M&A in food & drink has continued its recovery in 2025, with UK deals at an eight-year high, but the uncertainty caused by Donald Trump’s tariff agenda in the US could disrupt the positive momentum, according to a new report.
Volumes in the sector for the first quarter matched the 40 recorded in the final three months of 2024, data from professional services firm Grant Thornton showed.
Nicola Sartori, head of consumer industries at the firm, said the performance was even better than indicated by the figures given the boost to deal activity in Q3 as sellers rushed to get transactions over the line to escape an expected hit from the rise in capital gains tax.
“Without this impact, it’s likely that Q1 2025 would have seen an even higher volume,” she added.
The first three months of 2025 marked the strongest quarter for UK-to-UK domestic M&A since Grant Thornton started tracking activity in Q1 2017, as private equity continued to ramp up interest in the industry and trade buyers sought to strengthen brand portfolios and supply chain capabilities.
There were 11 direct investments from PE, up from nine in Q4 and 10 in the same quarter of 2024, including Puma Growth Partners backing Love Corn and Equity Studio taking a stake in CBD drinks brand Trip.
PE was also involved in several trade deals in the quarter, with PAI-owned Compleat Food Group acquiring The Real Yorkshire Pudding Company and LDC-backed Bramble Foods picking up Whitakers Chocolates.
A number of strategic UK-centred trade deals added to the Q1 figures as Yeo Valley bolstered its position in premium yoghurt with the acquisition of The Collective and Cake Box purchased Ambala Foods to expand revenue channels.
M&A activity reached a five-year high in 2024 following a fallow period as the food & drink industry fought battles across a number of fronts.
The momentum has carried into the second quarter of this year, with a flurry of deals in April and May so far, including Müller snapping up Biotiful for £100m, Unilever’s £230m acquisition of Wild and a merger of Greencore and Bakkavor.
However, Sartori warned further volatility in global markets could affect progress in the second half of 2025.
“The geopolitical and economic uncertainties we saw in April haven’t impacted volumes yet, but there may be a more tangible effect to come later in the year,” she said.
“The ongoing uncertainty around tariffs means the F&B sector will need to adapt to the increased costs of importing packaging, ingredients and machinery. Market volatility as a result of policy uncertainty has also impacted appetite for IPOs, particularly in the US.”
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