Since the release of our M&A report on the sector earlier this year, the consumer and retail sector has experienced a phenomenal period of deal activity. In the first eight months of 2021, the global consumer and retail industry saw more than 4,000 announced deals hitting the highest record in the past 10 years – second only to 20171. The United States, the UK and China have been the largest drivers of deal volumes this past year, with most deals happening in the retail subsector.1

Riding High - global consumer and retail deal volume and value

The above graph highlights the resilience of the C&R sector, where many opportunities are arising as consumer behaviours have rapidly evolved over the last 18 months and businesses are transforming to keep up with this pace of change

(Source: Thomson accessed in 7 September 2021)

For the last 8 months (Jan-Aug 2021), deal volume has grown 20 percent over the same period in 2020 and 7 percent over the same period in 2019. Financial investors have been taking special interest in the sector, accounting for 48 percent of deals. The investments are going primarily into specialty food and beverage, internet retail and pet food & products. 

This really highlights the resilience of the consumer and retail sector. We’ve seen many opportunities arise as consumer behaviors have rapidly evolved over the past 18 months— and businesses are transforming to keep up with this pace of change. Indeed, as we’ve seen in KPMG’s 2021 CEO Outlook, a vast majority (87 percent) of CEOs expressed moderate or high appetite for M&A over the next three years. When compared to the 2019 report, 2021 saw a 10-percentage-point increase in those expressing a high appetite for M&A2.

As forecasted in KPMG’s annual publication, Consumer & Retail M&A Outlook 2021, deal activity is primarily being driven by players looking to increase exposure in the direct-to-consumer (DTC) space. This is part of a larger trend we’ve seen to capitalize on the opportunities around channel’s expansion witnessed over the last few years.

What’s more, several players are going through a portfolio transformation process — moving away from assets for which they are no longer the best owner — while factoring innovation and sustainability as key decision criterion. In particular, consumer and retail CEOs expressed the highest intent to leverage increased investment in innovative business models among all sectors surveyed (at 74 percent compared to the global average of 67 percent)2

The high tide of deals has been sweeping across all regions. The United States saw a 31 percent increase in deal value over 8 months period in Jan-Aug 2021 over the same period in 2020 (reaching US$71 billion) and a 5 percent increase in volume with 738 deals.1 The market is being driven by rising activity in retail, especially DTC investments, and consumer products. 

Riding High - regional consumer and retail deal volume by percentage

(Source: Thomson accessed in 7 September 2021)

Europe registered 37 percent growth in deal volume over the first 8 months of 2021. This was driven primarily by the UK, which has seen high M&A activity over the past 12 months. Sector deals in the UK grew 45 percent over Jan-Aug 2020, which was hit heavily by COVID-19, and 17 percent over the same period in 2019. Notably, over half of all deals have involved financial investors.1

Asia-Pacific deal activity grew more modestly in the first eight months of 2021 – up over the same period in 2020 (up 9 percent) and 2019 (up 9 percent). Growth in this region was driven by China, with a 45 percent increase in deals in Jan-Aug 2021 over corresponding period in 2020.1

We expect the M&A pipeline for private equity to remain strong, with continued investment in corporate divestitures and innovative business models. Private equity interest in the sector has risen significantly, with investments directed in grocery, online and home improvement retail. 

Despite the high volume of M&A in the first eight months of the year, it doesn’t appear to be slowing down. Many of the trends show strong durability — which is confirmed by the recent CEO Outlook —so we are looking forward to what’s in store for the rest of the year.

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Thomson Deals, accessed 7 Sep 2021
KPMG 2021 CEO Outlook Pulse Survey