Around this time last year, in this column, we argued that 2025 was set to be a year for mergers and acquisitions in FMCG to thrive. We probably weren’t quite expecting the level of activity that has taken place, however! In January, shareholders approved the acquisition of Kenvue by Kimberly-Clark for approximately $48.7bn, while just last month, US spice giant McCormick announced a potential $44.8bn deal for Unilever’s food business. This is to name just a couple of many examples in the last year that have represented seismic change in the FMCG M&A landscape.
More specifically, in our article, we made three calls: that M&A would return as conditions improved; that activity would be driven more by portfolio repositioning than pure consolidation; and that an increasing share of deals would be used to access new operating models rather than simply add scale.
We’ve taken the opportunity to look back at how the year has unfolded. Interestingly, overall, the picture that has emerged is broadly consistent with those expectations, but more defined in its shape than it may have appeared at the time – and certainly more aggressive.
“Rather than a broad-based wave of combination, dealmaking has been concentrated around targeted portfolio adjustments, often in response to shifting category dynamics.”
First, M&A activity did return. Global deal value rose sharply, with Bain estimating a 40% increase to $4.9tn, while PwC reported consumer markets deal value up 41%, even as volumes remained broadly flat. As anticipated, improving macro conditions helped unlock activity that had been delayed through 2024, when higher interest rates, valuation gaps and regulatory uncertainty had slowed dealmaking. In that sense, the cycle behaved much as expected: activity returned as confidence and capital allocation constraints eased.
Secondly, that activity has been more about repositioning than consolidation. Rather than a broad-based wave of combination, dealmaking has been concentrated around targeted portfolio adjustments, often in response to shifting category dynamics. This is visible in a number of larger transactions. The colossal $36bn acquisition of Kellanova by Mars, Ferrero’s $3.1bn purchase of WK Kellogg and Keurig Dr Pepper’s acquisition of JDE Peet’s have all focused on strengthening positions within existing categories. In each case, those categories remain under pressure. In coffee and cereal, volumes have declined even as pricing supported topline growth, with margins increasingly squeezed as costs outpaced price increases. Snacking has been more resilient, but scale remains important to support brand investment and retailer relationships. These deals are therefore less about expansion than about stabilisation within existing portfolios.
Thirdly, and perhaps most notably, M&A has increasingly been used to access new operating models and categories. This is where activity has been most revealing, such as PepsiCo’s acquisition of Poppi. The company paid $1.95bn for the prebiotic, lower-sugar soft drinks brand, including $300m of anticipated cash tax benefits, closing the transaction in May 2025. With traditional soda volumes slowing, the valuation reflects the growth of functional segments, such as prebiotic and health-focused drinks, which have attracted a wave of new entrants. Rather than attempting to replicate this internally, PepsiCo moved to secure exposure through acquisition.
A similar dynamic is visible in food and nutrition. Danone’s agreement to acquire meal replacement company Huel, in a deal reported at close to €1bn, brings a subscription-led, direct-to-consumer model into the group. Huel’s growth since 2015 has been driven by repeat purchasing outside traditional retail channels, with a meaningful share of revenue coming directly from consumers. For Danone, whose operating model is built around scale manufacturing, retail distribution and trade promotion, this represents a system that would be difficult to replicate organically. Acquisition provides immediate access to both the brand and the mechanics of its growth.
“What these deals underline is a constraint we highlighted last year: large FMCG companies are structurally optimised for shelf-driven, retail-led demand.”
What these deals underline is a constraint we highlighted last year: large FMCG companies are structurally optimised for shelf-driven, retail-led demand. By contrast, direct-to-consumer and subscription-led models rely on continuous engagement, higher acquisition costs and different margin dynamics. These are not simply alternative channels, but different operating systems for generating and sustaining demand.
Taken together, the effect is a redistribution of M&A’s purpose. After several years in which pricing power did much of the work, those gains have largely normalised, leaving companies more exposed to uneven volume dynamics. At the same time, private label continues to outpace branded goods across much of Western Europe, while smaller brands account for a disproportionate share of incremental growth. This has shifted where growth is generated within portfolios, and in turn where M&A is being directed.
M&A activity certainly has returned on a large scale; however, it has been used more for portfolio reshaping than pure consolidation, and it has increasingly become a mechanism for accessing capabilities and operating models that are difficult to build internally. The common thread is not scale, but adaptation to where growth is now occurring.
The collapse of the recent Pernod Ricard and Brown-Forman talks reinforces the point. Even at the largest end of the market, scale alone is not always sufficient to make transactions viable. Increasingly, the more consistent pattern is selective deployment of capital into parts of the market where growth is structurally different, and harder to reach through existing systems. That suggests the framework outlined last year has not only held, but continues to shape how M&A is being used, and is likely to remain relevant into 2026 and beyond.
As these acquisitions unfold and the complex integrations take place, there will undoubtedly be some fascinating lessons from a talent perspective too. Cultural assimilation, capability builds and massive physical relocations will probably be among the most common themes – we’ll publish a follow-up article next year assessing our predictions again. What else do you envisage? We’d love to hear.
