Consumer Report
Summary & Outlook
The global consumer M&A market finally started showing signs of a recovery in Q3 amidst persistent economic and geopolitical challenges M&A Sentiment Indices rose, a marked improvement from late 2023 but still well below historical norms. Deal volumes in 1H24 fell by 22% year-over-year, with a few large transactions skewing aggregate deal values in Q3. North America led with 61% of global deal value followed by Europe, while AsiaPacific remains subdued. Consumer M&A is exhibiting signs of revitalization after a lackluster couple of years, and this report will highlight areas where we expect activity to pick up substantially as we head into 2025.
KEY FACTORS PROJECTED TO DRIVE GROWTH IN 2025
• Private Equity: This will be the story for 2025. After standing on the sidelines, PE firms hold an unprecedented $2.5–$3.0 trillion in dry powder. Record long capital deployment periods are now in excess of 3 years. This factor, combined with the Fed’s quantitative easing policy, will fuel a surge in M&A next year. Meanwhile, while LPs are demanding shorter holds and more capital deployment, PE sponsors also face intense pressure from their investor base to realize investments and generate returns. Continuation funds emerged as a popular mechanism to generate returns; however, that strategy tends to convey weakness in the underlying asset and is not viewed favorably by most market participants.
• Portfolio Optimization: Conglomerates that expanded aggressively through M&A in the past decade are now selling non-core and underperforming assets. Examples of this trend abound:
• Spirits: Diageo and Pernod Ricard are streamlining their portfolios by divesting non-core brands.
• FMCG: P&G sold its Magistral and Ariel brands in Argentina to Dreamco.
• Beauty and Personal Care: Yellow Wood Partners acquired Elida Brands and its portfolio of products from Unilever, while L’Oreal and Estee Lauder are pondering strategic alternatives brands.
• Wellness: J&J completed its Kenvue spinoff, while Nestlé divested Palforzia, a peanut allergy treatment. Reckitt Benckiser plans to divest its homecare and nutrition brands to focus on high-margin "power brands" like Dettol and Nurofen.
• Food: Unilever plans to divest its underperforming ice cream business.
• Cross-border Investments: In our habitual conversations with financial and strategic actors across the US and Europe, we are detecting increasing focus on the U.S. from foreign companies - motivated by strong growth, favorable demographics, lower capital costs and, to a lesser extent, the threat of tariffs.
SUBSECTOR OVERVIEW
• Food & Beverage: With M&A activity down just 2%, the F&B sector remains resilient. Mars’s acquisition of Kellanova notwithstanding, activity was primarily driven by PE As inflation stabilizes, PE firms continue to invest in high-growth areas such as snacks, ingredients and ethnic food This includes fast growing brands and product categories, as well as co-manufacturing operations and distribution. We have seen a lot of activity in snacks and baked goods, in particular. Based on our conversations with strategics and PE, we anticipate a surge in cross-border activity in 2025. The restaurant space remains rife with activity, particularly in franchises.
Summary & Outlook
• Apparel: The apparel segment experienced a slowdown in large transactions, with most activity targeting niche acquisitions. A notable exception to the rule was S&S Activewear’s $1.3bn acquisition of alphabroder. Distressed M&A opportunities are rising as brands face intense competition from e-commerce and changing consumer preferences, particularly as discretionary spending in apparel slows. Aggressive Asian players like fast-fashion giants Shein and Temu are creating further dislocation in the space
• Beauty & Personal Care: After a challenging Q2, the sector rebounded strongly in Q3, with BeautyMatter tracking 89 deals—a 78% year-over-year increase This surge helped push 2024 YTD deal activity into positive territory, driven by early stage and growth deals (up 162% quarter-over-quarter) that significantly outpaced control transactions. Investor interest has shifted toward sustainability and wellness-focused beauty brands, with a strong appetite for digital-first, eco-friendly, and wellness-driven brands that cater to emerging consumer expectations. In our view the sector remains vastly over-SKU’d and we expect most M&A activity to center on haircare and skincare, particularly in the masstige and prestige segments, with mass-market items and cosmetics in general continuing to underperform
• Retail: Retail M&A declined by 6%, driven by intense e-commerce competition (cf. Temu and Shein) and evolving consumer expectations Having exhausted other options amid tight credit markets, many retailers are exploring divestitures, while stronger players are circling distressed assets Saks’s parent Hudson Bay finally pulled off the long-desired acquisition of Neiman Marcus. Strategic deals focusing on digital transformation and operational efficiency are expected to drive activity in the coming months.
• Luxury: Long considered a buoyant sector, luxury goods are now facing drastically softer demand - particularly in China, where economic deceleration has frozen high-end spending. Overall, shoes and watches struggled, while fragrance and jewelry continue to thrive. Fashion underperformed across the board. LVMH reported an unprecedented 5% drop in revenues, while its archrival Kering disclosed even weaker results, led by Gucci’s fall from grace Despite this, pureplay brands like Hermès and Prada continue to perform beautifully
• Pet: The pet care market remains robust, fueled by high pet ownership rates and consumer investment in premium pet products PE firms continue acquisitions targeting specialized pet food, health, and services, as consumer spending in this area remains steady
As the cost of capital declines, the overwhelming consensus across the Consumer landscape reveals a clear improvement in both deal volumes and the quality of transactions – the latter a common refrain from PE investors rationalizing their inability to complete more transactions in 2023-24. Companies are evaluating new strategies to maintain profitability and adapt to changing trade dynamics. We expect cross-border dealmaking to accelerate as the incoming administration adopts a more business-friendly environment, boosting investor confidence and easing regulatory burdens The looming threat of tariffs and continuing shift to onshoring will add a layer of complexity to the M&A landscape, but also spell opportunity for some While the consumer M&A market is still navigating various challenges, there are clear signs of recovery and strong optimism for 2025.
