Consumer: Break-ups And Strategic Matchmaking

The trends we saw in consumer sector M&A over the past year play perfectly into the theme for our Global M&A report this year: the increasingly complex dynamics of the modern dating scene. In summary, it has been a year defined by break-ups, new beginnings and strategic matchmaking.

Portfolio break-ups and strategic refocus

Following years of expansion and the assembly of broad portfolios in the name of scale and optimisation, in 2025 we saw many consumer conglomerates take a harder look at which brand partnerships were truly delivering value. That period of reflection has produced a clear trend: high-profile portfolio separations. Across the sector, companies have faced increased pressure from investors to simplify group structures, sharpen their equity stories and focus on businesses with clearer strategic alignment. As a result, non-core assets have been spun off, complex organisational structures unwound and capital redeployed toward brands that genuinely belong together. In many cases, the objective has been to improve capital allocation, operational effectiveness and transparency in a bid to deliver sustained long-term value.

Several notable transactions underline this shift. In September last year, Kraft Heinz announced plans to separate its grocery staples business from its sauces, spreads and seasonings business, unwinding a structure that had been in place for a decade. Keurig Dr Pepper also revealed that following completion of its acquisition of JDE Peet's, the European coffee chain, the combined coffee business would be separated from KDP's drinks arm into two independent, US-listed publicly traded companies. Associated British Foods also said that it was looking at separating its fashion retail arm, Primark, from its food business. Starbucks and Burger King similarly announced pestments of majority stakes in their China operations.

These announcements followed similar break-ups unveiled in 2024 by Unilever and Reckitt Benckiser, both of which achieved completions last year – namely Unilever's spin-off of its ice cream business, The Magnum Ice Cream Company, and Reckitt's sale of its Essential Home business to private equity investor Advent International. Together, these transactions reflect a broader recognition across the sector that sprawling portfolios can dilute focus and hinder growth. This is particularly evident in an uncertain macroeconomic environment marked by lingering inflationary pressures and cautious consumer spending.

Execution challenges and valuation gaps

Not all planned separations have progressed smoothly, however, with several proposed break-ups stalling or being abandoned altogether. In some cases, companies have struggled to identify buyers with the right strategic alignment at an acceptable valuation. Wider geopolitical tensions, supply chain complexities and increasingly stringent regulatory approval environments have also contributed to a slowing of deal execution. These dynamics are all explored further in our main report, which can be found here.

Private equity has emerged as the natural next owner for many pested consumer assets. Private equity sponsors are often well positioned to acquire businesses that may have suffered from under-investment within crowded corporate groups, with the operational expertise, strategic focus and longer investment horizons needed to reposition assets for growth. After a period of suppressed private equity activity in consumer M&A, we anticipate a resurgence in PE investment in the sector in 2026, including bolt-on acquisitions designed to strengthen existing portfolio companies by expanding capabilities and market reach. Premium assets and well-known brands are likely to be in high demand. Sycamore Partners' take-private of Walgreens Boots Alliance underscores continued sponsor appetite for established consumer platforms where value can be unlocked through operational optimisation, real estate strategies and brand refocusing outside the scrutiny of public markets.

M&A as a route to acquire capabilities

Alongside portfolio simplification, consumer companies are increasingly using M&A to buy or invest in new capabilities rather than acquiring additional brands. Digital transformation and AI-enabled technologies are on the strategic agenda, as companies seek tools that can drive growth, efficiency and resilience. Retailers are investing in technologies that optimise supply chains, improve demand forecasting and streamline inventory management. By leveraging AI for predictive analytics and operational efficiency, companies can reduce costs and gain a strategic edge in a competitive environment.

The rapid rise of social commerce platforms such as TikTok Shop has further disrupted traditional retail models, reshaping how consumers discover and purchase products. These platforms are capturing the attention of millions and offer a fast, impulse-driven shopping experience that tightly links purchasing decisions to social trends and influencer engagement. In response, we expect to see established consumer businesses increasingly exploring acquisitions of, or investments in, specialist e-commerce platforms, digital marketing technologies and technology-enabled retailers as a means of modernising their online propositions and staying relevant to younger demographics. In the US, this trend is developing alongside heightened regulatory and political scrutiny of social media platforms, which may accelerate partnerships, minority investments or carve-outs as companies seek exposure to social commerce while managing geopolitical and data-privacy risk.

Outlook

Overall, the consumer M&A landscape is evolving from pursuit of scale to a search for strategic fit, operational focus and capability enhancement. While macroeconomic uncertainty and regulatory scrutiny remain, improving financing conditions and declining interest rates are expected to support deal activity. Corporate break-ups and spin-offs aimed at refining portfolios are likely to continue, with private equity in a prime position to form new partnerships across the sector. At the same time, technology-driven acquisitions and investments are expected to rise as consumer businesses look to future-proof their operations and position themselves for the next phase of growth.

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