All data gathered from PitchBook Data, Inc., as of July 2, 2026 

We were hoping for an improvement in the M&A market in 2026 from a slower 2025, but challenges for the M&D industry continue with geopolitical uncertainty and the Iranian war. H1 2026 was down in deal activity compared to the same period of 2025, but investment has increased, especially for manufacturing businesses with technology products and for public companies. Debt financing also continues to drive significant activity as businesses continue to refinance the debt secured during the pandemic.

Industry trends driving M&D M&A activity

Supply chain resilience and reshoring continue to be critical due to several years of geopolitical uncertainty, especially as it relates to continued conflicts in Europe and the Middle East. Using AI and other technologies to improve forecasting and financial reporting also remains top of mind for manufacturers, but implementing it continues to be a challenge.

Supply chain adaptations

Pursuing acquisitions to expand production and distribution capabilities is a common strategy for strategics and private equity to improve operations. Expanding these capabilities improves visibility across operations, shortens lead times, enhances service levels, and creates greater flexibility to respond to shifts in customer demand. Buyers are placing an increased premium on businesses with established domestic production capabilities, strong supplier relationships, and proven operational continuity. 

From reactive planning to predictive operations 

Manufacturers are increasingly focused on improving forecasting accuracy and gaining better visibility into their operations. As cost pressures and demand uncertainty persist, companies are investing in tools and processes that connect operational and financial data, allowing leadership teams to make faster, more informed decisions. The goal is not simply better reporting, but a deeper understanding of production capacity, inventory levels, and future demand so that growth plans are grounded in operational realities.

Financial transformation

According to a survey from CohnReznick and Manufacturing Dive of 150 M&D finance leaders, manufacturers continue to invest in financial transformation, but many are finding that technology alone is not enough. While most finance leaders are using or planning to use AI and analytics tools, many still cite disconnected systems and poor data integration as their biggest challenge. Reliable forecasting, real-time visibility, and better decision-making remain top priorities, highlighting the need for stronger data foundations before advanced technologies can deliver their full value.  

For buyers and investors, that foundation matters. Companies that can connect operational and financial data, track performance through meaningful KPIs, and produce more accurate forecasts are often better positioned to support growth initiatives and articulate a compelling transaction story. As manufacturers pursue greater automation and analytics capabilities, the quality of their data and reporting infrastructure is becoming an increasingly important differentiator.

Food and beverage deal activity

The food and beverage sector remains an active subsector of M&D during H1 2026. While much of the top deal activity was composed of debt refinancings as presented below, private equity and venture capital remain active in the middle market transactions.

The overall deal activity in the food and beverage sector in H1 2026 had 993 transactions totaling $53.54 billion in capital deployed. This compares to 1,466 deals and $110.81 billion invested during H1 2025. Both deal volume and the average deal size decreased, a trend similar to what we’re observing in the overall M&D industry.

Venture capital leads the number of capital investments in the food and beverage industry during H1 2026, with prominent investors such as LvlUp Ventures, SuperAngel.Fund, and Supernatural Ventures. However, private equity firms like WP Strategic Holdings made some notable investments during the same period, along with corporations like Sazerac and Snackruptors.

Food and beverage trends to watch 

Protein continues to be a key strategic play

Protein remains one of the strongest growth categories for food and beverage, as the increased adoption of GLP-1 medications is driving greater consumer focus on protein intake and nutrient-dense foods. Consumers also increasingly view protein as supporting satiety, muscle maintenance, energy, and overall wellness. Protein is also expanding beyond traditional categories (like powders and shakes) into snacks, beverages, desserts, and functional products. Key examples include David's expansion from protein bars into protein ice cream, SimplyProtein's protein tortilla chips, and protein water from brands like Ready and Clean Simple Eats.

We also saw more meal-replacement protein bars at the 2026 Summer Fancy Foods show than in many years past. This demand for protein is driving innovation, with manufacturers finding new sources of protein and formulas to differentiate products and reach a broader consumer base. Companies like General Mills (Larabar), Mars (RxBar), and HEYNU (HEYBAR) have launched plant-based protein bars, while Perfect Snacks launched a prebiotic fiber bar. Some companies are expanding product lines when entering the protein bar category, such as Simply Protein with their nut-free, plant-powered dipped bars that showcased at Expo West in 2026 or The Hershey Company’s Reese’s-inspired layered protein bar that launched on Amazon in June 2026.

Functional foods and beverages gain traction

Consumers increasingly seek products that deliver benefits beyond basic nutrition, driving growth in products focused on gut health, digestive wellness, hydration, energy, immunity, and mental well-being. Probiotics, fiber-enriched products, adaptogens, and functional beverages remain key areas of innovation.

