Mar 6, 2024

Frozen Food M&A Update – February 2024

frozen food m&a
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Frozen Food M&A Stays Warm Despite Cold Macroeconomic Winds

The Frozen Food sector remained dynamic in 2023, with an active merger and acquisition (M&A) market and new product launches despite a very challenging macroeconomic backdrop. While inflation has shown signs of retreating, consumers have increasingly shifted spending towards more value-oriented food products. Many consumers have opted for more stretchable meals, spurring heightened demand and acquisition opportunities for frozen food providers. Sector participants will continue to actively monitor the pricing environment and the level of consumer elasticity moving through the first half of 2024.

Despite increasing macroeconomic headwinds, Frozen Food remains an attractive category from an M&A perspective given the category’s alignment with broad consumer trends including value, convenience, and better-for-you.

Timothy BinneyVice President, Capstone Partners

Consumers’ Shift to Healthy Frozen Food Drives Robust Sales Growth

Frozen Food has been one of the fastest-growing categories in the Packaged Food Products space over the past 40 years and has continued to perform well despite the challenging environment. The U.S. Frozen Food sector generated $77.6 million in annual sales in 2023, according to Conagra’s 2024 Future of Frozen Food report.1 In addition, U.S. frozen food sales volumes were resilient, increasing by 5% from 2019 to 2023. This growth can be attributed to changing consumer preferences as the Millennial generation has increasingly demanded convenient health-conscious frozen food products. The category is projected to expand at a 5.7% compound annual growth rate (CAGR) from 2024 through 2034 to reach a total market size of $638.6 billion, according to Future Market Insights.2

American shoppers, particularly Millennials, remained interested in frozen food in 2023. Consumers have continued to actively shop the frozen aisle, with 98% of households purchasing frozen food and 86% of shoppers visiting the frozen food aisle during every trip to the grocery store, according to Acosta’s Shopper Insights Study.3 Additionally, 80% of Americans choose frozen food at least once a week, and most consume frozen food products an estimated four times per week. More than half of Americans have frozen food on hand, especially vegetables, and nearly half now own at least one secondary freezer to store these products, according to Advantage’s Pulse Survey.4 The Prepared Food segment has continued to lead the sector regarding sales and M&A activity, driven by consumer demand for nutritious and convenient meals. Prepared Food (including meals, handhelds, and appetizers), Desserts, and Seafood comprised the three largest categories by dollar share in 2023, according to Conagra’s 2024 Future of Frozen Food report.

The surveys conducted by Acosta and Advantage indicated that consumers have increasingly made frozen food purchasing decisions based on three key drivers: value, convenience, and healthy options. Acosta found that 67% of consumers believe frozen food can provide a better value than non-frozen, especially in the Vegetables, Fruit, Meat, Fish, and Pizza categories. Additionally, the majority of shoppers agree that frozen food is more convenient and a great alternative for those who cannot cook. However, only 25% of shoppers believe frozen dinners, snacks, and entrees are as nutritious as homemade. Consumer packaged goods (CPG) companies have continued to innovate around healthier products and develop clear messaging to educate consumers on healthier frozen food options.

Elevated Inflation and Producer Prices Indicate Continued Pricing Pressures

Lingering inflation has continued to plague the broader Consumer industry despite the Federal Reserve's indication of interest rate cuts in 2024. Of note, the majority (56.7%) of CEOs in the Consumer industry identified inflation as the top concern regarding company growth, according to Capstone's 2023 Middle Market Business Owners Survey.

Inflation has remained an issue for CPG businesses in recent years as volumes have declined in the face of price increases. Even as price increases have moderated in the second half of 2023, volumes have not rebounded apace, leading CEOs to worry about changing price elasticities of demand as consumers change behaviors to further stretch limited budgets.

More specifically, the consumer price index (CPI) for the Food-at-Home category (which includes grocery store and supermarket food purchases) increased in December 2023 by 1.3% over the prior year, according to the U.S. Department of Agriculture (USDA).5 This contrasts with the much higher 2022 Food-at-Home increase of 11.4%. While providing shoppers some relief relative to much higher price growth in recent months, the recent lower inflation has not fully mitigated challenging volume growth due to the changing consumer elasticities of demand.

