Changing consumer tastes drive food M&A

Healthier eating and new consumer preferences drives M&A to record levels in the food and beverage sector

Jamil Satchu

Jamil Satchu

Principal, Advisory, Strategy, KPMG US

+1 312-241-0628

People eating healthier and discovering broader flavor profiles is driving M&A deals to record levels in the food and beverage sector. In addition, the recent dramatic rise in inflation—which reached 7.5 percent in February—is creating demand for private-label manufacturers, whose products tend to be significantly cheaper than brand names.

Food & beverage M&A in 2021 reached 674 deals, the second-highest number on record. That surge continued in Q1’22, with private equity firm Carlyle Group asking investors to submit bids for Italian dessert and pastry maker Irca, widely expected to sell for more than $1.2 billion.1

The Irca sale followed a spate of other big deals, including spice maker McCormick & Co. purchasing natural flavorings provider FONA International for $710 million;2 Givaudan, a Swiss manufacturer of flavors and ingredients acquiring Kentucky-based DDW The Color House, a producer of natural food colors; and European private equity firm Investindustrial acquiring CSM ingredients, which supplies bakery ingredients in 100 countries.

As an indication of what’s driving the trend, food retailing giant Kroger said four flavors are gaining ground with consumers: umami, “everything” seasoning, tequila, and nostalgic flavors that deliver comfort.3

Natural and healthy ingredients are leading the trend, with the food-flavors market expected to reach $20.4 billion by 2028, with a CAGR of 4.2 percent, while plant-based foods are projected to reach $95.5 billion by 2029 with a CAGR of 12.4 percent,4 according to forecasts by Meticulous Research.

The KPMG Consumer Pulse survey in February 2022 found that 56 percent of respondents said healthy eating had become more important to them during the pandemic. For members of Generation Z, born between 1996 and 2012, 62 percent said they were eating healthier than a year prior. For 88 percent of baby boomers surveyed, a healthy diet was seen as a way to extend lifespan.5

Consumers also have become more price aware because of galloping inflation in the supermarket—putting a premium on private-label manufacturers whose goods are priced about one-third less expensive than their branded counterparts.

In this segment, FGF Brands acquired Weston Foods, which produces private-label bakery products and branded goods, for $1.2 billion in October, 2021.7 Similarly, TreeHouse Foods, where activist investor Jana Partners has taken a stake, has put itself up for sale.

This M&A surge is happening with the backdrop of the Russian invasion of Ukraine, which has caused prices of some food commodities to skyrocket, further raising valuations in the sector.


  1. “Carlyle kicks off $1.1 bln sale of Italian food ingredients maker Irca – sources,”, March 17, 2022
  2. “McCormick buys natural flavorings company FONA International for $710M,”, January 4, 2021
  3. “Kroger identifies 10 emerging food trends,”, January 18, 2022
  4. “Food Flavors Market to Grow at CAGR of 4.2% From 2021 to Reach $20.39 billion by 2028 -- According to Meticulous Research,”, March 2, 2022
  5. KPMG Consumer Pulse survey in February 2022