Ready for liftoff: Q3'24 M&A trends in consumer and retail

The Federal Reserve's interest rate cuts in September and November provided a positive boost to markets, but the optimism was tempered by geopolitical pressures, devastating hurricanes, and a longshoremen strike. The economic impacts of these events are expected to distort near-term activity but should be offset by future rebuilding efforts.

Soaring food prices, reflecting broader inflationary pressures, are challenging both consumers and consumer packaged goods (CPG) companies. A Circana analysis shows that prices for food at home in July 2024 exceeded pre-pandemic levels by 27 percent (29.7 percent for food away from home), outpacing wage growth of just 20 percent. As grocery costs rise, families are making tough choices between necessity and affordability, while CPG companies face growth headwinds. To navigate this environment, KPMG advises CPG brands to ladder pricing options and diversify product portfolios to address the constraints of lower-income households while capturing higher-income spending.