What did Q3 bring for food and beverage businesses?
UK food and beverage (F&B) M&A activity remained resilient through the third quarter of 2025, even as volumes softened slightly from the highs of Q2. A total of 49 transactions were completed during the period, representing a modest 6% decline quarter-on-quarter but still comfortably above the trailing average of 45 deals and ahead of levels seen in Q4 2024 and Q1 2025. This suggests that market sentiment, while tempered, remains broadly confident and that consolidation continues to play an important role across the sector.
While the slight reduction in activity reflects a more measured tone in the market, the persistence of strong domestic deal flow, combined with renewed interest in overseas expansion, reinforces the momentum within the sector. We also believe that the F&B sector is dealing with significant inflation, resulting in trade buyers prioritising synergies, vertical integration, and real strategic rationale. With the sector grappling with rising input costs, rapidly evolving consumer preferences, and changing HFSS regulations, strategic buyers are seeking acquisition targets with strong technical capabilities to drive innovation and diversify their product portfolios, closely aligned with their strategic objectives.
We are also seeing strong cross-border activity in the market, accounting for approximately 38% of deals in the sector. M&A activity in this regard remains strong with both global investors and UK-based companies actively targeting overseas assets – a positive indicator for the sector's future.
Quarterly Announced M&A activity in food and beverage
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Private equity appetite eases
Private equity (PE) activity also slightly slowed in Q3, with 13 deals recorded compared to 17 in Q2. PE accounted for 27% of total transactions this quarter, down from 33% in Q2. Of these 13 PE-backed transactions, only four involved minority stakes—Alice Mushrooms, Bespoke Kitchens, Arrowtown Drinks, and Goodrays—signalling that investors are maintaining a more selective and strategic approach to capital deployment.
The remaining deals were full or majority acquisitions, largely driven by existing portfolio companies executing on buy-and-build strategies. Notable examples include Inspired Pet Nutrition’s (Capvest-backed) acquisitions of Natura Plus Ultra Pet Food SAS and Sopral, The Compleat Food Group’s (PAI Partners-backed) acquisition of Fresh-Pak Chilled Foods, and Assisi Pet Care’s (Wind Point Advisors-backed) purchase of Yakers from KennelPak.
PE investors appear to be adopting a more cautious stance—focusing on disciplined capital allocation and value creation within existing platforms—while trade buyers continue to drive consolidation in response to cost pressures, shifting consumer preferences, and supply-chain dynamics.
F&B M&A PE Activity
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Pets and alcoholic drinks lead the M&A menu
Alcoholic drinks was where we saw the most deals completed in both Q2 and Q3 2025. But the subsector remains highly fragmented, lending itself to high amounts of small but numerous deal activity. Notable transactions this quarter included Heineken’s continued investment in Served Drinks, a hard seltzer and canned cocktail producer, and Powder Monkey’s acquisition of Australia’s Akasha Brewing and Wayward Brewing brands, reinforcing its international footprint across Australia and Asia. Ellers Farm Distillery also made headlines with its acquisition of Bramley & Gage, further expanding its craft spirits portfolio.
Pet food recorded a number of deals and is a subsector continuing to benefit from long-term tailwinds, as the number of pet owners and consumer’s preferred quality of pet food both remain high. In Q3, Assisi Pet Care acquired Yakers from KennelPak, and Inspired Pet Nutrition’s twin acquisitions of Sopral and Natura Plus Ultra Pet Food SAS cemented its presence in the European pet food market.
Selective tastes drive growth in Q3
Overall, sentiment in Q3 2025 could be described as cautiously optimistic. Dealmakers remain active, and opportunities are plentiful, particularly in high-growth subsectors such as premium spirits, pet food, and functional nutrition. Landmark deals indicate positive momentum, such as Greencore’s acquisition of Bakkavor, and ABF’s acquisition of Hovis from Endless LLP, both currently progressing through regulatory approval with the CMA.
Princess Group is expected to go public later this year, with one of the key motivations for raising capital being M&A. The company is actively pursuing a robust pipeline of tangible acquisition opportunities, having identified both short-term and long-term targets aimed at unlocking new geographies, product categories, and technical capabilities. This could be a positive sign for the sector if the IPO goes well, it may boost confidence among other food and beverage companies thinking about going public and might spark a wave of optimism in the sector and make IPOs a more attractive option for business owners and private equity firms looking to exit.
However, macroeconomic uncertainties, cost inflation, and regulatory complexity continue to influence deal pacing and valuations. For business owners and acquirers alike, vertical integration margin resilience, and brand differentiation remain key to attracting investor interest – in what continues to be a healthy, if slightly moderated, M&A environment.
