In the aftermath of the global financial crisis, many companies responded in the same manner as their customers by spending less. However, many companies are now looking to capture future growth by improving their strategic position in key growth markets and achieving economies of scale through market consolidation.

M&A is key to achieving these objectives and a number of rich companies are in a position to act. Just five of the 25 largest European consumer products companies have net debt levels of 50% or more of their market capitalisation.

It has been a busy year for deals, with Japanese brewers Asahi and Kirin active in the beverage market and The Boparan Group’s takeover of Northern Foods being one of the biggest UK deals so far this year.

There are some fairly powerful drivers that will spur further activity. Increased raw material and fuel costs, weak economic growth in developed markets and a decline in disposable incomes as austerity measures have knocked consumer confidence, but CFOs are still willing to take greater levels of risk.

With businesses having to work hard to deliver even modest levels of growth and maintain operating margins, M&A has returned as an important enabler.

Acquisitions in markets extending beyond BRIC countries are increasingly high on the agenda. ‘Hidden hero’ markets such as Mexico, Turkey and Egypt offer differential growth levels and boast the favourable dynamics of young and fast-growing populations, rapid urbanisation and highly fragmented markets. They offer some of the brightest opportunities although, as events in Egypt highlight, there is some risk.

Some sectors will see more activity than others, with food, drink and agriculture leading the way.

In the global beverage industry, the acquisition of strong brands continues to drive deal activity, especially where the target has an established position in attractive growth markets. Premium spirit brands and niche European breweries remain attractive targets. We expect established distributors in high-growth markets to appear on the acquisition radar of major drinks companies.

In non-alcoholic drinks, we expect brands that offer healthy or nutritional alternatives to feature in M&A deals, as traditional alcoholic drinks producers look to expand portfolios. Health and nutrition is also likely to drive activity in food, along with higher-value speciality products.

The agriculture sector remains highly fragmented, with few global players, and we expect to see consolidation. We also expect vertical integration as food and beverage companies look to reduce commodity price exposure, secure long-term supplies or ensure the provenance of their major feedstocks.

While caution prevails about the economy, most companies are optimistic about the outlook for M&A. Many believe M&A valuations will remain relatively stable. We expect to see premium valuations where businesses are able to demonstrate a differentiated product proposition and a clear growth story.

The timing of execution of M&A deals is susceptible to jitters triggered by sovereign debt concerns, foreign exchange volatility and commodity price spikes. However, in Europe, the appetite for big ticket M&A appears to have returned.

Conor Cahill is a partner in the corporate finance practice at Deloitte