Why Big Food Buys

Written By Jack Hamrick

155 acquisitions, sixteen years of exits, and what the public record leaves out.

In February 2025, Coca-Cola launched a prebiotic soda called Simply Pop into a handful of US regions and Amazon. Poppi had been on shelves in one form or another since 2016. Olipop had spent years building the category alongside it, and by early 2025 each brand was selling several hundred million dollars a year. PepsiCo had already tried and abandoned its own functional line, Soulboost. One month after Coca-Cola's launch, PepsiCo bought poppi for nearly $2 billion.

Two of the largest beverage companies in the world, with the best distribution systems ever assembled, watched a category form over most of a decade. One of them arrived late with a product of its own. The other wrote a check for close to $2 billion. Neither of them created the category.

I worked on Bud Light innovation at Anheuser-Busch before I started Foraged.com, so I’ve had the opportunity to spend time in the rooms where this pattern gets made. The explanation has almost nothing to do with talent, and the people who describe it as corporate stupidity have usually never had to write the business case.

After exiting Foraged and joining the venture side of the food industry with First Run, I wanted to better understand what characteristics tend to pervade the most successful food & bev CPG companies. Relatedly, and more specifically, I wanted to better understand what makes the CPG M&A engine run.

To help educate myself, I've built a record of 155 acquisitions of founder-built North American food and beverage brands spanning January 2010 through September 2026, each transaction checked against a source. Seen alongside the rest of the record, poppi looks less like an expensive anomaly and more like the most visible example of how the industry buys its new categories.

Where the money goes

BCG's 2026 study of what it called CPG's lost decade of R&D puts numbers on the pattern. Consumer packaged goods companies spent about 1.5% of sales on research and development from 2015 through 2025, against 21% in pharmaceuticals and 16 to 20% in software. Advertising and promotion took 6 to 15% of revenue over the same stretch and grew more than twice as fast as R&D. For a long time that allocation paid, because scale in manufacturing, distribution and media bought share more reliably than invention did.

BCG also found large-cap food and beverage companies returning roughly negative 5% to shareholders over the three years through December 2025, while the S&P 500 returned nearly 90%. Between 2021 and 2025 big brands gave up 12.4 points of share in cereal and granola bars, and insurgents picked up 10.8. NielsenIQ data, also published by BCG, puts small brands at 24% of category dollars and 86% of category growth.

A company facing that split can try to generate the growth itself or buy the companies already generating it.

How a big company decides what (or if) to launch

A new item has to demonstrate that it will bring in volume the large incumbent company would not otherwise get. Without evidence of incrementality, a careful analyst assumes substitution, because the alternative is a forecast in which the new product takes share from competitors instead of from the brand sitting beside it on the same shelf. Assuming substitution is the conservative position, and conservatism is what the individual’s job rewards.

To resolve this question, an incumbent wants proof of repeat purchase behavior among customers who had a real alternative and paid full price anyway. Obtaining this, however, creates a chicken-or-egg conflict: the evidence can only arise after the product has been in market long enough to produce it, so the case for launching rests on data that only a launch can produce. It’s classic innovator’s dilemma paralysis.

Layer the personal incentives on top. A modest success against a billion-dollar core brand disappears into rounding. A modest failure shows up by name in an individual’s performance review. BCG's account of why large consumer companies keep losing to small ones names this risk asymmetry, along with materiality, coordination cost, and the dilution of brand responsibility across so many functions of the incumbent’s organization that its original point of view erodes. I saw versions of all of this at AB InBev.

The counterintuitive part is that nobody in that chain has to behave badly for the initiative to ultimately fail. The analyst is right to assume substitution and the brand manager is rewarded for avoiding a potential miss. Added up, those defensible decisions produce a margin-rich, category-poor company that gets caught flat-footed when something like prebiotic soda starts to sell.

What survives the process is renovation: new flavors, sizes and pack configurations of products whose incrementality nobody has to prove, because the base already exists. Those launches often succeed on their own terms but rarely produce a category.

