M&A activity reveals dominance of sports nutrition
The food and beverage industry has been under immense pressure in recent years as increased costs, resulting from factors including climate change and geopolitical unrest, have taken their toll. Added to that, the cost-of-living crisis has hit consumers hard, tightening budgets and changing buying behaviours.
However, despite these challenges, activity in the mergers and acquisitions market has provided positive news for the food and beverage industry.
What’s more, certain food and beverage trends have emerged and developed into unstoppable juggernauts, bringing consumers and brands with them. But what’s the biggest and most dominant trend in the food and beverage world? Well, many would argue it’s wellness.
Consumers are embracing wellness in a way that few might have predicted, even just a decade ago. But its undeniable popularity has taken it to a global value of 5.61 trillion USD, according to market insight firm, Statista. Furthermore, this figure is projected rise to an estimated 8.47 trillion USD by 2027.
Looking at this trend more closely, we find a myriad of smaller trends within it. Gut health being one of the most widely recognised. Sports nutrition being another, with a CAGR of 9.0% since 2019 and a projected value of 33 billion GBP by 2028. And this success has led to a flurry of activity within the mergers and acquisitions market.
In fact, M&A activity in the EMEA sports nutrition sector has been particularly active, with eight notable deals so far in 2024, as a continued shift in consumer behaviour towards health and fitness drives market growth.
Why has sports nutrition become so popular?
Interest in sports nutrition has been steadily growing within the wellness trend over the past decade. Where it was once considered the option of gym enthusiasts, lifting weights while watching themselves in the mirror, it has now firmly entered the mainstream, with people of all ages and sports preferences choosing them to refuel.
“Sports nutrition food and drink enjoys surprisingly widespread use despite its specific function as supporting sports and fitness,” says Emma Clifford, senior food and drink analyst at market insight firm, Mintel. “As a result, sales are booming and at the heart of this strong performance is that the appeal of these products is expanding beyond the small pool of the most elite sportspeople and gym fans.”
But why have sports nutrition foods and beverages, often referred to as functional foods and beverages, become popular with the casual consumer? It appears that the answer lies in lifestyle.
“The category is increasingly attracting ‘lifestyle’ users who see these products fitting in with a healthy, active lifestyle,” says Clifford. “Fuelling the shift towards the mainstream use is the growing availability and visibility of accessible snacks and drinks from sports nutrition brands.”
What’s more, social media is having a major impact on consumer behaviours, with influencers setting trends and, quite literally, influencing their followers. What’s more, the terms #fitness, #fitspo, #fitfam, and #fitgoals, now dominate social media as some of the most searched and posted-about forms of content. This is in parallel to the decline in alcohol consumption across Europe.
“There are clear trends away from unhealthier lifestyle products, for example the consumption of alcohol has been declining for quite some time,” Mark Lynch, partner at corporate finance advisory firm, Oghma Partners, told FoodNavigator.
So which sports nutrition food and beverages are proving particularly popular with consumers, driving market growth and attracting investment?
“Drinks, protein powders and more recently protein snack bars have helped to drive sector growth and therefore are the attractive areas for buyers to look at,” says Lynch.
What are functional foods and beverages?
Functional foods and beverages are foods and beverages, which claim to have an additional function, through the addition of particular ingredients. These functions typically relate to the promotion of better health.
The term, functional food, can also apply to traits purposely bred into edible plants, such as purple potatoes, which have been modified to increase anthocyanin.
What’s next for the sports nutrition trend?
While no one can predict the future, it’s a pretty safe bet to say that the sports nutrition trend is here to stay. But how will the sector evolve?
The answer to this seems to be through development into other food and beverage areas, attracting consumers from different demographics to the current younger generations.
“An interesting area going forward will be the crossover between sports nutrition and nutrition for seniors – this is a promising area of focus,” says Oghma Partners’ Lynch
The continued growth of the high-protein foods and beverages trend is also likely to feature heavily in sports nutrition.
“The wide-ranging benefits linked to protein have been responsible for pushing it into the spotlight in the context of healthy eating,” says Mintel’s Clifford. “These multiple positive associations mean that usage of high-protein products is not limited to consumers with a single dietary want or need.”
Moreover, the continued strength of the market will likely encourage further investment in sports nutrition products and brands.
“Looking forwards, we expect relative valuations to remain healthy and a higher volume of larger deals as economic conditions continue to improve,” says Oghma Partners’ Lynch.