Clean labels face real-world supply chain challenges

Consumer attention remains firmly focused on ingredient transparency. According to the latest Food Business News’ annual Future of Food and Beverage Innovation survey, 64% of respondents consider clean label food products a top priority, up from 53% in 2025. Shoppers increasingly scrutinize labels, favoring products with shorter ingredient lists and fewer additives. The cracker category is benefiting from this demand. We have talked in past articles about Simple Mills, a Chicago-based subsidiary of Flowers Foods Inc., as they continue to be the leader in this space since their founding in 2012. In February they took it further, earning the Non-UPF Verified Standard, a third-party certification from The Non-GMO Project that identifies foods made without excessive industrial processing and verifies products primarily made with minimally processed ingredients.

Another standout company focused on clean label is The Campbell’s Co. In June, the company completed its transition away from FD&C colors to naturally sourced colors for the remaining brands in its portfolio, including Lance crackers.

Go Raw is another company that specializes in seed-based snack products and entered the cracker category this summer with Snacking Crisps crackers.

While the focus on clean label can create opportunities for brands to gain customers and market share, it also introduces operational challenges. Less-processed foods often require more complex sourcing and distribution strategies, particularly when shelf life is limited. As demand grows for products perceived as more natural, manufacturers must balance consumer expectations with the realities of production, logistics, and food preservation.

Faster innovation cycles reshape competition

Food companies are under pressure to bring new products to market more quickly than ever. Emerging technologies, including AI-assisted formulation tools, are helping manufacturers accelerate product development, test new concepts, and expand into adjacent categories.

Take, for example, the rapid growth of David, a business founded by Peter Rahal (who also launched RxBar) sold to Kellogg Company in 2017. David launched its protein bar in 2024 using EPG, an alternative fat ingredient that functions like fat but contributes significantly fewer calories than traditional fats. The company then broadened its product offerings to ice cream beginning in 2026.

This business highlights how management teams focused on innovation can grow brands quickly. As innovation cycles shorten, the ability to identify trends, develop formulations, and launch products efficiently is becoming an increasingly important competitive advantage.

Premiumization of private label

Private label products continue to compete and provide the same quality offerings to consumers as top brands, at a lower price. The price becomes a key differentiator at a time when consumers continue to feel financial stress from higher interest rates, fuel costs, and other economic impacts. We have seen more brands begin using their facilities to produce private label products for their own businesses and others. There are also some key players in the private label space, including TreeHouse Foods, Schreiber Foods, Maker’s Pride, LiDestri Food and Drink, and Carolina Beverage Group. Investindustrial sees the substantial value in private label as they acquired TreeHouse Foods through a $2.9 billion public-to-private LBO on Feb. 11. We look forward to seeing the newest private label trends at Private Label Manufacturer’s Association’s (PLMA) November show in Chicago.

Adult beverage trends

In last year’s report, we noted that alcohol consumption patterns continue to shift as more consumers – especially younger demographics – embrace moderation or abstention. This trend is driving a change in the adult beverage industry.

Portfolio diversification becomes a strategic priority

Consumer demand is spreading across beer, wine, spirits, nonalcoholic beverages, and THC-infused products, making diversification a growing priority for beverage companies. While some traditional alcohol categories have softened, premium segments continue to perform well, prompting many producers and distributors to expand their portfolios rather than rely on a single category. Those shifts are already reshaping parts of the market. In California, pinot noir production has reportedly fallen by roughly 30% since 2021, with some growers removing vineyards or selling land as consumption declines. Others are replanting with alternative white wine varieties, including fiano and grüner veltliner, to align production with changing consumer preferences.

That shift is influencing M&A activity as well. Acquirers are increasingly focused on building portfolios that span multiple beverage categories and consumption occasions. In many cases, a collection of complementary brands may be more attractive than a single standout product.

Alternative beverages attract attention

THC-infused and nonalcoholic beverages continue to draw interest from manufacturers, distributors, and retailers searching for new growth avenues. Companies are investing in distribution capabilities and shelf space as they look to capture demand from consumers seeking moderation, wellness-focused lifestyles, or alcohol-free social options.

Consumer behavior is helping fuel that interest. Growing use of GLP-1 medications, increased focus on health and wellness, and changing preferences among younger consumers are contributing to lower alcohol consumption and greater exploration of alternative beverage products.

Regulatory uncertainty remains a watchpoint

The biggest question facing the THC beverage market may be regulation. Ongoing debates around hemp-derived and cannabis-derived THC products continue to create uncertainty for operators and investors. Many industry participants support a framework that would regulate THC beverages similarly to alcohol, but the ultimate path forward remains unclear.

In the meantime, companies are keeping their options open. Building a portfolio that includes traditional alcohol, nonalcoholic beverages, and emerging categories offers a way to respond to shifting consumer demand while reducing dependence on any one segment.