Drinks companies, food service companies and makers of fine chocolate and even tofu have all been munched up in a flurry of M&A activity in the summer of 2024.

The brewing giant Carlsberg, with its take-over of both Britvic and Marston’s beer, have been the stand-out in the UK, although there have been lower valued deals for food and drink firms across Scotland.

Deal volume for T2 increased by 32.4% compared to the same period last year, with 49 transactions. The estimated deal value also rose to approximately £6bn, largely driven by the emergence of the larger deals, according to Oghma Partners research.

Marston’s , which announced a merger with Carlsberg in May 2020, has brewed its beer on its Midlands site in Wolverhampton since 1875. Britvic, makers of Robinson squash and J2O, was bought for £3.3bn.

Italian-listed company Newlat has acquired Princes from Mitsubishi Corporation. The combined New Princes Group will boast a turnover of €2.8 bn, a global network of 31 plants and a workforce of approximately 8,800 employees across more than 30 brands. 

Notably, 61.2% of deals were valued at £10m or less, with few middle to higher market transactions. Only 14.3% of deals exceeded £50m, and half of those were above £100m.

UK corporate buyers dominated, accounting for 57.1% of deal volume (28 deals), slightly higher than in T2 2023 (54.1%). Financial and overseas buyers contributed 22.4% and 20.4% of total deal volume, respectively.

The grocery and confectionery category was the most active, representing 24.5% of total volume, with the bakery sub category showing particularly strong activity with for example the acquisition of Village Bakery by Groupe Menissez.

Scotland’s vibrant drinks sector will be interested to learn the beverages sector accounted for a significant portion of deal activity. The Scotch whisky industry which hit £5.6bn in global exports in 2023, has seen recent deal activity with Edrington’s sale of the Famous Grouse brand to William Grant & Son, one of Scotland’s largest private drinks companies. This deal was not covered in the statistics.

However, Scotch whisky sales have fallen by 18% or £463.2m to £2.1bn in the first half of the year. More consolidation of stocks will mean further deal activity.

Scotland now accounts for 70% of the UK’s gin production, with many new generation gins taking on the likes of Hendrick’s, Gordon’s and Tanqueray. New innovative players will continue to be in the sights of the big players looking to expand their brand portfolios.

The “Other” category accounted for 22.4% of transactions, up from 4.7% in T1 2024. Nearly all deals in this category involved acquisitions of pet food manufacturers. Notable deals in this sub-sector include the acquisition of Butchers Pet Care by Inspired Pet Nutrition as well as the acquisition of Thrive Pet Foods by Swedish-based Petbuddy Group.

Mark Lynch, Partner at Oghma Partners, said: “Looking ahead, the short to medium term outlook is largely positive. We expect deal volume to continue at these levels supported by improving economic conditions. The potential for further rate cuts by the BoE this winter should provide buyers, particularly financial buyers, with more opportunities to pursue M&A activity.

“We are also likely to see a flurry of short term deal activity ahead of the Government’s budget announcement at the end of October, as business owners are concerned about a potential increase in capital gains tax. What remains unclear is whether any increase will take effect immediately or in the new tax year, April 2025. If it’s the latter, we could see a rush to market over the coming months as business owners seek to accelerate their exit plans to benefit from current rates. However, in the longer term, deal activity could decline due to less favourable selling conditions and the higher premiums required to close deals under the increased tax rates.”