Consumer Markets

Food & Drink

Deals Activity: Moderate

Restructuring Activity: Very high

Inflation ramps up pressure on food and drink manufacturers.

Deals activity in Food & Drink

  1. 1. Deal flow has remained remarkably steady in recent years, punctuated by a rapid uptick in Q1 2021 after a pause in activity during the pandemic.
  2. 2. We anticipate market consolidation in what remains a fragmented sector in the UK to spark an uptick in deal activity in the coming months.

Restructuring activity in Food & Drink

Food & Drink

Input cost inflation and commodity price volatility is putting extreme pressure on UK food and drink manufacturers. Having shown impressive resilience dealing with the twin operational and financial shocks of the pandemic and Brexit, the rocketing cost of ingredients, labour and energy have combined to further squeeze margins in the sector.

Availability of labour has been a particular challenge over the past two years, resulting in rampant wage inflation and, in some cases, increased instances of quality concerns. Manufacturers are urgently reviewing supply chains to ensure resilience and avoid costly production disruption.

Retailer range reviews result in 'winners and losers' as suppliers face delistings. Proposed legislation around high salt and sugar content has already seen significant product reformulation, with consumer demand also shifting towards healthier alternatives.

Such a challenging market presents significant opportunities for market consolidation to generate scale efficiencies and improve overall performance.

Find Your Expert

Dom Carter is Interpath Lead for Consumer Markets, which includes Food & Drink as one of three core segments. Steve Elsigood leads our approach to Food & Drink nationally. For a full list of our senior people with experience in the sector use the button below.

Our senior team