A founder works under different accounting. There's no core brand to cannibalize and no hurdle rate inherited from a mature business. If the product fails, the founder may lose everything, but the loss falls on the founder and a few investors and never appears in anyone's performance review. What comes out of that arrangement is a clean read on incremental demand: a group of people who found a product, paid for it, and came back.

What the record shows

Functional and energy drinks account for seven of the twenty-seven exits above $500 million in our set – from only fourteen total deals in the category. That pattern fits the review-board problem, since a new drink category is exactly the kind of uncertain bet a large beverage company has trouble greenlighting before an outside party begins proving it in the marketplace. The set shows where the big checks went but it can't, on its own, show why.

Bar chart: acquisitions in the First Run record by category, with known acquisition value. Snacks lead on deal count (24); functional and energy drinks lead on dollars ($18.7B across 11 priced deals).

Competition among buyers adds a second motive. Beverages especially come down to a few companies that watch each other closely, and a proven, independent brand left on the market is one a rival can buy. Coca-Cola took a stake in Monster in 2015, and PepsiCo bought Rockstar five years later. PepsiCo already owned Gatorade when Coca-Cola paid $5.6 billion for the rest of BodyArmor. Some of what an acquirer pays for is keeping the brand away from a rival, which helps explain prices that look generous on the target's own numbers.

Only seven of the twenty-seven largest exits still sold mainly through natural channels when they were bought. Most had already crossed into conventional grocery, convenience or club. A Lincoln International banker calls units per SKU per store per week one of the most important metrics for a brand.

Eleven of the 155 companies in our set went to a buyer that already held a minority position, including five of the twenty-seven largest: KIND to Mars, BodyArmor to Coca-Cola, Bai to Dr Pepper Snapple, La Colombe to Chobani and Freshly to Nestlé. Some beverage brands reached their buyer through distribution first, as with PepsiCo distributing Rockstar for more than a decade before buying it. A minority stake is no guarantee of an acquisition, though. Mondelez's SnackFutures counts Hu as its only full buyout among disclosed investments, and General Mills overhauled 301 INC, its venture arm, in 2025. The stakes that converted often belonged to brands that already led their segment. For example, BodyArmor was second in sports drinks when Coca-Cola bought the 85% it didn't own.

RXBAR shows what the finished proof looks like. Two founders started it in 2013 with roughly $10,000 and no institutional capital. By 2017 it was projecting about $120 million in net sales, and Kellogg paid $600 million, around five times sales and 12 to 14 times projected 2018 EBITDA. Kellogg had every capability required to make a protein bar with a short ingredient list. What it could not do was produce four years of evidence that people would buy one at a premium and come back.

Price paid against revenue at sale
65 acquisitions with usable net, projected or acquirer-stated sales. Both axes logarithmic.
Scatterplot of 65 acquisitions, price paid against revenue at sale, both on logarithmic scales, with reference lines at 1, 2, 3 and 5 times revenue. Most deals fall between one and five times revenue; larger brands tend to sell at higher multiples. Labeled: RXBAR, about 5 times; Alani Nu and Bachan's above 3 times; Soylent and Navitas Organics below 1 times. Median multiples: Under $50M revenue 2.0× (19 deals); $50M–$250M revenue 2.3× (33 deals); $250M revenue and above 3.0× (13 deals).
Median price as a multiple of revenue
2.0×
Under $50M revenue
19 deals
2.3×
$50M–$250M revenue
33 deals
3.0×
$250M revenue and above
13 deals
Source: First Run research. Includes acquisitions with a publicly available enterprise value and net, projected or acquirer-stated sales; three of the prices are press estimates. Excludes retail, scanner, gross and out-of-date sales figures.

What the record hides

Under the SEC's Rule 3-05, a public acquirer generally has to file the acquired business's financial statements only when the deal is significant to it, meaning it exceeds 20% on at least one of three tests. An emerging brand rarely comes close to that line against a PepsiCo or a Mondelez, so a small acquisition leaves a much thinner mandatory record, and whether the price shows up anywhere depends heavily on how big the deal is for that particular buyer. When we went looking specifically for priced exits under $100 million, most of the prices we found (16 of 21) sat in the SEC filings of the buyers, nearly all of them smaller public companies such as Laird Superfood, New Age Beverages, Hain Celestial and B&G Foods. A $40 million brand can matter to Laird, so its price lands in a filing. Bought by PepsiCo, the same brand is a rounding error. A $1.95 billion purchase is different again: it tells investors the acquirer is buying growth, so the number goes in the release.

