Beverage Sector M&A Update – August 2023

Beverage Sector Disruption and Innovation Bring Significant Middle Market Consolidation Opportunities

Capstone’s latest Beverage Sector M&A Update reports that, despite facing significant inflationary headwinds for much of the past two years, consumers have maintained healthy spending in the sector and continue to show appetite for premium products—especially within the Ready-to-drink (RTD) and Health & Wellness categories. This demand for convenience and premium offerings is driving innovation in the sector and laying strong groundwork for a resurgence of consolidation activity.

M&A activity in the Beverage sector has moderated through year-to-date, declining 21.4% year-over-year (YOY) to 110 transactions announced or completed. The slowdown in the sector has coincided with a decline across broader M&A markets, as middle market Q2 2023 deal volume across all industries fell 19.7% from Q1.

The rapid growth of the Ready-to-drink market, fueled by consumer demand for convenience, has encouraged collaboration between traditional soft drink players and leading beer and spirits providers. The push for greater product diversification and entry into high-growth end markets among beverage players has provided significant tailwinds for consolidation activity—which is only expected to accelerate upon a return to a more normalized economic backdrop.

Also included in this report:

• Analysis of how the Beverage sector has performed during past recessions and economic downturns.
• The qualities acquirers are currently prioritizing—and rewarding—in acquisition targets and the primary of drivers of M&A activity year-to-date.
• Insights and commentary from Capstone’s senior bankers on recent notable transactions and sector trends.

Capstone Partners’ Consumer Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the consumer and retail industries. Our team partners with leading mid-to-large sized Beverage sector businesses that serve growing end-markets. For more information on Beverage sector M&A trends featured in this report or to speak with one of our Consumer Investment Banking Team members about how to grow, value, and/or sell your company, we are here to help. Contact us today to start a conversation.