Food and beverage companies are unlikely to strike multi-billion dollar transformative M&A deals this year, with giants such as Kraft Heinz and Molson Coors focusing on smaller acquisitions that keep their finances in check while building exposure in categories such as better-for-you snacks and functional drinks. 

The food space has largely shifted to so-called “bolt-on” deals in recent years as companies adopted a more disciplined approach after some large transactions during the 2010s failed to meet optimistic targets and left companies saddled with billions of dollars in debt.

Tracey Joubert, CFO with Molson Coors, said at the Consumer Analyst Group of New York’s (CAGNY) annual conference in Orlando last month that the beer giant will continue its successful “string of pearls” strategy for acquisitions or partnerships that prioritizes brands playing in categories where it lacks or has a limited presence. The transactions also must be big enough that Molson Coors can use its heft to scale the business.

Molson Coors in January took a minority stake in nonalcoholic carbonated mixer Fever-Tree, the latest deal to build on its strategy of increasing its exposure beyond beer. The transaction came two months after Molson Coors purchased a majority of Zoa, the better-for-you energy drink co-founded by Dwayne “The Rock” Johnson.

The past few years have seen food makers engage in a handful of billion-plus deals, but in nearly every case it has been with a single company or brand that fills a void within their already burgeoning portfolios.

Last year, The Campbell’s Company closed a $2.7 billion deal for Rao’s sauces maker Sovos Brands, while PepsiCo doled out $1.2 billion for Mexican-American food maker Siete Foods. And Hershey purchased Sour Strips, a sour candy brand with a strong presence on social media.

Executives at CAGNY said they have improved their balance sheets and remain on the lookout for opportunities to reshape or improve their portfolios.

“When it comes to portfolio management, our priority is to do M&A that strengthens and accelerates our organic growth strategy ... with a bias towards bolt-ons,” Andre Maciel, Kraft Heinz’s CFO, told analysts.

Few companies have been as active in recent years as Hershey. The Reese’s and Kisses maker has used M&A to build its $1.1 billion salty snacks portfolio, snapping up Dot’s Pretzels, SkinnyPop popcorn and Pirate’s Booty puffs.

“M&A has played a key role in our growth over the years and really getting to that optimal portfolio, because it all starts in competing by having the right portfolio,” Michele Buck, Hershey’s CEO, said at CAGNY. “We will continue to use M&A as a way to expand our portfolio.”

Billy Roberts, a senior food and beverage analyst with CoBank, told Food Dive earlier this year he expected dealmaking to pick up. Last year averaged fewer than 500 deals per quarter, a nearly 40% decline from the 2021 to 2023 period, the cooperative bank noted in a report last November.

He predicted M&A would accelerate due to lower interest rates, fewer outside distractions for companies and a need to improve margins and growth since inflation-weary consumers are less tolerant of price increases.

“There are quite a few opportunities out there for M&A activity,” Roberts said. “We could see some smaller entities really get picked up, particularly in a couple of different categories” like snacking and plant-based alternatives.