The food and drink sector remained a “robust” source of M&A activity in 2025 as interest rates fell and the UK economy saw a gradual recovery.
Despite geopolitical uncertainty – including a start to the year dominated by news of new US tariffs – dealmaking remained steady with 133 transactions completed, according to a report by corporate finance firm Oghma Partners.
The total was only slightly (12%) down on the 151 deals completed in 2024, when deals were rushed through ahead of feared tax hikes in Rachel Reeves’ first budget, and remained significantly higher than 2023, when 117 acquisitions were completed.
The year’s solid dealmaking volumes were aided by interest rate cuts by the Bank of England – which has cut rates six times since August 2024 – bringing the base rate to 3.75% and making both debt-funded acquisitions and companies’ prospective running costs significantly cheaper.
Excluding the one-off £1.2bn acquisition of Bakkavor by Greencore, aggregate deal value also remained resilient at an estimated £2.5bn, a 9% reduction from 2024.
As before, smaller transactions of £10m or less made up a strong majority (65.4%) of deals, even if slightly down on previous years: in 2024, 68.9% of deals were below £10m, and 75% in 2023.
Overseas buyers made up over a fifth (21%) of deals, below the five-year average of 27.4%, and corporate buyers made up 60.9% of all deals, though financial buyers – including private equity – increased its share to 18.2% of deals, up from a low of 12.6% in 2024.
Beverages were the best-represented category in all deals, with 26.3% of deals transacted, but Oghma partner Mark Lynch highlighted “notable consolidation” in the UK meat sector.
Key transactions included OSI Group’s acquisition of Karnova Group in February 2025, Cranswick’s purchase of James T Blakeman at £32m; Sofina buying Finnebrogue and Red Sky Group’s acquisition of The Welsh Sausage Company in July and Delenco Foods in November.
Making up 20.3% of deals by volume, the chilled foods sector was another focus of activity, with Compleat Food Group alone snapping up The Yorkshire Pudding Co, Freshpak, Julienne Bruno, in 2025, with Greencore’s soups and sauces factory following in January 2026.
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Princes Group’s London flotation in October was also notable, adding £400m to the acquisitive group’s war chest for future acquisitions.
Looking ahead, Lynch expected consolidation to continue across subsectors, alongside large corporates further diversifying their portfolios and expanding their geographic footprint.
“As interest rates gradually ease but inflationary pressures persist, M&A activity is likely to remain selective and strategically driven, with deal values and volumes broadly in line with 2025 levels,” he said.
“However,the outlook into 2026 is tempered by ongoing geopolitical uncertainty. Anticipated increases in business costs and the likely continued presence of the ‘cautious consumer’ is also likely to impact buyer sentiment.”
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