Food M&A Update – April 2025

Tariff Uncertainty Slows Food M&A, Distributors Well Positioned for Growth

Capstone’s latest Food M&A Update reports that merger and acquisition (M&A) activity in the sector has fallen year-over-year (YOY) as trade and tariff policies have created high levels of uncertainty for the business operating environment and the health of the consumer.

Tariff discussions have played a significant role in the Food sector to start 2025, impacting public company stock performance and muddying the outlook for all sector participants and consumer health. On April 2^nd, President Trump announced widespread tariffs on nearly all trade partners: 10% on all U.S. imports with higher retaliatory tariffs on select nations, according to the White House. On April 9^th, a 90-day pause on tariff implementations was announced, igniting optimism that duty rates could become more modest following trade negotiations. While a universal 10% tariff rate was applied to most countries for the 90-day window, China (145%), Mexico, and Canada were exempt from the pause. America’s dominant trade partners for food imports have been Canada and Mexico, with the two countries accounting for 40.3% of food imports to the U.S. in 2024, according to Bloomberg’s World Economic Analyzer. Going forward, goods that are compliant with the United States-Mexico-Canada Agreement (USMCA) will be tariff free while non-compliant goods will be subject tariffs of up to 25%. The remainder of the U.S.’ top trade partners in negotiations could see an unweighted average tariff of 22.1% from the April 2^nd mandate. This uncertainty in the operating landscape has negatively impacted the Food M&A market to date.

Also included in this report:

• A summary of 2024 food exports to the U.S. by country and proposed tariff rate, with additional detail on select food categories that face the highest potential duties.
• A breakdown of deal volume in the Branded, Distribution, and Processing segments and which segment stands to see heightened acquirer interest moving through 2025.
• Analysis of notable food M&A transactions that characterize key trends in the space, including deal rationale.

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 Food businesses that serve growing end-markets. For more information on the Food 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, contact us today to start a conversation.