Strategic activity dominated 2025’s headlines in consumer M&A, but a stalled middle market meant dealmakers were skeptical that the sector had truly recovered.

Going into 2026, however, dealmakers have renewed optimism amid improved macro footing, significant pent-up deal supply, and an expectation of more sustained activity across the year.

The North American Consumer M&A market saw a 57% year-over-year volume expansion to USD 143.6bn across 686 deals in 2025 compared to USD 91.7bn over 750 deals in 2024, resulting in the highest deal volume seen in consumer sector for the past 10 years. However, 2025 volume was largely driven by the USD 51.4bn pending acquisition of Kenvue by Kimberly-Clark in November.

Strategics captured 60% of the total deal volume with USD 86.4bn over 450 deals while sponsors accounted for the remaining 40% having USD 57.2bn worth of volume across 236 deals.

Mergermarket tracked 686 consumer deals completed in 2025, the lowest deal count seen since 2010 when only 669 consumer deals were completed.

But there is good momentum going into the new year, with debates over interest rates and tariff concerns largely accepted as the new normal, said Justin Craig, managing director at Moelis & Company.

“‘It’s a question of ‘What more are you waiting for?’” Craig said. “A lot of clients have accepted that there’s not going to be perfect tariff clarity at any point in the near future. There’s not an easy way to kick the can, and say, let’s wait till 2027 when the market is better. That’s helping to accelerate a lot of these conversations.”

Why activity should heat up

Six out of the top 10 consumer deals in 2025 occurred in the last quarter with a combined value of USD 66.4bn. The strong end to the year is raising hopes for lasting momentum in 2026, said Morgan LeConey, head of US consumer and retail at Macquarie Capital.

“I expect a much stronger first and second quarter this year, which I hope, most importantly, will continue into the third and fourth quarter of this year — versus previous years, where I think we’ve seen a busy quarter or two and then activity die down for some macro, external reason that ultimately impacted total volume,” LeConey said.

The high-growth side of the food and beverage space saw a resurgence on the back of some larger strategic deals last year — including the acquisitions of LesserEvil, Poppi, and Simple Mills — generating renewed excitement for some of the founder-led, high growth businesses, LeConey noted.

The outlook for 2026 will also be more positive as concerns over geopolitical and macroeconomic issues are gradually eased, said Iván Marchena, senior economist at investment company Just2Trade.

In November, President Donald Trump signed an executive order allowing a range of food products, such as coffee, bananas, and beef, to be exempt from tariffs, as the goods cannot be sufficiently produced in the U.S.

“At this point it’s probably more a question of the unknown shocks that could come to the system,” Craig said. “Will there be another black cloud? That’s another issue. But I don’t think it’s easy to identify where we sit today what that black cloud is.”

Strategics vs. sponsors

Undeterred by external factors, food and beverage strategics will continue to be active in reshaping their portfolios and enhancing their core offerings, acquiring assets that are aligned with their strategy and have the scale they need, said Alejandro Cola, managing director and founder at Crescendo Strategic Advisors.

“That is independent of a meltdown in the economy or geopolitics,” Cola said. “The financing is there – banks are willing to lend to these large CPG companies, and they view these transactions as favorable and positive.”

Although a very small percentage of assets ultimately get sold to strategics at top-tier multiples, the sponsor side is still recognizing sufficient returns at lower relative valuations, LeConey said.

“We’re now entering a phase for many of those consumer assets where EBITDA has rebounded back to levels where even with some multiple compression, there’s still a return for the selling sponsor,” LeConey said.

Craig noted that sponsor sellers are starting to manage down their expectations, especially relative to some marks that were slightly aggressive, such as during the Covid M&A boom.

Plenty of deals were pulled last year, and sponsors will continue to face pressure to exit as portfolio assets’ average age continues to increase and buyers have lots of cash sitting on the sidelines, Cola said.

Obstacles that could hinder consumer M&A are consumer confidence and inflation, particularly inflation related to consumer goods, Cola added.

“Value-conscious consumers are going to the supermarket to buy the best deals, and they’re choosing private label brands and brands that offer better value,” Cola said. “That’s putting a lot of pressure on companies’ volume and companies’ ability to pass through prices. What ends up happening is margin erosion, volume erosion, which is not very favorable for an exit.”

Subsectors to watch

On the beauty and wellness side, oral care, beauty retail experiences, hair growth, and supply chain players are expected to generate significant acquisition interest, said Brittany Arnett, founder of oral care company Arame.

Arnett noted that recent consolidation among indie beauty retailers, such as Ulta acquiring London’s Space NK and Violet Grey acquiring The Detox Market, demonstrates the power of the specialty beauty retailer, especially those that can offer a quality brick-and-mortar experience.

“High-touch beauty retail experiences will be more important — particularly since Sephora stores have become oversaturated with products and more geared towards a younger demographic,” Arnett said. “The older, wealthier customer will want to gravitate towards more of a department store model with a higher-touch experience from sales associates.”

This newswire reported last month that Bubble Beauty, a manufacturer of skincare products for young adults, had collected initial bids in its sale process. Bubble Beauty is projecting over USD 100m in revenue for 2025, with both strategics and financial sponsors circling the process, as reported. Mergermarket reported in June that the company was exploring strategic alternatives, including the possibility of a sale, and had mandated Centerview Partners to serve as its advisor.

Protein will be top of mind for many food and beverage companies this year, Craig noted, with the continued rise in popularity of GLP-1 and health and wellness trends resulting in consumers looking for protein in all sorts of formats. Plant-based meat company, Beyond Meat, recently introduced a sparkling protein beverage line with options for 10 grams and 20 grams of protein.

While healthy snacking, ethnic food, and protein-centric food products will generate interest, consumers are now revisiting the allocation of dollars in their grocery baskets, which have become much more expensive in recent years, Craig said, adding that this could lead to foods viewed as not delivering proper nutrition or value becoming less attractive acquisition targets.