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

Mergers & Acquisitions: Value is hiding in every corner of complex deals

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.

Here are some key trends and insights from Q3 2024:

Deal volume declined 13 percent quarter-over-quarter to 505, but deal value surged 402 percent to $59.4 billion, driven by large transactions such as Mars' $35.9 billion purchase of Kellanova.
Fewer strategic deals drove the sector total, while private equity appears to have stabilized and is poised to accelerate.
The consumer sector saw a 16 percent drop in deal volume but an 84 percent increase in value, while retail experienced a 13 percent decline in volume but a 99 percent surge in value.
The top five deals ranged from $2.1 billion to $35.9 billion, showcasing the high-stakes nature of the current M&A environment.

Download our paper, Ready for liftoff: Q3'24 M&A trends in consumer and retail, for an in-depth look at trends in the C&R sector and see how portfolio diversification helps food companies manage rising costs and changing consumer behavior.