Amidst the pressures faced by the food and beverage industry, driven by rising costs due to climate change and geopolitical instability, a significant trend is emerging in the mergers and acquisitions (M&A) market: sports nutrition. This sector is not only thriving but also shaping the future of the industry.
Industry Under Pressure
The food and beverage sector has been grappling with numerous challenges in recent years. Escalating costs, largely attributed to climate change and geopolitical tensions, have strained operations. The cost-of-living crisis has compounded these difficulties, forcing consumers to tighten their budgets and alter their purchasing habits.
Yet, despite these hurdles, the M&A market has delivered some positive news. Certain trends within the food and beverage industry have evolved into powerful forces, with wellness emerging as a dominant theme.
Wellness: A Global Powerhouse
Wellness, once a niche market, has grown into a global behemoth. According to market research firm Statista, the wellness industry is valued at $5.61 trillion USD and is projected to reach $8.47 trillion USD by 2027. Within this vast landscape, sports nutrition has carved out a significant niche, boasting a compound annual growth rate (CAGR) of 9.0% since 2019 and an expected value of £33 billion GBP by 2028.
This robust growth has spurred a surge in M&A activity, particularly in the EMEA (Europe, the Middle East, and Africa) sports nutrition sector, where eight major deals have been recorded in 2024 alone. This trend is fueled by a broader consumer shift towards health and fitness, propelling the market forward.
The Rise of Sports Nutrition
The appeal of sports nutrition has steadily grown over the past decade. Once the domain of gym enthusiasts and bodybuilders, it has now entered the mainstream, appealing to a diverse range of consumers across all age groups and fitness levels.
“Sports nutrition food and drink enjoys surprisingly widespread use despite its specific function of supporting sports and fitness,” notes Emma Clifford, a senior food and drink analyst at Mintel. “This strong performance is driven by the expanding appeal of these products beyond the small pool of elite athletes and gym-goers.”
So, what’s driving this shift? According to Clifford, lifestyle changes are at the heart of sports nutrition’s growing popularity. “The category is increasingly attracting ‘lifestyle’ users who see these products as fitting into a healthy, active lifestyle,” she explains. This shift is further supported by the growing availability and visibility of accessible snacks and drinks from sports nutrition brands.
Social media has also played a crucial role in this trend. Influencers are shaping consumer behavior, with hashtags like fitness, fitspo, fitfam, and fitgoals dominating social platforms. This trend is occurring alongside a notable decline in alcohol consumption across Europe.
“There are clear trends away from unhealthier lifestyle products, with alcohol consumption declining for quite some time,” says Mark Lynch, a partner at corporate finance advisory firm Oghma Partners.
Popular Products Driving Growth
Drinks, protein powders, and protein snack bars have been instrumental in driving the growth of the sports nutrition sector, making them particularly attractive to investors.
What Are Functional Foods and Beverages?
Functional foods and beverages are those that claim to offer additional health benefits through specific ingredients. This can include naturally bred traits in edible plants, such as purple potatoes enhanced with anthocyanins.
The Future of Sports Nutrition
Looking ahead, sports nutrition shows no signs of slowing down. One promising area of focus is the intersection between sports nutrition and senior nutrition, which could attract a broader demographic beyond the current younger generations.
“The continued growth of the high-protein foods and beverages trend is also likely to feature heavily in sports nutrition,” says Clifford. “The multiple positive associations with protein have pushed it into the spotlight in the context of healthy eating, attracting consumers with diverse dietary needs.”
As the market continues to strengthen, further investment in sports nutrition products and brands is expected. “Looking forward, we anticipate healthy relative valuations and a higher volume of larger deals as economic conditions improve,” concludes Lynch of Oghma Partners.
Conclusion
In a time of economic uncertainty, sports nutrition has emerged as a beacon of growth within the food and beverage industry. Its widespread appeal, fueled by lifestyle changes and social media, has not only driven market expansion but also attracted significant investment, solidifying its position as a dominant force in the M&A landscape.
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