GLP-1 Drugs Reshape Food M&A Valuations
The rise of GLP-1 weight-loss drugs is influencing mergers and acquisitions in the food industry, with buyers scrutinizing snack and bakery assets for
GLP-1 weight-loss drugs are now a key factor in food industry mergers and acquisitions. Potential buyers are scrutinizing how snack and bakery portfolios will withstand reduced consumption linked to the medications.
James Watson, a UK partner at consultancy Argon & Co, says the market is pricing in the GLP-1 impact faster than data can validate it. He notes that while the drugs influence due diligence and the price paid for assets, he has not yet seen them derail a major food transaction. Companies without a strategy to address potential volume pressure risk becoming distressed assets, Watson warns.
GLP-1 Risk Enters Deal Pricing
Private equity investment in packaged food remains significant. S&P Global Market Intelligence recorded $5.92 billion of such investment in the first seven months of 2026. The sector is on course to exceed the $6.75 billion invested across all of 2025.
Despite this activity, deal count has slowed while median deal size has grown sharply below.
| Metric | 2025 (Full Year) | Jan-Jul 2026 |
|---|---|---|
| Total Deal Value | $6.75bn | $5.92bn |
| Number of Deals | 264 | 138 |
| Median Deal Size | $4.2m | $7.5m |
Recent data underpins the heightened scrutiny. A December 2025 study in the Journal of Marketing Research found US households reduced grocery spending by an average of 5.3% within six months of someone starting a GLP-1 drug. Spending on savoury snacks fell around 10%, with sweets, baked goods and biscuits also seeing substantial declines.
However, the broader market impact may be less dramatic. Consumer consultancy OC&C Strategy Consultants forecasts an average annual volume drag of only about 0.2% through 2031. This would leave US food and beverage volumes roughly 1% below where they might have been without GLP-1 adoption.
"GLP-1s are reshaping food and beverage consumption, with the impact extending beyond volume to fundamentally change the mix of what consumers buy," says Coye Nokes, partner and head of retail and consumer goods in the US at OC&C.
Watson cautions against blaming every sales dip on the drugs. Inflation, price sensitivity, and competition are also depressing volumes. A key challenge for acquirers is isolating the true impact of GLP-1s from other market forces.
No Clear Premium for Health-Focused Brands
Acquisition multiples do not show a simple pattern where nutrition-focused brands command a premium over indulgent ones. Recent major deals illustrate this point.
| Acquirer | Target | Deal Value | Multiple (x EBITDA) |
|---|---|---|---|
| Simply Good Foods | OWYN (protein shakes) | $280m | 13.3 (after synergies) |
| Campbell | Sovos Brands (Rao's sauces) | $2.7bn | 19.8 (before synergies) |
| Mars, Inc. | Kellanova (Pringles, Cheez-It) | $35.9bn | 16.4 (trailing) |
Lincoln International's first-quarter 2025 review found nutrition businesses traded at an average 13.8 times EBITDA, while coffee and snack companies averaged 20.4 times. "I don't think there is enough evidence to be definitive here," says Watson. There are examples of a premium being paid but it is far from consistent.
Conventional bakery and snack assets are not unsellable. Watson argues that strong brands, pricing power, and valuable manufacturing capacity can protect valuations. Flexible packaging and price-pack architecture, allowing for smaller portions, offer another defence. Conversely, what kills valuations is volume decline the seller cannot explain, he says.
Long-Term Uncertainty and Brand Loyalty
The long-term adoption rate of GLP-1 drugs remains a major uncertainty. A Novo Nordisk-funded trial extension found participants regained about two-thirds of lost weight a year after stopping treatment, suggesting ongoing use may be needed.
There is a very real risk of undervaluing snack assets, particularly while the true impact of GLP-1s is not proven, Watson states. He urges the industry to understand what the actual long-term usage rate will be, rather than accepting a doomsday scenario.
Research from flavor giant Givaudan complicates the narrative. Its study of over 15,000 social media discussions found GLP-1 users continue to seek familiar product experiences. They often just want them in smaller portions or different formats.
Santiago Vega, VP of marketing and regional innovation for North America at Givaudan, says this means brands can reformulate or resize indulgent offers rather than abandon them. This suggests consumer loyalty and adaptable formats may offer more protection than a health claim competitors can easily copy.
The most defensible premium in future deals may lie in specific capabilities rather than finished brands. According to the source report, ingredient expertise, whey-processing capacity, and flexible packaging could attract more interest from buyers searching for a genuine competitive advantage in a shifting market.