Private equity buyers disclose least of all in our set. Seventeen of their 18 deals carry no price, and 98 of the 99 deals with a price went to corporate buyers. That second figure describes who announces prices. It can't tell anyone how often private equity is the buyer.

Across all 155 deals, 56 carry no price at all and seven more rest on press estimates. Over sixteen years, the range between $25 million and $100 million holds 26 priced transactions, too few to support a median anyone should act on. Capstone Partners' sector reports carry the same limitation in a qualifier most readers skim past: their size distributions cover disclosed deals. About half of the disclosed deals in its late-2025 read were below $100 million of enterprise value, in the band that discloses least.

The clearest evidence comes from a single year. Our first pass, which collected high-profile deals across all sixteen years, happened to include four acquisitions from the twelve months through September 2026, and all four had published prices. When we then went through that year's trade press deal by deal, logging every acquisition rather than just the notable ones, we found 24 more. Only two came with any price, and one of those is a press estimate. Quiet deals turn up only when someone goes looking for them, and a record assembled the usual way fills up with the famous ones.

A founder reading trade coverage absorbs a distribution that does not exist. He concludes that brands get acquired at half a billion dollars or not at all, and he raises capital calibrated to that belief. An investor reading the same coverage underwrites the same phantom distribution. Both are reasoning from a sample assembled by the communications departments of the acquirers.

The market under the headlines runs deeper. The largest strategics write the biggest checks, mostly for brands that are already big; among the exits above $500 million that reported usable revenue, the median was about $340 million at sale. Mid-size strategics like Flowers, Marzetti, Celsius, Ferrero, Barilla and Utz have been active buyers of founder-built brands, taking Simple Mills, Bachan's, Alani Nu, and Goodles among others. 

Private equity is busier than the priced record suggests. In our comprehensive search of the last twelve months, 13 of the 28 acquisitions went to private equity firms, and none of them disclosed a price. The only number in circulation amongst the PE deals, for Good Culture, is a press estimate. Capstone Partners counted between 191 and 301 food-sector transactions a year from 2020 through 2025. A handful of large announcements take most of the attention, and the rest leave much of the middle difficult to measure from public sources. The takeaway is that these exits happen far more often than the priced record suggests, whatever they were worth. An undisclosed price could hide a $15 million sale or a $400 million exit.

What we look for before the proof exists

Acquisition data looks backward. It shows what the proof looked like once someone produced it. Seed investing has to work earlier, determining which young companies are likely to produce that proof based on their earliest traction and behavior.

So the decision at First Run starts with the business, not with who might buy it someday. We care about strong margins and customers who come back. We look for something in how the product is made, sourced, or sold that is structurally hard to copy – something an incumbent wouldn't volunteer to take on and another startup can't shortcut by raising more money and spending around it. We also think deeply about whether early growth reflects a durable need or a trend/diet having its moment. The two can look similar in a company's first few years, and the difference tends to become obvious only with time. A trend-chasing investor and a cautious brand manager at a big food company are waiting on the same thing: someone else's evidence that the category works. We look for the earliest, thinnest version of that evidence, and the key is discerning which markers will carry the brand to fifty times its current size.

The acquisition record adds one more lens. A large company could make a similar version of most of the products we see, often fairly quickly. The better question is whether a competent, well-funded team inside that company would have chosen to build and launch it, and kept at it, before the demand was obvious. A yes makes the road ahead very hard, because the incumbent that kills interesting products approves defensive ones quickly. A no, earned because the founder committed to something a large organization would never volunteer for, gives the brand a reason to exist and eventually a reason to be bought.

We aren't looking for companies built to be acquired. We're looking for good businesses, run by founders who are accumulating evidence of demand that the strategic's own process is unlikely to produce first.



Sources

Jack Hamrick
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