We have witnessed an uptick in large deals announced during 2024 across the consumer markets sectors. This trend suggests that M&A activity in consumer markets is recovering and will strengthen in 2025, driven by renewed investor confidence and an acceleration of strategic transformations by companies looking to drive growth. Consumer sentiment has not fully recovered from the post-pandemic surge in inflation and interest rates, and some uncertainty remains, particularly regarding tariffs, geopolitical conflicts and the impact of climate change. However, increasing valuations in the sector and heightened pipeline activity indicate growing optimism among dealmakers and a pick-up in M&A volumes and value for the coming year.
Macroeconomic uncertainties, financing challenges and misaligned expectations around price between sellers and buyers muted M&A activity in consumer markets in the past two years. In 2024, consumer markets deal volumes were 16% lower than in 2023, but deal values increased 13%, highlighting the impact of several larger deals that were announced during the past year.
As we begin 2025, some of these negative factors are easing. For example, despite price pressures persisting in some countries, global inflation appears to be largely tamed, with interest rates stabilising, albeit at a higher level than before. Estimates from the International Monetary Fund suggest that global GDP will remain steady at a projected growth rate of 3.2% between 2024 and 2025, slightly below the average 3.7% GDP growth rate of the two decades prior to the pandemic. Markets have taken note; valuations in consumer markets are rising, with PitchBook data showing that North American and European EBITDA multiples for the consumer sector increased from 9.0 in 2023 to 9.5 in the third quarter of 2024, and revenue multiples for the sector also increased from 1.0 to 1.2 over the same period.
Recently, the improving macroeconomic picture has contributed to growth in global real wages in some advanced economies. However, consumer purchasing power and sentiment continue to be affected by the inflation legacy. Higher household savings rates in some countries reflect this consumer caution. For example, in Europe, household savings increased from 7.3% in 2022 to an expected 8.2% in early 2025, about 1.5% above pre-pandemic levels.
While there is often a lag between better economic news and consumer perceptions of the state of the economy, the current disconnect suggests that we may be facing a lingering ‘vibecession’ on the consumer front.
‘Even if consumers appear to be going through a “vibecession”, there are clear signs that the consumer markets deal pipeline is filling up, backed by investor activity and easing market conditions.’
Hervé Roesch,Global Consumer Markets Deals Leader, PwC UKDuring the recent period of inflation-driven price increases, consumer companies experienced volume compression. But that phase seems to have ended, and we see corporate operators actively managing their portfolios to drive business performance, whether through divesting certain categories, reinforcing their positions in others, entering new markets or developing new ways to address new customer needs. Recent examples of announced deals in 2024 include Mars’ proposed acquisition of Kellanova and Unilever’s proposed separation of its ice cream business.
We also expect a number of consumer assets held by private equity (PE) to come to market in 2025. Over the past few years, PE holding periods have extended across all sectors. Based on an analysis of European PE exits performed by Gain.pro, consumer markets’ assets have the unwelcome distinction of having the longest holding period of any sector: the average holding time for consumer assets exited in 2023 to 2024 rose to 6.3 years from 5.1 years in 2019 to 2020. The combination of improving valuations and exit conditions, along with the pressure to release cash to limited partners and close funds, will likely be a significant driver of further M&A activity. This bodes well for 2025 exit activity of consumer assets.
The trend in take-private and delisting transactions—such as the delisting of Tod’s following the acquisition of the brand by L Catterton; Apollo’s proposed acquisition of International Game Technology’s gaming and digital business; and International Paper’s proposed acquisition of DS Smith—is expected to continue into 2025, particularly in markets outside the US where public valuations in the sector may remain subdued.
Source: PwC’s 28th Annual Global CEO Survey, January 2025
Environmental regulation and consumer perception of businesses’ environmental profiles increasingly factor into investment decisions, particularly affecting the packaging, retail and consumer goods sectors. The ability to demonstrate the sustainability of business results in the face of upcoming legislation, especially in Europe, is a critical success factor in many M&A processes.
Global M&A trends in consumer markets by sector
M&A volumes and values in 2024
M&A volumes in consumer markets decreased between 2023 and 2024 by 16%, performing slightly better than the overall global M&A markets, which saw an 18% decline in deal volumes over the same period. Consumer markets’ deal values increased by 13%, primarily because of two deals valued at more than $30bn and six other megadeals (deals greater than $5bn).
M&A trends were not uniform across countries or regions:
- Asia Pacific. Deal volumes declined by 13% between 2023 and 2024, although deal values increased by 15% over the same period. India was an outlier, with deal volumes and values increasing by 11% and 40%, respectively, over the prior year. Japan also had an increase in deal values, due to a significant megadeal announced during the year, but deal volumes declined by 16%, following the same trend as seen in many of the other countries in the region. China and Australia both had double-digit declines in deal volumes and values in 2024.
- Europe, the Middle East and Africa (EMEA). Deal volumes declined by 18% between 2023 and 2024, although deal values increased by 15% over the same period. M&A in consumer markets in EMEA has been weighed down by inflation and macroeconomic conditions, as well as by the proximity of two wars that created greater macroeconomic uncertainty in the region.
- Americas. Deal volumes declined by 17% between 2023 and 2024, although deal values increased 12% over the same period. The US had the most deals and greatest share of deal value in the region, with many of the larger deals involving US companies. Latin America’s deal volumes declined by 13%, but deal values declined by 37%.
2025 M&A outlook for consumer markets
Growth is back on the agenda for consumer markets for 2025, with profitable growth in volumes the main goal for most operators in the sector. We expect significant portfolio consolidation activity on the corporate front and a greater number of liquidity-driven exits on the private equity front. This makes for a stronger deals pipeline for the sector than we have seen in several years.