Beverage Sector M&A Update – February 2025

Alcohol Disruption Sparks Increase in Beverage Sector M&A

Capstone’s latest Beverage Sector Update reports that M&A activity in the Beverage sector rebounded in 2024 after a subdued year for dealmaking in 2023, supported by healthy consolidation among privately-owned beverage companies and a resurgence in private equity deals.

Anti-alcohol sentiment continued to gain momentum in 2024, challenging growth prospects for beer, wine, and spirits brands. These operators are expected to face continuous headwinds in 2025, as moderating alcohol consumption remains an emerging consumer preference. Notably, in January 2025, U.S. Surgeon General Dr. Vivek Murthy called for an update to health warning labels on alcoholic beverages to contain the link between alcohol consumption and cancer risk, as the third leading preventable cause of cancer in the U.S., dampening sentiment among alcoholic beverage businesses. However, positive sales trends appeared in select subcategories. In Beer, Flavored Malt Beverages (FMBs) and Non-Alcoholic Beer saw dollar sales increase 5.5% and 25.1% year-over-year (YOY), respectively, according to NielsenIQ.  In Spirits, Tequila, Ready-to-Drink Beverages (RTDs), and Non-Alcoholic Spirits category sales rose 7.3%, 18.9%, and 86% YOY, respectively. Robust growth in emerging categories contributed to the rebound in Beverage sector acquisitions.

Excess inventory challenges, particularly in tequila and bourbon products, have contributed to an overhang to start 2025. Sector participants’ ability to harness artificial intelligence and logistics software to reduce operating costs and drive greater efficiencies in digital marketing, manufacturing, and distribution will likely dictate clear winners in the space. Incremental growth opportunities in commercializing new consumption occasions have supported a hopeful sector outlook and offered an additional catalyst for M&A opportunities.

Also included in this report:

• A review of 2024 sales across various drink categories and subcategories and related commentary from major public players.
• A breakdown of deal activity by buyer type, with detail on buyers’ acquisition criteria in the current environment and expectations for 2025.
• Seven notable transaction highlights, including the Capstone-advised sale of Horizon Beverage to Southern Glazer’s Wine & Spirits.

Capstone Partners’ Consumer Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the consumer and retail industries. Our team partners with leading mid-to-large sized Beverage sector businesses that serve growing end-markets. For more information on Beverage sector M&A trends featured in this report or to speak with one of our Consumer Investment Banking Team members about how to grow, value, and/or sell your company, we are here to help. Contact us today to start a conversation.