Chart: Health and beauty deals dominate as global retail M&A slows in Q2

While the value of global retail and consumer deals declined by 13% between Q1 and Q2, health and beauty companies attracted the highest valuations of any subsector and accounted for over a third of deals by volume, Retail Week can reveal. 

The number of deals across all retail and consumer industries also declined 4% quarter on quarter. These figures are from the latest AlixPartners global consumer and retail trends report. 

“If you think about beverage [and] alcohol companies, for example, and health and wellness trends, there’s the shift to low/no, there’s a shift to healthy hydration,” says James Cass, partner and managing director at the global consultancy firm. ”We expect this trend to continue to drive strategic decision making and M&A”. 

Some of the major beauty deals announced this year include the sale of makeup brand Rhode, co-founded by Hailey Bieber, to ELF Beauty in a deal worth up to $1bn (£746m). L’Oréal purchased a majority stake in British premium skincare brand Medik8 and acquired haircare firm Color Wow in June. Moving into Q3, and particularly relevant for the British high street, was Ulta Beauty’s acquisition of Space NK. 

In the health space, PepsiCo completed the acquisition of prebiotic soda brand Poppi for $1.95bn (£1.45bn) in May. Celsius Holdings also announced in April that it had cut a $1.8bn (£1.34bn) deal for fellow drink brand Alani Nu.

”If you’re an entrepreneur and you’ve got a brand that’s growing, you may want to work with private equity because they can help you accelerate that growth even further and support you with everything that we know private equity can do well,” says Cass, but larger multinationals have “got the route to market and the distribution network and they can turbocharge the growth and the accessibility of some of these brands”.

The AlixPartners report also found that despite a fifth consecutive quarter of decline in private equity-backed retail and consumer deals, the number of private equity deals worth over £1bn increased. In all, 40% of £1bn-plus deals involved a private equity fund, up from 29% in Q1. 

“There’s a huge amount of dry powder,” said Cass, but private equity companies are looking for safe assets in a world filled with geopolitical uncertainty, inflation and tariffs. “What we see with our clients is that scale is often associated with resilience, and that’s very important in this environment.”