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2021 M&A Trends in Consumer Products

The impacts of the Coronavirus pandemic on the consumer products industry in the past year forced many companies to reassess several areas of their business model. Among renewed priorities, M&A have risen to the top of the corporate agenda to help CPG companies maintain a competitive advantage. Consumer product companies continue to lean into programmatic M&A to acquire small brands and integrate their capabilities into the larger organization. We’ve highlighted key M&A trends in consumer products based off of the major M&A’s from this year.

2021 Major Mergers &  Acquisitions in Consumer Products

JANUARY

January 5: Mondelez International, Inc. acquires Hu Master Holdings. 

Mondelez International announced its acquisition of Hu Master Holdings on January 5, 2021. Mondelez International, Inc. is an international company encompassing numerous brands, from OREO to Sour Patch Kids. Hu Master Holdings, the parent company of Hu Products, is a US-based brand focused on simple ingredients in their chocolates, crackers, and other snack foods. Sources estimate the deal is valued at or around $340 million.  

January 13: Sazerac Company, Inc. Acquires Paul Masson Brandy (Constellation Br.). 

Sazerac’s acquisition of Paul Masson Brandy was first announced last June, finally receiving approval from the U.S. Federal Trade Commission (FTC) on January 13, 2021. Sazerac, a global spirits company, is home to several name brands, such as Southern Comfort and Wheatly Vodka, with their acquisition of Paul Masson Brandy further expanding their portfolio. This deal was closed at a value of $265 million. 

January 14: The Barilla Group acquires Pasta Evangelists. 

The Barilla Group announced its majority stake acquisition in UK-based brand Pasta Evangelists on January 14, 2021. Barilla is an international, Italian grown family brand inspired by Mediterranean and Italian foods. Pasta Evangelists specializes in direct-to-consumer fresh pasta and sauces, with their audience focused in the United Kingdom. This deal allows The Barilla Group to expand their presence in the UK, while Pasta Evangelists founder and CEO, Alessandro Savelli, remains involved. The deal value is estimated to be around €40 million.   

FEBRUARY

February 1: L’Oréal acquires Takami Co. 

Beauty giant L’Oréal finalized its acquisition of Japanese skin care brand Takami Co. on February 1, 2021. This deal allows international brand L’Oréal to expand their luxury portfolio and plant roots in the Asian continent with the help of the popular and fast-growing Takami brand and products. The price and value of this deal has remained undisclosed.  

February 2: THG Holdings acquires DermStore, LLC. 

THG Holdings, a global technology platform company, finalized its acquisition of online skincare and beauty cosmetics retailer DermStore from Target Corporation on February 2, 2021. THG Holdings, a UK-based e-commerce platform, focusing on bringing brands direct-to-consumer. With the acquisition of DermStore, THG Holdings can expand its reach in the skincare industry as well as the United States. The deal closed at a value of $350 million.  

February 8: Whole Earth Brands, Inc. acquires Wholesome Sweeteners, Inc. 

Whole Earth Brands, a global food company focused on promoting healthy lifestyles and diets, finalized its acquisition of Wholesome Sweeteners on February 8, 2021. Wholesome Sweeteners is the #1 organic and plant-based sweetener brand in North America. This deal amounted to a cash payment of $180 million, with the potential to reach up to $55 million under an earnout by the end of 2021. 

February 11: Hormel Foods Corporation sets out to acquire the Nuts Business from Kraft Heinz Company. 

The acquisition of the Nuts Business from Kraft Heinz by Hormel Foods was agreed upon on February 11, 2021. Hormel Foods is an international manufacturer of several food brands, from Skippy peanut butter to SPAM products. This acquisition of the Nuts Business includes most of the Planters, NUT-rition, Cheez Balls and Corn Nuts brands and products. The deal led to a $3.35 billion cash payment.  

February 23: The Estée Lauder Company, Inc. acquires DECIEM Beauty Group, Inc.  

Esteemed beauty brand Estée Lauder announced its acquisition of Canadian beauty brand DECIEM on February 23, 2021. Estée Lauder is a global beauty brand with over a dozen beauty brands, such as Clinique and MAC Cosmetics, under its belt. With the additional of the international DECIEM brand focused on authenticity and transparency, Estée Lauder will add DECIEM’s six brands to its portfolio, including the well-known skincare brand The Ordinary. The deal is estimated to cost nearly $1 billion.   

MARCH

March 5: Nestlé USA, Inc. acquires Essentia Water. 

Nestlé USA acquired leading alkaline bottled water brand Essentia on March 5, 2021. Nestlé USA, a leader in the food and beverage industries with brands like Lean Cuisine and Perrier, continues to expand its premium water portfolio. With the addition of Essentia, Nestlé will further enhance its focus on international premium water brands. The deal is estimated to be worth $1 billion.   