We expect pricing from intense inflationary markets to moderate in 2025 and recycling the impact of currency devaluations from these markets in 2024 With respect to our commodity environment, we expect prices on industrial materials to remain relatively stable, while agricultural commodities will continue to face volatility and higher prices.
John Murphy (President & CFO, Coca-Cola)
Consumer M&A Summary
Consumer price index
Unemployment Rate
Consumer Deal Volume in the Americas
Consumer Indices
Consumer companies continue to significantly underperform the S&P 500 in 2024. The Consumer Discretionary sector saw volatility over the summer and ended the quarter leading other indices. Both Consumer Staples and Food & Beverage ETFs posted healthy gains, rising by 15-20% by period’s end However, consumer spending remains tepid as consumers recalibrate their habits, favoring discretionary splurges while essential goods struggle. Consumer Staples lagged despite strong earnings from companies passing cost increases to consumers. This hesitancy to fully return to pre-pandemic spending reflects a shift toward selective spending, even as the broader market shows strength
Consumer M&A Deal Volume (Americas) Deal Volume represents # of deals completed Source: PwC analysis
Consumer Valuation Data (HVA Index)
EV/Revenue
Harbor View Index
Public Trading Statistics (Harbor View Index)
APPAREL
BEAUTY & PERSONAL CARE
Public Trading Statistics (Harbor View Index)
FMCG
FOOD & BEVERAGE
Public Trading Statistics (Harbor View Index)
HEALTH & WELLNESS LUXURY
Notable Transactions
MARS FEASTS ON SNACKS
$35.9bn
AUG 2024
ACQUIRED BY
Source: Pitchbook & Mars
$4.75bn
AUG 2024
ACQUIRED BY
Source: Pitchbook & KKR
AUG 2023
ANNOUNCED $8.5BN ACQUISITION OF
Source: Pitchbook, FTC, Tapestry and Capri
The snacking industry continues to grow, driven by consumers' desire for convenient, better-for-you options That doesn’t mean that candy and chips are falling out of favor Mars, Incorporated, the closely held global leader in confectionery and pet care, has acquired Kellanova (NYSE: K) for $35.9 billion, reflecting a 44% premium to Kellanova’s recent trading average This blockbuster deal transformed league tables while enhancing Mars’s portfolio, adding iconic brands like Pringles®, Cheez-It®, and Pop-Tarts® This acquisition accelerates Mars’s ambition to double its snacking business, particularly among Gen Z and Millennials The highly strategic transaction enhances Mars’s global reach, production capabilities, and product innovation
VARSITY'S NEXT CHAPTER
Varsity Brands, a leader in team sports, athletics, and spirit, has been acquired by global investment firm KKR. Varsity Brands serves over eight million athletes and students annually with customized team uniforms, apparel, and equipment, partnering with major brands like Nike, adidas, and Under Armour The new owner plans to support Varsity Brands’ continued growth, building on its strong foundation. This acquisition positions KKR to help Varsity Brands expand its presence in new markets and product categories, while maintaining its leadership in cheerleading competitions and training programs This is part of a larger trend surrounding an increase in interest by Private Equity investors into the sports space, and in particular youth sports. Other PE holdings in this space include TZP’s Soccer Post, Transom Capital’s Bravo Sports, Kohlberg’s realized investment in Bauer and Woodside Ventures’ acquisition of Goal Five.
THE DEAL THAT WASN’T
The FTC filed a lawsuit to block Tapestry's $8.5 billion acquisition of Capri Holdings, dubiously arguing that the merger would reduce competition in the accessible luxury handbag market. Tapestry, which owns Coach and Kate Spade, wanted to acquire Capri’s brand portfolio, including Michael Kors, Versace, and Jimmy Choo. The FTC claims this merger would give Tapestry excessive control over the affordable luxury market, raising prices and reducing choices for consumers. The agency also raised concerns about wage and benefit impacts on employees as competition between the two companies would be reduced Tapestry had defended the acquisition, highlighting an intensely competitive and highly fragmented industry with hundreds of competitive brands that include established players and new entrants. Ultimately, Tapestry and Capri decided to call off the merger. One wonders if under the incoming administration, the FTC would have ruled differently
Select Consumer M&A Transactions
Select Consumer M&A Transactions
Consumer Expertise
Health & Wellness (USA)
Buy-Side Advisory
Kitchen Equipment (France, USA, Mexico)
Sell-Side Advisory
Fashion (France)
Capital Raise
Fairness Opinion
Luxury (France)
Programmatic M&A
(Pan-European)
Sell-Side Advisory Juvenile/Apparel Zorbit (UK)
Capital Raise Edutainment (USA)
Sell-Side Advisory
Personal Care (France, Ireland)
*Includes engagements executed with previous firms
Our Consumer Team
Anthony Sehnaoui Managing Director
Anthony heads the Consumer practice at Harbor View Drawing on his international background and experience, he has executed transactions in 15 countries. In addition to his extensive M&A experience as a banker, Anthony also has considerable experience as a business operator.
Capital Raise
Food & Beverage (USA)
About Harbor View Advisors
Operating at the intersection of investment banking and management consulting, we partner with inspiring companies and private equity firms to help them design and execute their strategies for growth or exit. With decades of successful client outcomes, we help growing teams improve their opportunities for success. We provide Sell-side advisory, Buy-side advisory and Strategic Consulting to innovative companies and financial sponsors.
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment. Harbor View Advisors does not guarantee the accuracy or reliability of any data provided from third party resources. Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.