As another year draws to a close, it’s time to ask if 2026 will be the year dealmaking in food & drink finally comes roaring back. Each new year brings hope of increased activity, but the challenges hanging over all businesses have proven hard to shake off. Deals that do happen are taking much longer to complete and the valuation gap between buyers and sellers is still a tricky hurdle to overcome
M&A activity in the sector definitely picked up in 2025, even if still slower than peak years. Greencore’s merger with Bakkavor was The Grocer’s deal of the year, but Premier Foods remained on the acquisition trail, as did The Compleat Food Group, Kingsmill finally moved for Hovis, and the alcoholic drinks and petfood categories proved to be highly active once again. And there was a London IPO for Princes to add to the mix, with the group looking to do its maiden deal in 2026.
In light of all that, what do the dealmakers in the City think of the prospects for 2026?
Private equity activity is expected to accelerate
The UK food & beverage sector enters 2026 on solid footing following a resilient 2025 that saw nearly 90 deals in the first three quarters. Activity was driven by vertical integration and supply chain security, alongside robust private equity participation and sustained cross-border interest.
Looking ahead, about one fifth of global investment professionals expect a constructive year for mergers & acquisitions on the back of greater availability of debt financing.
Important deal drivers for 2026 include portfolio reshaping as companies realign product offerings and regional supply chain resilience. Innovation will play a critical role, with emphasis on healthier products, recipe reformulation and strategies to manage rising ingredient costs. Businesses that combine strong R&D capabilities with technical solutions will be highly attractive to both trade players and private equity-backed platforms.
Private equity activity is expected to accelerate, while consumer bifurcation between premium and value segments will shape acquisition strategies. Additionally, tariff changes, geopolitical shifts and the continuation of large-scale M&A will further influence the competitive landscape.
Top acquisition targets are expected to include better-for-you and functional beverage brands, emerging snack and bakery players, contract manufacturers, divested corporate brands and value/private-label producers. Conversely, ultra-processed foods, sugary drinks, additive-heavy products and legacy cereals remain vulnerable amid evolving consumer preferences and regulatory pressures.
Sub-sectors attracting the most investment will focus on protein-forward products, gut-health and digestive wellness, functional beverages, natural plant-based foods, sustainability technologies and fresh, value-driven retail categories. With improved financing conditions and heightened investor confidence, 2026 promises to be a dynamic year for food and beverage M&A.
Doug Bentley, corporate finance partner, Grant Thornton
Inflationary pressures will ease
Next year is shaping up as a defining one for the UK consumer investment landscape. But rather than a broad-based recovery, the outlook points to selective capital deployment with a focus on the top-tier companies.
On the venture side, consumer remains a challenging category for generalist funds. Capital will continue to concentrate in businesses that are brand and technology-led, as well as those with a significant omnichannel approach, showing a strong focus on the core dynamics of pricing, personalisation, customer loyalty and strong brand metrics.
Consumer brands are certainly anticipating a more pragmatic revival of interest. Growth equity and private capital are increasingly willing to back profitable or near-profitable brands. Founder-led businesses in categories such as wellness, beauty, pet and premium food remain attractive, particularly where communities and repeat purchase provide insulation from promotional pressure.
M&A is likely to be the more reliable exit route in 2026. Strategic buyers in fmcg, retail and consumer service are gradually returning as balance sheets stabilise and inflationary pressures ease. However, deal structures will remain conservative. Bolt-on acquisitions, portfolio buys and minority stakes are expected to dominate, with earnouts frequently used to bridge valuation gaps. Private equity will continue to play a central role through buy-and-build strategies, often targeting sub-scale but profitable brands that can be scaled operationally.
After a few quiet years, the mood music feels encouraging for consumer brands, and the investment and M&A scene more broadly in 2026. Fast-growing, profitable businesses with significant brand loyalty are certainly going to look to capitalise on this more positive landscape, which could lead to a vintage year for the brands and dealmakers.
