UK reports surge in F&B M&A as plant-based brands face mixed fortunes

A 2024 review of mergers and acquisitions (M&A) in the UK F&B sector reveals that total deal volume surged 29% from the 117 deals held in the previous year.

According to the corporate advisory firm Oghma Partners, the total deal value recorded a robust increase, even excluding Carlsberg’s US$4.2 billion acquisition of Britvic. Grocery and confectionery deal volumes remained consistently high at 22.5%.

“The significant increase in deal volume and value in UK F&B can be attributed to a more stable cost environment for the industry, coupled with a steadier overall economic climate. Additionally, pent-up deal demand from previous years, combined with concerns about potential changes to capital gains tax, drove many business owners to accelerate their exit plans, further fuelling activity,” Oliver North, director at Oghma Partners, tells Food Ingredients First.

North says it is worth noting that 11.3% of the deals were out of administration or distressed, meaning that they were done quickly and generally at a loss to cover liabilities urgently. Some 69% of deals had a value less than £10 million (US$12.2 million).

Plant-based positionings

The firm identifies a “polarization” in the plant-based and meat-free market, with strong players thriving and weaker ones struggling. Several factors are helping stronger players maintain growth in a market where consumer demand for higher nutritional footprints is pushing value.

“[One factor is] a strong brand identity. Leading brands resonate with consumers through clear messaging about health, sustainability and ethical benefits,” explains North.

“Innovating with better taste, texture and variety keeps consumers engaged and attracts new ones. Strong players also tap into adjacent categories, expanding their product range, for example, The Tofoo Co moving into tempeh products.”

Consumer trust remains vital for brands, with the shift toward health-conscious products creating value in the sector. “Transparent sourcing, clean labels and consistent quality build credibility, helping to retain and grow their customer base.”

The M&A report notes that brands like Allplants and VBites depict challenges within the plant-based scene. The former, despite raising £67 million (US$82.4 million), recorded financial losses and dwindling demand. VBites faces similar operational and financial challenges.

In 2025, the firm expects the sector to mark a phase of “intensified competition,” where brands with sustainable models will continue to grow while weaker companies may face increased pressures, potentially leading to consolidations or exits.

Growth in beverages and food ingredients

Oghma Partners’ report shows that the beverage sector saw significant deal values in addition to accounting for a large portion of deal volumes (20.5%). Among these was the acquisition of pub giant Marston’s 40.0% stake in a brewing company to Carlsberg for £206 million (US$253 million).

“We see a continued search for growth brands which can drive entry into new categories for the potential owners,” notes North.

Oghma Partners’ report shows that the beverage sector saw significant deal values.Another sector expected to boom is food ingredients due to its diverse customers opening up new end markets and high margins.

According to the report, consolidations will continue while bigger players await market stability. This trend has been set with some of last year’s biggest deals, such as Arla Food Ingredients’ acquisition of Volac Whey Nutrition and Solina’s takeover of Rich Sauces, reflecting the sector’s appeal.

Oghma Partners predict that the pet nutrition sector could witness further consolidation, with pet owners increasingly demanding natural and organic products.

“As per the human nutrition market, consumers are looking for ‘healthy’ pet foods with a natural and organic bias associated with ‘healthier’ products. We see this trend continuing,” reveals North.

“We also see a trend toward fresh and frozen products and away from dry products. This evolution may favor more agile and smaller brands with flexible manufacturing structures vs. some more traditional products currently available.”

Interest rates dampen financing

The firm notes that geopolitical tensions and economic uncertainty have impacted M&A activity and company valuations. High interest rates, particularly, have hindered businesses’ ability to secure acquisition financing.

“Inflation is less problematic for deal financing, but higher interest rates have significantly raised borrowing costs, making debt financing for acquisitions more expensive. While higher rates do not necessarily limit financing availability, they reduce the attractiveness of leveraged buyouts as the increased cost of servicing debt lowers potential returns for private equity investors,” explains North.

While interest rates were expected to decline at the start of 2024, they remained high.

“Interest rates are expected to remain higher for longer in 2025, keeping borrowing costs elevated, which could impact how much buyers are willing to pay for businesses.”

However, while inflationary pressures and interest rate policies will continue to impact valuations, the firm expects M&A activity to remain strong in volume, primarily driven by smaller deals.