Low and no drinks fuel food and beverage dealmaking as Asia Pacific leads global M&A market

Growing demand for low and no drinks and functional beverages is helping drive mergers and acquisitions across the global food and beverage sector, according to new industry research.

A report by Baker Tilly International and Mergermarket has found that investors are increasingly targeting beverage brands aligned with changing consumer habits, particularly among younger consumers who are moderating alcohol consumption and moving away from sugary drinks.

While food businesses still represented the majority of activity, the beverage sector is rising as a growing strategic focus for buyers. Investor interest is increasingly concentrated on categories such as low and no products, functional beverages and other health-oriented alternatives, with companies seeking exposure to faster-growing segments of the market, the report revealed.

The trend comes as Asia-Pacific continues to dominate global mid-market food and beverage dealmaking, accounting for 41% of transaction volume and 39% of deal value in 2025, underlining continued investor confidence in markets benefiting from urbanisation, population growth and growing demand for premium products.

The research found the region accounted for 41% of global deal volume and 39% of deal value last year, underlining continued investor confidence in markets benefiting from urbanisation, population growth and growing demand for premium products.

The global picture

However, companies became more cautious about overseas acquisitions. Cross-border deal value in Asia-Pacific fell 13% to US$1.9bn (£1.42bn), while the number of transactions declined 15% to 17 deals. Despite the slowdown, the region still recorded the highest number of international deals globally.

The broader trend was reflected across all major markets. Globally, cross-border mid-market food and beverage deal value dropped 31% to US$6.6bn (£4.92bn) in 2025, while deal volume fell 27% to 54 transactions, as buyers faced increased regulatory scrutiny, geopolitical tensions and challenging execution conditions.

Overall, the global mid-market food and beverage sector proved resilient. Total deal value edged up 1% to US$20.4bn (£15.22bn) in 2025, according to the report, while the number of transactions slipped 1% to 187 deals.

The figures suggest investors remain willing to back businesses with strong brands, pricing power and clear growth prospects, even as higher financing costs and valuation discipline continue to weigh on overall activity.

Private equity versus strategic acquirers

The report highlights a growing divide between strategic corporate acquirers and private equity investors.

Private equity activity weakened sharply during the year, with buyout values falling 35% to US$3.6bn (£2.69bn) and deal volumes down 31% to 37 transactions. Strategic buyers, by contrast, remained active as larger companies sought acquisitions to strengthen product portfolios, expand scale and support long-term growth plans.

Harsh Maheshwari, global advisory services leader at Baker Tilly International, said buyers were becoming increasingly selective.

“Food and beverage dealmaking is entering a more selective phase. Buyers are looking beyond scale to clear consumer relevance, pricing power and resilience,” he said. “In the mid-market, this creates strong opportunities for brands built around health, convenience, premiumisation and supply chain resilience.”

The premium push

Food businesses account for 76% of total deal value and 82% of transaction volume. Demand for healthier products, convenient formats and premium offerings is expected to remain a key driver of acquisitions through 2026 and beyond.

In North America, inbound food and beverage deal value fell 44% to US$1.6bn (£1.19bn), while outbound acquisitions by North American buyers dropped 33% to US$1.8bn (£1.34bn). Western Europe also recorded weaker international activity, although European companies remained the world’s most active overseas acquirers.

Looking ahead, Baker Tilly said dealmaking is likely to remain supported by corporate portfolio reshaping, demand for health and wellness-focused brands, and improving financing conditions.

Maheshwari said opportunities continued to emerge from both established and fast-growing markets.

“Mature markets are producing carve-outs and succession-driven opportunities, while high-growth markets are surfacing younger, faster-growing targets in categories that barely existed a decade ago,” he added.

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