Refreshed: distilling beverage sector M&A

July 2025  |  FEATURE | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2025 Issue

The M&A market saw a strong rebound in the first half of 2025, with many sectors, beverage in particular, experiencing an uptick in transaction activity – a key indicator of its health and future direction.

For beverage businesses, the scope of the transactions undertaken reflects changing consumer preferences, technological adoption and competitive pressures, with data showing unprecedented movement in these respects in recent years.

According to Capstone Partners’ February 2025 beverage sector update – ‘Alcohol Disruption Sparks Increase in Beverage Market M&A’ – M&A activity in the sector rebounded in 2024 after a subdued year for dealmaking in 2023, supported by healthy consolidation among privately-owned beverage companies and a resurgence in private equity (PE) deals.

Consumer preferences are also continuing to evolve, notes the Capstone analysis, including a growing anti-alcohol movement that has spurred significant disruption and dragged on alcoholic beverage sales volumes. However, optimism for sector growth throughout 2025 remains, as the key trends outlined below indicate.

First, consumer preferences appeared to turn against alcoholic beverages in 2024, but strong performance in select categories such as ready to drink spirits and non-alcoholic beer has provided optimism for growth throughout the supply chain.

Second, beverage M&A activity rebounded despite headwinds, with deal volume increasing 21.7 percent year over year (YOY) in 2024. Buyer appetite was widespread across the beverage industry, with each segment recording YOY jumps in transaction activity.

Third, strategic buyers continued to drive deal volume, accounting for more than three quarters of total sector transactions for the sixth consecutive year. Private companies comprised the majority (83.7 percent) of strategic M&A transactions.

Fourth, PE investment in beverages rose for the first time since 2021, with fund managers showing particular appetite for wine & spirits acquisitions.

Finally, beverage distributors are using M&A to acquire new growth brands that fit a wider range of occasions, and consumer needs. The convergence between soft drink and alcohol distributors is accelerating as distributors seek to build ‘a total beverage solution’ service capability.

“Additionally, the rise of environmentally conscious consumers has made sustainable production and distribution crucial in purchasing decisions,” says Mark Williams, global chief revenue officer at Datasite. “This shift presents new opportunities for consumer brands, often necessitating a complete overhaul of supply chains and brand strategies.

Also having an impact on dealmaking across the sector is technological innovation, including digital payment systems. “‘Buy now, pay later’ is redefining e-commerce and is rapidly becoming the preferred shopping method, with the global market expected to grow to almost $8 trillion this year, from $6 trillion in 2024,” adds Mr Williams.

Strong foundation

Despite the headwinds enveloping the sector in recent years, transaction activity in both the alcohol segment and low-alcohol or non-alcoholic alternatives remains robust.

As noted by Mr Williams, there has been huge growth within the alcohol subsector, with beers & ales retaining its position as the most popular for M&A activity.

With trade buyers consolidating the space, recent deals in this segment of the sector include Yorkshire beer producer Great Newsome’s acquisition of East Yorkshire brand Little Valley and the Asahi Europe & International acquisition of US-based Octopi Brewing, with both deals being struck in 2024.

Concurrently, anti-alcohol sentiment continues to gain momentum. “With consumers wanting more health-conscious alcohol alternatives, low-alcohol or non-alcoholic, there has been an increase in M&A activity in this area,” observes Mr Williams. “Larger companies are keen to tap into the growing demand for these alternatives and the same can be said for companies with a focus on plant-based, organic, low-sugar and gluten-free products.”

Among the deals hitting the headlines in the low-alcohol or non-alcoholic segment are the 2024 acquisition of energy drink brand ZOA by Molson Coors and the transaction, also in 2024, that saw the North American business unit of spirits and beer company Diageo acquire non-alcoholic spirits brand Ritual Zero Proof.

With 2024 the first year of M&A market expansion in the beverage sector since 2021, the foundations appear to be strong as new consumption preferences disrupt the landscape.

Market dynamics

As the sector evolves, opportunities abound. However, alongside catalysing factors such as PE interest, technological advancements and changing consumer demands, M&A practitioners, in their pursuit of transactions, should also be cognisant of the risks that accompany consumption in this space.

“While the increase in consumer deal initiations suggests optimism in the sector, potentially leading to more M&A deals closing over the rest of 2025, M&A does present risks, including impacts from volatile global financial markets and now the impact of US tariffs,” concludes Mr Williams. “Therefore, businesses and dealmakers must proceed cautiously, prioritising deeper due diligence, particularly when grappling with uncertainties that could influence consumer spending and M&A activity.”

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Fraser Tennant