Consumer Packaged Goods Companies Adapting to Market Changes
Consumer packaged goods (CPG) companies are undergoing significant transformations due to shifting consumer trends, increased input costs, high interest rates, inflation, tariffs, and changing regulations. This has led to breakups, spinoffs, mergers, and acquisitions within the industry.
Companies are reevaluating their core product lines and reshaping their portfolios in response to these marketplace shifts. The strategic adjustments are aimed at improving the bottom line and staying competitive in the evolving landscape.
According to Mike Graziano, director of transactions advisory services at RSM US, CPG companies are redefining their priorities and core businesses. This is evident in recent breakups announced by companies looking to streamline their operations and focus on key areas of growth.
One example is Keurig Dr Pepper Inc. (KDP), which is acquiring JDE Peet’s for approximately $18.4 billion. The plan is to merge Keurig and JDE Peet’s and then split KDP into two independent, publicly traded companies. Tim Cofer, CEO of KDP, believes this move is the right step for the company and its shareholders, emphasizing the synergies and efficiencies that will result from the combination.
Similarly, Kraft Heinz is dividing into two independent, publicly traded companies to better organize its extensive portfolio of over 200 brands. CEO Carlos Abrams-Rivera stated that strategic transactions were being evaluated to unlock shareholder value and drive long-term growth.
Another significant deal was the acquisition of WK Kellogg Co by The Ferrero Group for $3.1 billion. This acquisition took the publicly held company private and could shift its focus towards higher-growth snacks, moving away from its declining cereal business. Chairman and CEO Gary Pilnick highlighted the benefits of joining forces with the Nutella manufacturer to drive growth in a competitive market.
Key Trends Impacting Mergers and Acquisitions
Data from Dealogic indicates a 48% increase in corporate divestitures through July, reaching the highest dollar value since 2021 at $725 billion. While the number of transactions in the food and beverage sector dropped by 34% in the first quarter of 2025, year-over-year transactions remained consistent at 282 for the trailing 12-month period ending March 31.
Colin Schopbach, Americas chief revenue officer at Datasite, noted that transaction demand remains strong despite market uncertainties. Global deals rose by 3% in the first half of the year compared to the same period last year, indicating a robust M&A environment.
Challenges in M&A Deals
While global consumer deals have increased, they are taking longer to close, with an average of nine days more than the previous year. However, the percentage of successfully closed deals has risen by 7 percentage points to 46%. This trend is driven by a focus on health, wellness, efficiency, and digital transformation, supported by private equity capital.
Graziano highlighted the impact of shifting company valuations and debt on M&A deals. He noted that the high valuation threshold post-COVID-19 has created a gap between seller expectations and buyer willingness to pay. Earnouts are becoming more common in deals as parties negotiate terms to bridge this valuation divide.
GLP-1 drugs and Supplemental Nutrition Assistance Program (SNAP) benefits are also influencing CPG M&A. The popularity of GLP-1 drugs for weight management and blood sugar regulation is reshaping the industry landscape. The reduction in SNAP benefits in 2026 is expected to impact middle-market brands and grocery consolidation, prompting CPG companies to evaluate their exposures and adapt their strategies accordingly.
In conclusion, the CPG industry is experiencing significant changes, driving companies to reevaluate their priorities, streamline their operations, and focus on growth areas. Mergers, acquisitions, and strategic transformations are reshaping the landscape as companies navigate market challenges and opportunities.