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.

A fundamental, long-term acceleration in the way consumers acquire goods and services in retail, leisure, and hospitality, combined with the zero-interest-rate environment, excess liquidity, and government stimuli, buoyed M&A activity in the space. Companies aimed to quicken the digitization process, expand on direct-to-consumer sales, and focus on ESG and sustainable offerings to drive growth, stay relevant, and strengthen resilience as the pandemic served as a turning point in consumer markets.

Portfolio optimization and reconstruction were at the heart of consumer M&A: As consumer behaviors drastically evolved in 2021, corporates sought to either partner with companies or buy assets to enter fast-growing niches or expand market share.

For the consumer products industry, 2022 will likely come with supply chain struggles, which are unlikely to be resolved fully or quickly. Additionally, the rapid increases in costs are impacting the industry’s ability to achieve desired growth. Nevertheless, 2022 is expected to be the year of strong financial performance, with increasing margins driven by raising prices for end consumers.

*Based on Deloitte’s 2022 Consumer Products Industry Outlook and Pitchbook’s 2021 Annual Global M&A Report