Food and beverage companies are expected to focus on smaller acquisitions this year instead of striking multi-billion dollar transformative M&A deals. Giants like Kraft Heinz and Molson Coors are prioritizing acquisitions that keep their finances in check while expanding their presence in categories such as better-for-you snacks and functional drinks.
In recent years, the food industry has shifted towards “bolt-on” deals as companies have become more disciplined following some failed large transactions in the 2010s. These smaller acquisitions allow companies to fill gaps in their portfolios without taking on excessive debt.
Tracey Joubert, CFO of Molson Coors, announced at the Consumer Analyst Group of New York’s annual conference that the company will continue its “string of pearls” strategy for acquisitions. This strategy focuses on acquiring brands in categories where Molson Coors has limited presence and can leverage its size to scale the business effectively.
Molson Coors recently acquired a minority stake in Fever-Tree, a nonalcoholic carbonated mixer, and purchased a majority stake in Zoa, a better-for-you energy drink co-founded by Dwayne “The Rock” Johnson. These acquisitions reflect the company’s commitment to diversifying beyond beer.
While there have been billion-dollar deals in the food industry in recent years, they have mostly involved filling specific voids in companies’ portfolios. Campbell’s acquired Sovos Brands, PepsiCo bought Siete Foods, and Hershey purchased Sour Strips to enhance their product offerings.
Executives at CAGNY emphasized the importance of strengthening their balance sheets and looking for opportunities to reshape their portfolios through strategic mergers and acquisitions.
Kraft Heinz’s CFO, Andre Maciel, highlighted the company’s focus on M&A that aligns with its organic growth strategy, with a preference for smaller bolt-on deals. Hershey has been particularly active in using M&A to expand its salty snacks portfolio, acquiring brands like Dot’s Pretzels, SkinnyPop popcorn, and Pirate’s Booty puffs.
Michele Buck, CEO of Hershey, emphasized the role of M&A in building an optimal portfolio for the company’s growth. She mentioned that Hershey will continue to use acquisitions as a means to enhance its product offerings.
Industry analysts predict an increase in dealmaking activity, driven by lower interest rates, a focus on improving margins and growth, and consumer demand for innovative products like snacking and plant-based alternatives.