Outlook 2025: Consumer

As we head into 2025, we're seeing many reasons for continued strengthening in the M&A and private capital markets. Over the past year, there has been steady improvement in the rate environment, the GDP outlook, consumer spending and financial health, and corporate earnings.

Against this backdrop, we believe 2025 will see ongoing growth across several areas of the consumer industry, and we're excited for the opportunities to come. See our perspectives on the overall M&A and private capital markets.

Consumer: Resilient Spending Across Categories

Spending continues to prove resilient within a wide range of consumer segments, from food and beverage to a diverse set of products and services to a broad array of multisite businesses.

Across these areas, companies that align closely to key consumer trends are the best positioned for long-term growth. Looking ahead, the consumer industry will keep providing investors with a wealth of opportunities, with several subsectors showing significant runway.

Our senior professionals are excited to see the consumer industry gain further M&A momentum as we head into 2025. Below, we share the trends behind this activity, categories particularly well positioned for success, and recent clients that exemplify the industry's investment potential.

Food & Beverage: A Focus on Fresh and Premium

Food and beverage is one area where we've seen considerable investor interest, featuring consistent, stable demand characteristics. In this sector, the bakery segment is garnering strong attention with grocery stores looking to offer higher-quality, fresher, and more convenient bakery products that emphasize authentic and premium ingredients. Demonstrating the value-creation opportunity in bakery is our client Rise Baking Company, a bakery manufacturer that produces a broad portfolio of products for in-store bakeries and foodservice customers, including leading national grocery chains, convenience stores, QSRs, and mass merchandisers.

The ingredients market also continues to expand with value-added ingredients experiencing especially meaningful growth. Across this space, ingredient companies that provide premium, natural, and clean-label products are particularly sought after. We worked with The Perfect Purée of Napa Valley, a prime example of a leading company that continuously innovates to create new, high-quality, and natural ingredients that align to consumers' changing eating preferences. Investors recognize the differentiated and defensible position of such suppliers offering a clear value-added proposition. The Perfect Purée provides high-quality and consistent products that are critical to their customers' success, and their ready-to-use purée provides customers with significant labor savings and unmatched consistency compared to in-house prepared purée.

Pet: Premium, Healthy, and Humanized

Similarly, the pet sector's growth continues to be supported by a greater awareness of and focus on pet health. These factors are driving an emphasis on pet wellbeing and greater demand for premium and specialized food, supplements, and treat items.

"Several pet segments are capturing investor attention, such as premium cat and scientifically backed supplements," says Ryan Budlong, a group head and managing director. "Across the sector, investors have the chance to capitalize on significant value-creation potential within a fertile environment for M&A."

Pet supplements, for instance, are seeing burgeoning demand from a growing number of pet owners. In this space, Harris Williams advised Armira on entering a partnership with almapharm. Almapharm develops nutraceuticals for pets and farm animals, an accelerating market opportunity that aligns closely to pet food premiumization and natural ingredient trends. Our client Lintbells, meanwhile, provides scientifically proven pet supplements that make a visible difference in chronic health conditions.

Consumer Services: Growth and Stability

Consumer services has also proven its performance in a wide variety of macroeconomic and inflationary periods. For instance, the home services subsector—long known for its growth, stability, and opportunities to build market-leading platforms—is seeing consistent consumer demand and strong investor interest.

The third annual Harris Williams Home Services Survey reinforces the subsector's strength, driven by long-term consumer behavior shifts that tend to weather economic uncertainty and consumer headwinds. "Multiple years of consumer data reinforce the inherent resilience of the home services subsector," says Brent Spiller, a group head and managing director. "Consumers are steadily shifting toward the do-it-for-me model, and they're looking for sophisticated service providers that are easy to find and work with."

Going forward, home services companies able to provide the modern experience consumers expect while using proven marketing approaches are poised to win share and lead the growth and innovation M&A investors so highly value.

Consumer Products: Potential in Fast-Growing Channels

Likewise, a number of consumer products are performing well across macro environments. Health and beauty is an example of a category that's well positioned for long-term expansion, with recent client Tangle Teezer shedding light on its M&A potential.

According to the 2024 Harris Williams Health & Beauty Survey, nearly 95% of consumers plan to spend the same or more on beauty and personal care in the coming year—the same as last year's results. We found the highest spending in hair and skin care followed by cosmetics, while fragrance gained consumer interest. This should provide strategic buyers and financial investors with greater confidence in the sustainability of demand for the industry and highlight a number of exciting growth opportunities across subsectors and channels.

Throughout the consumer products sector, direct-to-consumer (DTC) is another space to watch. While it experienced a large pullback as post-COVID-19 shopping habits evolved, businesses that have continued to perform well have proven the differentiation of their business models.

"The DTC model has transformed a host of consumer markets, bringing convenience to shoppers while helping innovative brands forge tighter connections with customers and establish more control over their go-to-market strategies," says Ed Arkus, a group head and managing director. "Growth in the space has been a boon for M&A investors seeking opportunities in the fastest-growing consumer channels."

Consumer Multi-Site: Wide-Ranging Opportunities

Across a breadth of multi-site business models, the consumer health and wellness space remains attractive to investors, with steady demand for services and products related to health, wellness, fitness, sleep, and mindfulness. Buyers are prioritizing best-in-class businesses with consistently strong performance, a proven ability to recruit and retain talent, strong clinical quality, and a clear road map to growth.

Franchisee investing also continues to be a highly active area for M&A across many types of franchisor systems. Investor interest is strong in a variety of consumer categories, including fitness, which is benefiting from the prolonged consumer focus on health and wellness and from an influx of new and growing brands. A resilient market of fitness franchisors and franchisees as well as owned and operated brands continues to add new members and draw investor attention—especially within the high-value, low-price (HVLP) segment. Harris Williams client Fitness Ventures, for instance, is a best-in-class franchisee under Crunch, one of the industry's fastest-growing brands. The company is a prime example of how scaled, professionalized platforms are excelling in the sector and the HVLP category.

Looking Forward

The team expects consumer M&A to continue to improve along with macroeconomic conditions in 2025. Leading consumer businesses will have proven their ability to perform in tougher macroeconomic environments, and competition will be intense for the best of the best.   

"Thanks to encouraging long-term consumer trends, there are many areas of the industry that are poised for growth," says Budlong. "Overall, investors will continue to prioritize subsectors with resilient and predictable demand, a track record of growth with additional runway, large addressable markets, and sustainable tailwinds."

Entering the new year, we look forward to partnering with consumer investors and company leaders worldwide to help them navigate the M&A and private capital markets and unlock value in their businesses. 

Learn more about the Harris Williams Consumer Group.