March 10: Franchise Group, LLC acquires Pet Supplies Plus, LLC. 

Franchise Group finalized its acquisition of Pet Supplies Plus on March 10, 2021. Franchise Group, a leading operator of franchised brands, welcomes the omnichannel pet supplies and services retail chain Pet Supplies Plus. Expanding their franchising into the pet industry, Franchise Group closed the deal at $700 million. 

March 22: Mondelez International, Inc. acquires Grenade UK Limited. 

Snack-food company Mondelez International acquired nutrition brand Grenade UK Limited on March 22, 2021. Grenade UK Limited produces sports nutrition products, from protein bars to drinks and shakes. While the details of this transaction remain undisclosed, the deal is estimated to be worth $277 million. 

March 31: Metropoulos & Co. and One Rock Capital Partners acquires Nestlé Waters North America, Inc. 

Investment firms Metropoulos & Co. and One Rock Capital Partners acquired Nestlé Waters North America on March 31, 2021. Nestlé Waters, leading bottled water provider in North America, includes brands such as Poland Springs and Pure Life. This deal was valued at $4.3 billion.   

APRIL

April 30: Nestlé acquires The Bountiful. 

Nestlé Health Science, focused on vitamins, minerals, and supplements, acquired nutrition brand The Bountiful on April 30, 2021. The Bountiful, comprising of brands such as Nature’s Bounty and Solgar, joins Nestlé’s nutrition and supplement portfolio aside Vital Proteins, AOV, and others. The deal closed at a value of $5.75 billion.   

M&A Trends in Consumer Products 

When considering the impact of the COVID-19 pandemic on the industry, many companies were faced with reassessing their strategic approach to M&A. Through this reassessment, companies have shifted their focus to building a presence in new markets and expanding their consumer base, acquiring new skill sets and industry knowledge, and gaining a competitive edge.   

Looking across the major M&A’s from this year, here are some key M&A trends in consumer products: 

Trend #1 – Continued use of M&A as a strategic accelerator 

The CPG industry has faced many disruptions in the past 18 months and as a result, businesses are seeking routes to a less turbulent future. Most see M&A as a method to support stable growth that is in-line with business strategy. Strategic acquisitions are increasingly viewed as multi-faceted, not just aimed to grow sales, but also to introduce the company into new market leadership positions, acquire new audiences, and breathe life into product innovation and corporate culture.  

Trend #2 – Rapid growth of SPACs to transition to public markets

There have been more than 400 SPAC (special purpose acquisition vehicle) IPOs in the last year, according to SpacInsider, and the CPG industry has not been left out of the boom. This method allows companies to gain benefits of being a public company without the complexity and timelines associated with traditional IPOs. In the CPG space, this has created a new avenue for companies to transition to public markets without being acquired by a traditional large CPG or retailer. The trend has been particularly frequent in DTC-native companies seeking to gain access to capital to support DTC economics and scaling.  

Trend #3 – Portfolio optimization through divestitures  
CPG companies in 2021 are seeking a return to focus on their core. Several of the largest CPG companies have been divesting non-core businesses and assets to reinvest in their core markets and fuel the digitization of their business models. More often than not, CPG companies are combining this with programmatic acquisitions that closer to their core strategic focus. Companies hope that the redoubling on their strategic focus helps to stave off growing competition from large companies and emerging competitors alike.    

Trend #4 – Digital leadership to stay in line with consumer needs  

Consumer preferences, attitudes, and norms have shifted over the last year because of the pandemic. Leading companies are leveraging various digital tools and technologies to stay out in front of those shifts in preference, and to understand which are temporary and which may be sustained. From an M&A perspective, companies are also considering strategic investment in technologies that support those efforts and building new capabilities in media to continue engage with consumers in meaningful (and differentiated) ways.  

In Conclusion 

From food and beverage to health and beauty, M&A trends in consumer products companies reveal that utilizing M&A is one of the most critical levers to drive the strategic agenda. Increased competition and digitalization will continue to make M&A an increasingly attractive method to drive growth, build new capabilities, and create a sustainable advantage.  

Large companies will leverage M&A to create focus and scale but also pay close attention to capability development and the acquisition of audiences. Emerging companies will continue to take advantage of new methods to gain the benefits of public markets, increasing the overall competitiveness of the industry. Acquisitions should be used as a strategic lever not just for growth but to remain innovation and to deliver for rapidly changing consumer needs and preferences.  

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Contributions by Rachel Ruth

Tags: Consumer Products Trends, M&A, M&A Integration, Strategy, 2021 Trends
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