North American consumer & retail M&A activity is on the up, while South America struggles in the face of a punishing economic environment. Deal drivers include business resilience, channels to market, next-gen capabilities and ESG.
North America: confidence abounds as new consumer tastes spur market change.
US consumer deal volume enjoyed a welcome 5 percent uptick in 2021 with just under half of transactions involving financial investors, and a surge of activity in food & beverage and internet & catalog retail. This rally is set to continue as confident buyers reshape and expand portfolios to meet changing consumer expectations.
The investment trends that began during COVID-19 have steadily increased, notably health, direct-to-consumer assets, sustainable businesses and, somewhat ironically, comfort food.
The promise of further growth should retain the interest of European investors (where deals were 2 percent higher in 2021) and win back buyers from Asia Pacific) after a disappointing M&A decrease of 31 percent year-on-year.
Sustainability is no longer a 'nice to have' and has moved center stage, as large companies cleanse their portfolios of assets that don't support their environmental, social and governance (ESG) agenda.
Brazil: unfavorable conditions putting the brakes on deal growth
In a spectacular year for consumer & retail M&A across the Latin America region, the largest market Brazil increased deal volumes by 100 percent in the 9 first months of 2021, year-on-year.
However, we can expect a slowdown in 2022, as increased interest rates and weaker capital markets hit investors' liquidity. In a bid to sustain recent growth, businesses are reinvigorating development and transforming business models to capture new consumer trends, while improving cash management to cope with continued market uncertainty.
Global supply chain disruption could actually benefit the South Americas, as investors from US and Europe explore alternative sources, which should boost cross-border transactions.
Finally, retail is set for a shake-up, as big-box companies rationalize their convenience store portfolios to morph into pure-play operators, while convenience players go in the opposite direction.
Find out more about 2022 M&A prospects in the Americas, Europe and Asia Pacific, and download the full report.
Striding forward with confidence
Global consumer and retail M&A outlook 2022
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