Consumers in 2023 continued to limit discretionary purchases, actively reduce household inventories, increase use of leftovers, and focus on more hands-on meal preparation over convenience. The changing consumer behavior has altered price elasticities of demand, putting continued downward pressure on volume recovery even as price growth moderates.

In 2024, Food-at-Home prices are expected to increase by 1.6%, according to the USDA. Prices for most food categories are predicted to change at a rate below their 20-year historical average and are expected to increase for 11 Food-at-Home categories, including fats and oils (+4.6%), beef and veal (+2.2%), and fresh vegetables (+1.9%). At the same time, prices are expected to decrease for four categories including pork, eggs, and cereal/bakery products.

With respect to producer prices, the producer price index (PPI) for the All Food Manufacturing space declined in 2023, with the relative index value falling 1.5 points between January and December. However, Frozen Food sector PPI growth increased in the third quarter, suggesting frozen food producers' wholesale prices remain elevated relative other food producers. Studies by the USDA have found that for food categories, PPI can be a leading predictor of CPI. Given that correlation, the increased Frozen Food PPI suggests frozen prepared food producers may experience continued upward pricing pressure in 2024.

Frozen Food M&A Activity Rises, Strategics Remain Acquisitive

Frozen Food M&A activity in the U.S. fared better than the broader market, rising 14.3% year-over-year (YOY) to 16 transactions announced or completed in 2023. In contrast, U.S. middle market deal volume fell 12.8% YOY, with total U.S. transaction activity registering a deeper decline of 24.1% YOY in 2023. Buyers in the sector continued to tread carefully with acquisitions, placing particular focus on input costs, ability to take price and volume growth, and taking their time on diligence. Strategic buyers with healthy balance sheets continued to control the Frozen Food M&A market. In 2023, strategic buyers accounted for 62.5% of total sector M&A volume. Financial acquirers, hindered by high borrowing costs, comprised the remaining 37.5% of sector deals. While private equity largely pulled back on M&A pursuits, select sponsors continued to engage in add-on acquisitions to drive value for portfolio companies in the space. Notably, Capstone Partners advised frozen pasta manufacturer Mama Rosie's on its acquisition by Mill Point Capital-backed Seviroli Foods in July 2023. Terms of the deal were confidential.

Prepared Food Segment Garners Strong Buyer Appetite

The Prepared Food segment (which includes Frozen Food) continued to yield considerable levels of sector M&A activity. Prepared food providers comprised 43.8% of sector M&A targets in 2023, a slight uptick from 42.9% in 2022. Acquirers in the segment have demonstrated a willingness to pay premium valuations for target companies that can diversify business divisions with high-growth prepared food brands, especially at the top end of the market. This has been evidenced by Campbell Soup Company's (NYSE:CPB) announcement to acquire Sovos Brands (Nasdaq:SOVO) in August 2023 for an enterprise value of $2.7 billion or 14.6x EV/EBITDA. The transaction serves as both a strategic and earnings play for Campbell Soup, with the goal of building a $1 billion Sauces business within its Meals & Beverages division, according to a press release.6 Campbell Soup will also absorb the Rao's brand through the deal to deliver a successful line of pasta sauces and premium frozen entrées.

Upon further analysis of the Frozen Food M&A market, six of the 16 acquisitions in 2023 targeted growth-focused, better-for-you (BFY) brands. The remaining 10 transactions targeted older, slower-growth, cash-flow brands. Although BFY brands accounted for less than half of sector M&A targets in 2023, the number of deals in this category doubled YOY. Privately-owned BFY brands in the sector have garnered significant buyer interest from large players, demonstrated by Unilever's (LSE:ULVR) acquisition of Boston, Massachusetts-based Yasso in June 2023 (undisclosed). The acquisition of Yasso supports Unilever’s premiumization strategy in its Ice Cream business, joining Ben & Jerry’s, Magnum, and Talenti. High-quality privately-owned businesses seeking liquidity are expected to draw a steady pool of interested strategic and financial buyers throughout 2024.

Public Players Initiate Growth Via New Products and Acquisitions

Public companies in the Frozen Food sector have continued to grow through organic innovation and acquisitions in 2023. Despite recent public market volatility, public players in the space have demonstrated significant defensibility contrary to many other areas of the Consumer industry. Several notable examples of public company growth tactics are outlined below.


