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by Matt Andersen, Matt Gase, and Stephen Daubert | Westlake Securities
The consumer goods sector continues to evolve, shaped by steady growth, disciplined valuations, and a renewed focus on innovation and efficiency. As our Q2 2025 Consumer Goods Industry Report highlights, the middle market is proving remarkably resilient, even as shifting consumer preferences, inflationary pressures, and supply chain realignments redefine how brands compete and grow.
Market Growth: Resilient and Controlled
The U.S. consumer goods market reached $597 billion in 2024 and is expected to expand to $693 billion by 2030, a steady 1.2% CAGR. Globally, the market is projected to rise from $4.6 trillion to $4.97 trillion by 2029, underscoring enduring demand for everyday essentials. This measured expansion is less about explosive growth and more about stability, loyalty, and operational precision.
Valuations Hold Strong Across the Middle Market
Despite cost pressures, valuations remain firm. Middle-market companies in the sector have traded at an average of 6.8x EBITDA, with top performers reaching 10.6x. Investors are rewarding businesses that pair steady margins (averaging ~19%) with scalable, efficient operations and brand-driven differentiation.
Strategic Shifts: Inflation, Innovation, and Private Label Momentum
The report identifies several powerful forces reshaping the landscape:
– Inflation and Cost Pressure: Rising input and logistics costs are forcing companies to balance price elasticity with profitability.
– Private Label Growth: Consumers, especially in mature markets, are trading down to value-tier products, fueling retailer-owned brands.
– Innovation and Brand Loyalty: Brands that maintain trust and perceived quality sustain pricing power and customer loyalty despite tighter wallets.
Deal Flow Drivers: Technology and Supply Chain Agility
Operational efficiency and innovation are driving transaction interest. Companies that leverage AI, automation, and digital logistics tools are emerging as prime acquisition targets. These technologies not only optimize inventory and distribution but also provide the agility to respond to fast-changing consumer behavior.
Meanwhile, localization and nearshoring are reshaping sourcing strategies, reducing global dependency, and strengthening regional supply chains. This shift is increasingly viewed as a competitive moat in deal evaluations.
Food, Beverage, and Retail: Where Buyers Are Focusing
Recent transactions across food and beverage categories show buyers prioritizing companies with:
– Efficient, tech-enabled production
– Diversified retail and foodservice distribution
– Exposure to high-growth categories, such as health-focused, plant-based, and convenience foods
Similarly, the retail sector’s M&A story is defined by omnichannel integration and data-driven merchandising. Retailers with strong private-label portfolios and loyalty programs are attracting premium valuations.
Outlook: The Next Chapter of Consumer Goods Growth
We expect the next 18 months to bring continued M&A momentum across consumer goods. Buyers, both strategic and financial, will pursue targets that combine:
– Operational efficiency
– Digital maturity
– ESG integration
– Brand authenticity
In a market no longer driven by volume alone, the new growth equation favors companies that can innovate efficiently, scale sustainably, and connect authentically with their consumers.
For more information, contact our team or download the full Q2 2025 Consumer Goods Industry Report here.
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