Big Food companies are accelerating portfolio splits while private equity carve-out activity surged in the first half of 2025, according to recent industry data. Kraft Heinz, Unilever, Hain Celestial, and Keurig Dr Pepper have all moved to separate key business units, aligning with a broader trend of breaking up legacy operations to unlock growth potential.
Surging Carve-Out Activity
Private equity carve-out deals reached $23.72 billion across 145 transactions in H1 2025, up from $19.37 billion across 127 deals the previous year. Companies are seeking to isolate high-growth brands from legacy margin constraints, allowing them to operate independently and attract targeted investment.
Unilever announced plans to split off its ice cream division, while Hain Celestial is separating its international operations. Keurig Dr Pepper is restructuring its coffee and beverage portfolio. These moves reflect investor pressure to maximize shareholder value through focused business units rather than sprawling conglomerates.
Coca-Cola’s Manufacturing Bet
Coca-Cola and its bottling partners are committing $10 billion in U.S. infrastructure spending through 2030, targeting bottling plants, production facilities, and distribution centers. The investment spans at least eight states, including plant expansions in Michigan and New York, bottling operations in California, Colorado, Indiana, and Alabama, plus a new distribution center in Florida.
The announcement follows layoffs earlier this year, signaling a strategic pivot toward domestic manufacturing capacity.
GLP-1 Impact on Food Demand
GLP-1 medication adoption has grown rapidly, reaching 11% of U.S. adults compared to just 3% in 2024. Over 137 million Americans are now eligible for these prescriptions. Users reportedly consume 700 fewer calories daily and reduce grocery spending by 6%, particularly cutting back on processed foods, sugary drinks, and snacks.
Analysts estimate up to $73 billion in global food brand value faces risk, with confectionery, chocolate, and savory snacks accounting for 53% of that exposure despite representing only 30% of total brand value. Major brands are responding: Nestlé launched Vital Pursuit, Conagra introduced GLP-1 friendly Healthy Choice options, and Danone expanded Oikos offerings for muscle retention.
Inflation Pressures Mask Cost Reality
While August food inflation held steady at 1.3%, manufacturers face sharply rising input costs. Diesel prices jumped 77.8% year-over-year, driving more than one-third of the month’s final-demand goods increase. Grain costs rose 17.7% annually, oilseeds increased 15.8%, and confectionery inputs climbed 13.6%, including a 6.1% spike in August alone.
Paper packaging costs are accelerating again, creating additional pressure on branded food producers who are absorbing margin compression between rising costs and consumer prices. The UK’s Food and Drink Federation projects food inflation reaching 3.9% by December 2026 and 6.4% by July 2027, suggesting current pressures will intensify.
El Niño-related risks compound long-term concerns, with analysts forecasting a 14% drop in global agricultural output over two years. Rice production faces particular vulnerability with 26% of output at risk, while India’s monsoon runs 13% below normal. Sugar markets reacted sharply, recording the largest monthly gain since October 2010 in August.
Sourcing flexibility has become critical for procurement teams making decisions now, as the gap between input costs and retail prices continues widening without signs of immediate relief.