  • In April 2023, Bimbo Bakeries USA launched a line of frozen treats inspired by its Entenmann’s brand of popular baked products.

Campbell Soup Company (NYSE:CPB)

  • Campbell Soup Company announced its acquisition of Sovos Brands in August 2023 for an enterprise value of $2.7 billion, equivalent to 14.6x EV/EBITDA. Sovos manufactures consumer food products through a variety of Italian brands including Rao's sauces, Michael Angelo's frozen entrées, and noosa's yogurt.

J.M. Smucker (NYSE:SJM)

  • J.M. Smucker has experienced significant success with its Uncrustables product, which it acquired in 1999 (undisclosed). Uncrustables sales exceeded $680 million in fiscal year (FY) 2023, a ~36% increase over the prior year, according to the company's FY 2023 investor presentation.7 J.M. Smucker broke ground on a new, third, plant to manufacture the Uncrustables line in 2022 with production anticipated by 2025. The company expects to achieve $1 billion in Uncrustables sales by 2026.

Kraft Heinz (Nasdaq:KHC)

  • Kraft Heinz launched 360CRISP™, a new platform that enables microwave-cooked food to be crispy as though it was cooked on the stove (September 2023). 360CRISP™ debuted with the launch of LUNCHABLES® Grilled Cheesies. The company plans to introduce five new products across four existing brands by the end of 2024.
  • Additionally, Kraft Heinz launched its new, internally developed HOMEBAKE 425°/:30™ brand of frozen entrées, sides, and vegetable dishes in May 2023. All offerings are designed to cook together in one standard oven at 425 degrees for 30 minutes.

Nestlé (SWX:NESN)

  • Nestlé wound down its Frozen Meals and Pizza businesses in Canada (February 2023). In particular, the Delissio, Stouffer's, Lean Cuisine, and Life Cuisine brands will no longer be sold in the freezer aisle at Canadian grocery stores. The change will enable the company to focus on products that support long-term business growth, including confectionery, coffee, ice cream, premium water, and pet food.
  • In April 2023, Nestlé and private equity firm PAI Partners agreed to create a joint venture for Nestlé's Frozen Pizza business in Europe. Nestlé's Frozen Pizza business generates annual revenues of approximately $450 million and is distributed under the Wagner, Buitoni, and Garden Gourmet brands, according to a press release.8 The business will be headquartered in Germany and led by a strong and experienced management team. Nestlé and PAI also partnered on ice cream with the creation of Froneri in 2016. PAI is currently exploring options for Froneri, which it acquired fully from Nestlé in 2019 (undisclosed).

Frozen Food Deal Flow Projected to Remain Strong in 2024

Overall, the market expects M&A activity to recover to a degree in 2024. Transaction inventory has continued to build with prospective sellers having been on the sidelines waiting for greater economic transparency and business recovery before launching a sale process. Strategics are expected to continue to drive the Frozen Food M&A market in the near-term as they seek to add on-trend, growth-oriented brands to their portfolios. Private equity will likely continue to carefully acquire privately-owned, cash-flow producing brands supported by strong volume and distribution.

To discuss consumer dynamics and M&A opportunities, provide an update on your business, or learn about Capstone's wide range of advisory services and Frozen Food sector knowledge, please contact us.


  1. Conagra, "Future of Frozen Food 2024 Uncovers Hottest Frozen Food Trends Emerging for 2024,", accessed February 26, 2024.
  2. Future Market Insights, "Frozen Food Market Outlook from 2024 to 2034,", accessed February 27, 2024.
  3. Acosta, "Shopper Insights Study,", accessed February 27, 2024.
  4. Advantage, "Pulse Survey: What's Hot in the Frozen Food Aisle,", accessed February 27, 2024.
  5. U.S. Department of Agriculture, "Food Price Outlook 2024,", accessed February 27, 2024.
  6. Campbell Soup, "Campbell to Acquire Sovos Brands, Leader in High-Growth Premium Italian Sauces,", accessed February 27, 2024.
  7. JM Smucker, "Fiscal Year 2023 Investor Presentation,", accessed February 27, 2024.
  8. Nestlé, "Nestlé and PAI to Create Joint Venture for Frozen Pizza in Europe,", accessed February 27, 2024.

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