Consumer & Retail
Consumers changed their behavior and preferences, so companies are changing their go-to-market strategies and capabilities in response. Industry players are recalibrating how they segment consumers, prioritize channels, establish product portfolios, position their brands, and deploy service models. This work continues in the new year.
Rising costs of raw materials, transportation, and labor will put pressure on profit margins, while the pandemic has exposed the need for more resilient and agile supply chains. Companies that can adapt to changing consumer preferences, invest in technology, and prioritize sustainability are likely to gain a competitive advantage.
Consumer behavior changed drastically in 2022 from what was seen in the boom of 2021, leading corporations to adjust their business strategies. Carveouts were a big theme of portfolio revamps: Corporates aimed to deleverage or exit noncore assets as headwinds forced them to re-evaluate, seeking to increase efficiency and cut costs. This opened the door for PE firms and corporations alike.
*Based on Deloitte’s 2023 Consumer Products Industry Outlook and Pitchbook’s 2022 Annual Global M&A Report
FCL Industry Coverage
- Food and Beverage
- Personal Care
Valuations in consumer markets are beginning to recalibrate as a result of inflation and a slowing economy, which are directly impacting consumers and leading to a decline in consumer sentiment. Since the first quarter of 2022, M&A activity in the sector has slowed, with 5,275 deals completed in the first quarter of 2023 and an increase to 6,734 deals in the second quarter of 2023, largely driven by acquisitions by PE firms. We can see a positive trend in median post-valuation in 2023, with Q1 being 16% higher than Q4 2022 with a median post-valuation of $21.64 million, and Q2 2023 slightly lower than Q1 but maintaining the positive trend with a median post-valuation of $20.3 million.