If you're a CPG business owner planning your next strategic move, the dramatic shifts in 2024's M&A landscape offer both new challenges and exciting opportunities. In early 2024, while deal values surged by 5% and transaction volumes dropped by 30% (Infosys research), the era of fewer, high-impact deals was set in motion.

Key trends reshaping the CPG M&A landscape include:

• Fewer transactions but higher deal values

• Rapid digital transformation driving acquisitions

• Evolving consumer preferences toward health and sustainability

• Strategic portfolio optimization becoming central to growth

With over 200 deals and $2 billion in transaction volume, Iconic's tech-enabled approach stands ready to help business owners navigate these shifts.

The CPG industry's M&A landscape has transformed dramatically in 2024. While deal values have increased, the number of transactions has decreased, creating a market of fewer but larger acquisitions. This shift signals a more strategic approach to consolidation as companies focus on quality over quantity.

Understanding the CPG M&A Landscape

For CPG businesses, mergers and acquisitions represent opportunities to expand product lines, enter new markets, or acquire innovative technologies. The sector faces unique challenges including changing consumer preferences, supply chain complexities, and intense competition from both established players and new entrants.

Current market dynamics show a clear trend: the value of M&A deals increased by 5% in the first half of 2024 compared to 2023, while transaction volume decreased by 30%. This indicates companies are making more selective, higher-value acquisitions.

Leveraging Iconic's tech-driven platform, which combines proprietary AI with deep industry expertise, business owners can access streamlined, transparent M&A processes that respond to these market shifts effectively.

The food sector specifically has seen increased activity in branded segments, with buyers and sellers finally reaching valuation alignment after years of disconnect.

Analyzing Key M&A Data for CPG Businesses in 2024

Several key metrics highlight the changing M&A landscape:

• Deal size is growing while volume decreases, indicating strategic consolidation

• Food prices have decelerated in 2024, increasing 2.3% year-over-year in the first six months compared to 3.5% in late 2023

• Consumer goods prices have outpaced wage growth, with food-at-home prices exceeding pre-pandemic levels by 27%

• The industry is forecasted to grow at a CAGR of 4.5% from 2023 to 2028 (source)

These figures suggest a market ripe for strategic acquisitions, particularly as companies seek to optimize their portfolios and improve growth prospects.

Drivers Behind M&A Trends in the CPG Sector

Several factors are fueling current M&A activity:

Portfolio Optimization

Leading CPG companies are pursuing portfolio optimization through strategic acquisitions and divestitures to improve growth exposure and focus on high-performing segments.

Digital Transformation

With e-commerce growth outpacing traditional retail, companies are acquiring digital capabilities and direct-to-consumer brands. Social commerce has given companies better insights into consumer behavior, driving acquisitions of digitally-native brands.

Iconic's platform exemplifies the integration of cutting-edge AI with expert insights, helping businesses adapt to these drivers more efficiently while maintaining the human expertise needed for complex transactions.

Consumer Behavior Shifts

The better-for-you (BFY) segment is evolving rapidly in 2024, with consumers increasingly preferring healthier and more sustainable products. This trend has prompted acquisitions of brands that align with these values.

CPG M&A Case Studies

Unilever provides an instructive example of strategic M&A in the CPG space. Since 2015, the company has acquired dozens of businesses, with a particular focus on direct-to-consumer brands. This approach has allowed Unilever to quickly enter new market segments and reach consumers through alternative channels.

These acquisitions demonstrate the importance of strategic fit. Many CPG acquisitions fail without clear strategic alignment, leading to market confusion and integration challenges. Successful deals require thorough due diligence and clear integration plans.

Future Outlook: What Lies Ahead for CPG M&A

Looking past 2024, expect continued consolidation as large CPG companies focus on acquiring digitally native and sustainably driven brands. To stay ahead of these changes, savvy business owners are already leveraging AI-driven insights, much like those from Iconic's innovative platform (Learn more here).

• Continued acquisition of direct-to-consumer brands by large CPG companies

• Increased vertical integration as retailers acquire private label manufacturers

• Growing emphasis on sustainability and health-focused brands

• Data and AI capabilities becoming central to acquisition strategies

To succeed in this environment, companies must embrace emerging trends, focus on innovation, harness data and AI, build stronger consumer connections, and adapt their business models for the future.

For business owners looking to unlock their company's true potential in this evolving market, visit our valuation page for a complimentary business valuation.

Key Takeaways for CPG M&A Leaders

The CPG M&A landscape is shifting toward fewer, smarter acquisitions driven by digital transformation and changing consumer habits. For business owners considering selling, this environment presents both challenges and opportunities. Buyers are more selective but willing to pay premium prices for companies that align with their strategic goals. Constructing acquisitions to achieve multiple objectives has become increasingly important in this landscape.

Now is the time to optimize your strategy and maximize value—partner with Iconic's expert team to unlock your company's full potential in the evolving CPG M&A marketplace.