Phil Hails-Smith, managing partner, Joelson
A more optimistic outlook
As we look towards 2026, the UK food & beverage sector is showing signs of resilience amid improving market dynamics. Although 2025 was a difficult year characterised by continued economic uncertainty and cautious consumer spending, there are encouraging signs that suggest a more optimistic outlook for 2026.
There are reasons to be optimistic. Various forecasts suggest improved growth prospects, while consumer confidence is expected to stabilise, creating a more favourable investment environment.
Furthermore, investors and strategic acquirers are turning their attention to high-growth segments, with food supplements, better-for-you food products, minimally processed pet food and ingredients all attracting interest. Consumers are increasingly looking to take control of their health.
Now that strategic acquirers have largely stabilised their portfolios, M&A is a key lever to drive accretive sales growth, harness consolidation opportunities and expand into these faster-growing categories. Additionally, operational synergies achieved through M&A can help improve margins, making this an attractive strategy in the current environment.
This momentum in M&A is set to be supported by considerable capital reserves in the UK market. The British Private Equity & Venture Capital Association estimates UK PE and VC funds are sitting on £190bn of dry powder, which should be deployed over the next three to five years. Historical trends suggest half will be invested in domestic opportunities, providing substantial financial backing for acquisitions and consolidation in F&B.
Tom Cunningham, director, Lincoln International
M&A momentum will remain strong
As we move into 2026, the snacking and broader packaged food sector is settling into a more stable rhythm after several years of volatility. Input costs are beginning to level out, supply chains are running more smoothly and consumer demand remains resilient, albeit with a continued divide between value-focused and premium segments. For both strategic buyers and private equity sponsors, these conditions offer a stronger foundation to evaluate opportunities and execute deals, contributing to a more competitive M&A environment across the sector.
We’ve seen a series of high-profile moves this year that reflect these trends. Ferrero’s acquisition of WK Kellogg Co, and, more recently, Hershey’s purchase of LesserEvil, demonstrate corporates remain willing to commit at scale for strong brands with established household recognition. At the same time, private equity is also active, pursuing niche and mid-sized brands with clear growth potential. Sponsors are leveraging operational expertise and add-on strategies to enhance value, while corporates are looking to broaden category exposure and strengthen geographic reach. The competition between these two groups continues to drive robust pricing for high-quality assets.
Consumer preferences are also continuing to evolve. Functional snacking, clean-label products and flavour-led innovation are all resonating with shoppers, while convenience and health remain key drivers of choice. The GLP-1 trend has risen to prominence this year, and, as momentum builds, it is fuelling strong demand for foods that are both functional and nutritious. Brands that can successfully navigate these trends, while maintaining broad distribution, are highly prized by both strategics and financial sponsors.
Looking ahead, the combination of stabilising costs, predictable cashflows, and healthy innovation pipelines suggests M&A momentum will remain strong through 2026. The interplay between corporate scale and private capital is likely to define the next wave of consolidation, with opportunities for portfolio expansion, operational improvement and long-term value creation. For those involved in the sector, the focus remains on targeting the right brands, acting decisively and executing with precision to capture sustainable growth.
James Scallan, managing director, Houlihan Lokey
Brands will focus on quality
In 2025, we’ve seen ambitious food and drink brands challenging the status quo and outperforming in their categories.
“There’s been an increase in everyday indulgences. The transformational growth of Shaken Udder [the premium milkshake brand LDC exited in November following a four-year partnership] proved consumers will treat themselves even in tough economic times. The strongest brands dare to be different to drive categories forward.
In 2026, we can expect brands to focus on quality. There’s huge proliferation in the market – more than consumers need – and the ones that haven’t got their positioning right will be left behind.
Success will look like balancing quality with value for money. But that doesn’t mean racing to the bottom with cheap products. It’s about innovation and refocusing to give customers the best experience.
The UK remains a first mover on innovation. Jake & Nayns is a brilliant example. The loaded naans business, co-founded by two brothers, took the traditional sausage roll and pastry category and flipped it on its head, bringing bold, authentic flavours to a convenience format.
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