Retail and CPG M & A Game…

The outlook for retail and CPG mergers in 2026 is cautiously optimistic, with deal volume expected to rebound after a volatile 2025. M&A activity will reflect changing consumer behaviors, such as the rise of GLP-1 weight-loss medications and a focus on value among shoppers.

Let's begin with the consumer.

Consumer behavior will shift from "volume-driven" to "value-driven" growth, leading Retailer and CPG companies to streamline portfolios and focus on high-impact, health-oriented, and tech-integrated categories.

Three cross-industry strategies are anticipated to develop.

1. Rationalizing the Portfolio: Major consumer packaged goods companies are expected to accelerate the divestment of non-core or underperforming local brands, redirecting capital toward global, high-growth categories.
2. Capability-Led Acquisitions: Retailers and GPG manufacturers increasingly acquire technology rather than develop it, focusing on AI customer engagement, logistics automation, and retail media networks to accelerate data monetization and improve fulfillment.
3. Private Equity Resurgence: PE firms must monetize aging assets, with about 55% of sponsor-backed businesses held for more than 5 years. Nervous investors anticipate asset redeployment amid an evolving economy.

In Retail: Effective scaling is crucial for achieving both growth and profitability.

We foresee increased M&A in retail as major retailers boost investments in purchasing, logistics, warehousing, technology, and operations. 2026 will focus on delivering better shopper experiences at lower costs.

In CPG manufacturing, Growth and profitability depend on letting go of weak brands and building strong, next-generation portfolios.

In 2026, brands will aim to build “superbrands”, dominate markets, and strengthen relationships with retailers. Despite increased activity, dealmakers face rising regulatory challenges/trade uncertainties, which could delay large deals.

And the Future...

For CPG Manufacturers: “Create Future-Fit Brands and Categories”:

1. De-invest in non- performing brands and re-invest in scale and differentiation.
2. Ride the emerging “Nutrient-Dense and Healthier for You" functional food wave.
3. Make vertical integration a core growth strategy.

For Retailers: "Become the Ecosystem":

1. Leverage technologies such as in-store robotics, seamless supply chains, comprehensive manufacturer-integrated collaboration, merchandising automation, and workforce productivity to increase revenues and profits.
2. Aggressively target the long-term, value-seeking consumer segment by enhancing the quality and variety of private brands.
3. Prioritize becoming agentic-ready to ensure product catalogs are easily discoverable and actionable by AI agents, which may mediate over 20% - 30% of enterprise shopping in 2026.

Going to be an interesting year in the Retail and CPG M & A “Chess game.” Are you prepared?