The Takeaway: A Q&A With James Scallan on Consumer Trends and M&A Activity in the Snacking Segment
What trends are driving M&A within the snacking sector?
A broader trend we’ve observed is the significant presence of corporate buyers in M&A activity within the wider food and beverage sector, and this holds true for the snacking market as well. Many corporates are coming off strong financial performances, bolstered by healthy cash flows and robust balance sheets. This financial stability allows them to pursue acquisitions that prioritise long-term efficiencies over short-term growth.
Corporates are on the lookout for deals that help them expand into new markets or diversify their product lines, particularly in rapidly growing segments, which snacking certainly is. The shift towards healthier eating has bolstered interest in “better-for-you” and “healthy indulgence” snacks, creating opportunities for companies that can innovate in this space. By acquiring businesses that align with trends like healthier eating and sustainable sourcing, they aim to reinforce their market positions while capitalising on evolving consumer preferences.
Additionally, the rise in snacking—thanks to our busier lifestyles and the growing variety of snack options—has kept consumer demand strong. Strategic buyers, including private equity firms, are particularly drawn to premium assets within the sector. This appetite is reflected in the rise of “mega deals” in 2024, such as Mars’ acquisition of Kellanova, the largest in snacking history.
How will category interest grow in the years ahead, and why?
Our view is that the snacking sector is poised for continued growth, with initial signs of recovery appearing and economic conditions improving. As interest rates continue to normalise and visibility of performance increases—including volume recovery and inflation pass-through—an uptick in M&A activity is expected approaching 2025.
Consumer demand for health-conscious snacks will continue to drive growth in “better-for-you” options that prioritise natural ingredients and address dietary needs like gluten-free, plant-based, and low-sugar options. Additionally, a growing emphasis on sustainability is driving innovations in eco-friendly packaging, with many companies responding to consumer preferences for environmentally responsible products.
Could anything stand in the way of growth?
Strong underlying tailwinds promise growth as inflation and interest rates stabilise and sentiment improves, though supply chain pressures and raw material costs remain significant challenges. Branded snacks enjoy strong consumer loyalty, but ongoing price sensitivity may hinder growth volume.
Where does private equity come into the equation?
While corporate buyers have been the dominant force in recent M&A activity, particularly for larger acquisitions, PE firms are starting to make their presence felt as conditions for borrowing improve. A good example is One Rock Capital Partners’ recent acquisition of Europe Snacks, which owns the Burts brand in the U.K. It illustrates that while overall investment may be subdued, strategic moves are still taking place when the price and asset are right.
What lies ahead for PE involvement? Suppose inflation remains cool and interest rates stabilise: Activity is likely to intensify as private equity grows more competitive with improved debt availability and pricing. Growing consumer confidence, as a result of easing cost-of-living pressures, should lead to an improved trading environment, too.
So, what’s The Takeaway?
While corporate buyers currently lead the M&A landscape, economic improvements signal that private equity is on the cusp of re-establishing its influence in the market. For businesses and investors alike, the ability to remain agile, capitalise on synergies, and anticipate shifts in consumer behaviour will not just be advantageous but critical to staying competitive in an increasingly dynamic market.
