Dutch M&A trends in the Consumer Markets industry

The consumer markets sector in the Netherlands has seen significant fluctuations due to macroeconomic and industry-specific factors. Looking ahead to 2025, the M&A landscape is set for a resurgence driven by evolving consumer trends, technological advancements and strategic portfolio optimisations. 

In 2024, key themes included portfolio optimisation, consolidation and distressed M&A. Companies like Unilever announced the sale of non-core assets to streamline operations and reduce costs, while consolidation efforts, such as the merger of FrieslandCampina and Milcobel, aimed at building efficiency and resilience in the global dairy market. The traditional retail sector, hospitality and some subsectors of consumer goods, like bicycles and fashion, saw a rise in insolvencies, driving distressed M&A activity.

In 2024, there was a dramatic drop in average deal values in the Netherlands compared to the previous year, though deal volumes remained relatively stable with a six percentage decline versus a sixteen percent global decline. The absence of mega deals and prolonged disposal processes contributed to these declines.

Similarly, as in other industries, macroeconomic factors like inflation, high interest rates and geopolitical tensions, coupled with financing challenges and a persistent valuation gap between sellers and buyers, made it harder to conclude deals. Companies awaited inflation subsidence as rising prices and reduced consumer confidence made it more difficult to acquire new customers and increase sales. This mainly impacted larger deals, while the mid-market showed resilience. Corporates with strong balance sheets had an advantage over private equity in a capital-constrained environment. 

During the second half of 2024, larger deals were already being made and there were more announcements (and market rumours) of upcoming exits, indicating potential for more consistent dealmaking in 2025.

Several factors that have impacted M&A activity in previous years are expected to ease in 2025. Interest rates are starting to decline, and inflation has stabilised. However, consumer purchasing power and sentiment remain affected by geopolitical tensions and uncertainties. Despite these challenges, there is optimism for M&A in the consumer markets sectors as the pressure to transform through M&A to meet evolving consumer needs and keep pace with rapid market changes remains significant.

Additionally, the decrease in M&A activity in previous years has created pent-up demand and accumulated assets that companies and investment funds are keen to sell. Combined with the need for returns, improved valuations, better exit conditions and pressure to release cash to limited partners, this is expected to drive more M&A activity related to private equity-held consumer assets.

M&A opportunities involving owner-led and family businesses are also noteworthy, driven by both succession issues and the need for investment to support growth. M&A activity is anticipated to increase, with acquisitions led by operators capable of delivering synergies and transformation to create sustained outcomes. Strategic portfolio reviews and financing challenges will likely accelerate the flow of disposals. The timing of disposal processes remains uncertain. Investors are exercising caution in selecting which deals to pursue, resilient assets with high earnings visibility and alignment with evolving consumer trends are prioritised.

Consumer companies that effectively manage their portfolios and seize opportunities for both short-term growth and long-term reinvention are more likely to thrive. 

• Consumer health and beauty: demand for consumer health products and beauty and personal care items continues to grow due to demographic changes and behavioural factors. Companies offering health solutions, including sports nutrition and sustainably produced goods, are particularly attractive targets. M&A will be used to accelerate growth.
• Food and beverage: this sector is expected to see further portfolio optimisation and consolidation. Fast-moving consumer goods companies are stimulating M&A activity by optimising their portfolios. These carveouts provide opportunities for smaller players and private equity investors. The sector remains attractive due to stable demand and especially businesses with a broader portfolio (for instance combining branded and private label offerings) are perceived as interesting targets. 
• Hospitality and leisure: there are signs of recovery in this sector, with growing demand for leisure activities and travel. Transactions are expected around hotels, gaming and sports.
• Pet products and services: the pet sector continues to attract investor interest, driven by premium pet food growth and secular trends, such as the increase in pet ownership post-Covid-19 and the humanisation of pets. Premium pet food brands, particularly those offering natural, fresh and raw products, are seeing strong growth.
• Retail: the traditional retail sector may experience more distressed situations as assets in need of refinancing do not meet projections. There has been a significant increase in retail insolvencies during 2023 and 2024. Factors such as the gradual growth of e-commerce, (wage) cost growth and changes in consumer preferences are affecting retailers broadly. These circumstances could lead to further industry consolidation, allowing more financially stable companies to acquire brands, intellectual property and selected assets, thereby creating value through strategic turnarounds and integrations.

According to PwC's 28^th CEO Survey, Dutch CEOs in consumer markets are highly concerned about inflation and its impact on revenue and profitability. Together with changing market conditions and technological disruption, particularly the rise of AI, this is prompting them to actively reinvent their companies and business models. Placing a strong focus on integrating AI can enhance efficiency and profitability. 

Additionally, many are investing in sustainability, with CEOs making climate-friendly investments that are boosting revenues. This dual focus on AI and sustainability exemplifies their strategic approach to modern business challenges.

The consumer markets industry in the Netherlands is on the brink of a significant resurgence in M&A activity in 2025. Companies are poised to leverage M&A as a strategic tool to optimise their portfolios, adapt to evolving consumer trends and drive both growth and transformation. Private equity will continue to play a pivotal role, particularly in sectors that align with trends in innovation, sustainability and strategic adaptation, and focus on resilient businesses with strong track records.