 megadeals weren’t limited to better-for-you beverages either, with private equity firm Roark Capital inking a deal with franchise operator Dave’sHot Chicken for roughly $1 billion.

The first quarter reinforced private equity’s interest in food and beverage, and strategic buyers continued to account for a consistent source of deal activity. However, trade and tariff policies have created a growing level of uncertainty for both business operators and investors. Some companies are slowing down M&A activity as they realign their operations, while investors are focusing on deal structures that provide greater flexibility and risk mitigation. Still, despite these headwinds, companies remain focused on acquisitions to fuel growth, improve operations, broaden product offerings, and expand into new markets. In the near term, economic and policy uncertainties will continue to shape deal dynamics, but fundamentals in food and beverage still support active M&A interest.

Drivers of deal activity in Q1 2025 include:

• Continued focus on health & wellness: Consumers are increasingly prioritizing healthy and sustainable foods, prompting major corporations to pursue acquisitions of brands meeting this demand. Kraft Heinz, Hershey, and Molson Coors are just a few of the food giants prioritizing M&A to enter or expand into fast growing health & wellness categories. PE firms are also capitalizing on the trend. Earlier this year, Dutch Gold Honey, a family-owned business that produces ethically sourced honey products, was acquired by an affiliate of lower middle market private equity firm New Water Capital.
• More cheese, please: US cheese producers are drawing heightened acquisition interest thanks to growing consumer demand for specialty cheese products. Adding to the segment’s M&A appeal is that producers are relatively well insulated from tariff risk. These dynamics have spurred a wave of M&A activity, with a swathe of specialty cheese companies coming to market in recent months.
• Private equity’s appetite for bakery: Recent years have seen private equity firms increasingly targeting the bakery segment for roll-up strategies. Bakery companies remain in high demand, from makers of specialty products to manufacturers of fresh bread and other staples, and competition among buyers has driven attractive valuation multiples for sellers. In Q1, middle market PE firm One Equity Partners announced its acquisition of CraftMark Bakery, a frozen bakery manufacturer that supplies restaurants and in-store retail bakeries. CraftMark’s attributes made it an attractive acquisition: high volume B2B provider with reliable revenue streams and room for bolt-on growth.
• Convenience still rules: M&A activity in the fresh-cut produce segment has grown steadily in recent years as buyers, both strategic and private equity, seek to capitalize on strong consumer demand for healthy, convenient, and minimally processed foods. In Q1, Red Arts Capital, a middle market PE firm specializing in supply-chain related and logistics businesses, announced its acquisition of Freshway Foods. Freshway Foods is a supplier of fresh-cut processing, repacking, transportation, and logistics services, serving retail and foodservice customers

• Food and beverage manufacturers, which include branded and private label/co-manufacturing, accounted for majority of deals in Q1 2025, with a total of 27 transactions and 18 transactions, respectively. In addition to the megadeals that dominated the beverage space (see page 1), other notable deals included Flowers Foods’s acquisition of better-for-you brand Simple Mills for $795 million.
• The distribution segment saw a noticeable uptick in M&A activity with a total of 15 deals, up 50% versus the prior quarter. As food prices climb in the current environment, distributors may gain more pricing power, boosting both revenue and M&A interest in the sector.
• The restaurant segment produced 13 deals in Q1, with buyers favoring restaurant franchise operators for their steady royalty revenue and relatively low operating costs. Deals included investment firm Maple Park Capital making a majority growth investment in Rita’s Italian Ice & Frozen Custard, an Italian Ice concept with a franchise network spanning over 575 locations across 30 states.