The CPG approach to M&A is evolving beyond its typical role as a lever for portfolio and geographic growth. In today’s dynamic market with increasing supply chain pressures, M&A also serves as a powerful lever for CPG companies looking to build resilience in their supply chain to support and sustain their long-term growth.   

Supply chain benefits from deals are no longer a secondary consideration and are powerful tools to build supply chain resiliency in a variety of ways depending on a firm’s objectives. CPG companies can leverage deals to expand their manufacturing capabilities, diversify their sourcing, expand distribution, and in select cases, strategically divest components of their business to streamline portfolios and reduce exposure.  

Using M&A to Expand Manufacturing Capabilities 

Shifting consumer preferences have accelerated the emergence of new categories and the overall growth in product portfolios. As categories develop quicker, the time and capital-intensive process of building out capabilities in house for portfolio expansion becomes riskier as categories may evolve before capabilities are fully built.  

Co-Manufacturing is a viable option for expansion by leveraging a co-manufacturer’s expertise, but it can increase supply chain complexity and impede long-term growth if the selected partner has capability limitations or competing priorities. Acquisitions allow CPG companies to not only gain expertise, but also fully control the supply chain to ensure strategic priorities are aligned. CPG companies can use deals as a strategic tool for quickly gaining capabilities to enter new segments or purchase additional specialized manufacturing capabilities to better manage the supply chain for proven brands in a firm’s portfolio.   

In 2021 when Hormel Foods looked to expand out of the meat-centric snack segment, they strategically acquired the iconic PLANTERS brand from Kraft Heinz to add capabilities in snacks nuts and savory snacks with the established brand. As a part of the deal, Hormel acquired PLANTERS’s production facilities in California, Virginia, and Arkansas. When J.M. Smucker Co. looked to enter the sweet baked snacks category, they chose to acquire Hostess brands to not only gain established brands, but to also quickly gain the production expertise of Hostess’ facilities (spanning six different cities across the United States and Canada). These strategic decisions favored speed of entry by acquiring established brands and the supply chain to support future growth in the categories. 

Utz Brands’s acquisition of Festida foods in 2021 was notable because Festida Foods had served as a key contract manufacturer for Utz’s On the Border brand. Utz saw significant growth potential for the brand and instead of looking to add those manufacturing capabilities to their existing supply chain they chose to acquire their co-manufacturing partner. What’s more, the Midwest location of Festida Foods’s manufacturing sites enhanced Utz’s ability to expand in the region. Taking this approach allowed Utz to move faster and secure the supply chain capabilities for a critical growth platform in their portfolio. 

Leveraging M&A for Sourcing Diversification 

Increased commodity volatility is requiring CPG companies to prioritize sourcing diversification as a key strategic priority. Some companies are looking for diversification to reduce their exposure to commodity risk, some are trying to concentrate their purchasing power in emerging categories, and some are looking to strengthen their access to specialty sourced inputs.  

Economies of scale are a powerful lever for CPG companies when purchasing commodities, but when a company’s portfolio is highly dependent on commodities with increasing volatility, they can experience heightened risk.  

In 2025, the Ferrero Group acquired WK Kellogg as part of their strategy to expand their North American footprint with iconic brands. This deal not only provided Ferrero with multiple legacy brands in the cereal space, but it also had strategic supply chain benefits. Ferrero’s strong portfolio of chocolate and confectionery products is heavily reliant on cocoa, and the prolonged volatility in the cocoa market put a strain on some of Ferrero’s core brands. Expanding into cereals with WK Kellogg’s brands helped to de-risk Ferrero’s overall sourcing reliance on cocoa because cereals have cheaper inputs with historically less volatility than the cocoa market. 

When Nestlé saw growth in the fast-growing vitamins, minerals, and supplement categories, they leveraged the acquisition of the Bountiful company to consolidate their purchasing power for key inputs. This deal also provided Nestlé with a stable of strong brands but equally as important was the securing of their sourcing power to ensure a defensible position in these new categories.  

The shift in consumer demand for ethical sourcing added scrutiny to CPG sourcing with consumers seeking more transparency and traceability. This is especially true in the meat-based snacking category, where consumers value ethically and sustainably sourced animals. This consumer shift made EPIC Provisions an attractive target to General Mills when they looked to enter the meat-based snack category. Not only did EPIC Provisions have a brand that resonated with consumers, but they had a strong ethically sourced supply chain that General Mills could continue to build upon. 

M&A as an Accelerator for Distribution Strength and Expansion 

Organic distribution growth for CPG companies can be slow and capital-intensive, especially in competitive segments. Due to these challenges, M&A has become a key lever for leaders looking to scale their distribution reach or strengthen their downstream supply chain. PepsiCo’s acquisition of Poppi is a large-scale example of how a high-growth brand can leverage being acquired to further accelerate their distribution growth in a competitive and rapidly expanding category. When Mars announced their acquisition of Hotel Chocolat, a key element of the deal was Mars’s ability to provide infrastructure to support Hotel Chocolat’s international expansion that had proven challenging to accomplish organically. Tilray Brands acquired four craft breweries from Molson Coors to leverage the strategic markets of those four craft breweries to provide them established access in those markets to further develop their downstream distribution for their craft beer division in a highly fragmented and competitive category.  

Strengthening downstream distribution is a crucial component for holistic supply chain resiliency in the long-term. As consumer preferences for variety and faster availability increase in conjunction with a decline in brand loyalty, any disruptions to distribution pose a significant risk to CPG companies. M&A is a strategic option for companies to rapidly bolster and expand their distribution capabilities.  

Using Divestiture to Streamline a CPG Portfolio 

In some situations, CPG companies are better suited to divest brands or struggling business units to redirect focus to other areas of their portfolios with stronger margins or more growth potential.  

When General Mills made the decision to divest their North American Yogurt business to Lactalis, it was a strategic move to consolidate their focus on their global platforms as opposed to the yogurt segment which requires a complex cold chain supply chain. In the blockbuster split of Kellogg into Kellanova and WK Kellogg, a driver of the split was to allow the new companies to streamline operations to better support a more focused portfolio.  

When Campbells acquired Sovos’s brands, they didn’t just immediately fold all Sovos’s brands into their portfolio. Campbells reviewed all the Sovos brands and made the decision to divest Noosa Yoghurt because it would detract from their focus on shelf-stable categories while drawing resources away from their core operations. While divesting business units may reduce topline revenue in the short term, it allows organizations to narrow their focus in pursuit of long-term growth of their core portfolio.  

Implications for CPG Leaders 

As CPG companies navigate an evolving landscape, the success of their M&A deals will depend not only on portfolio expansion and brand growth, but also whether the deals strengthen the supply chain capabilities required to protect margins and sustain performance despite market shifts. This requires applying an operational lens to the due diligence process early to ensure the deal supports the company’s long-term supply chain strategy and increases operational resiliency.   

True supply chain resiliency is not only built by selecting the correct target or divesting the right business unit, but through an intentional integration or restructuring post-close that activates a cohesive supply chain strategy to support the company’s long-term growth goals.   

Contributions by Alan D’Adamo