Consumer Products M&A update: Q2 2017

Retailers and restaurants alike are working to find the right balance between online and physical customer experiences. Meanwhile, specialty waters and ready-to-drink tea, coffee, and probiotic drinks are bringing strong growth to the functional beverages market. This Consumer Products M&A update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the Consumer Products industry.

Consumer Products trends

  • Pop-up shops gain traction1: The pop-up store, a temporary use of physical space to create long-term impressions with potential customers, has become a go-to-market strategy for retailers looking to extend brand awareness and introduce new products. Pop-up stores employ a “here today, gone tomorrow” tactic, creating a “fear of missing out” aspect for potential customers. In 2017, pop-up stores are expected to contribute $50 billion to the total retail industry’s annual sales of $4.5 trillion.
  • Back to brick-and-mortar2: Major online retailers are pushing to expand their presence in-store, realizing that the ideal shopping experience requires a certain level of physical presence. Brick-and-mortar stores are seen as great marketing vehicles that boost sales for their respective online stores. Amazon, Warby Parker, Bonobos, and Casper are just a few companies that have opened physical stores in the past two years.
  • Online ordering3: While in-person visits to restaurants are declining, online orders have been a boon to the industry. Orders placed online now exceed telephone orders, and many restaurants are scrambling to rethink their services, the layout of their restaurants, and how they deploy their staff. McDonald's, Red Robin, and Denny’s are testing online ordering platforms while Panera is adding 10,000 delivery jobs in 2017.
  • Functional beverages4: Specialty sparkling, mineral, and flavored waters have been driving strong growth in the functional beverages market, which surpassed carbonated soft drinks this year to become the largest beverage segment by volume. Specialty waters grew 75 percent between 2014 and 2016, and are expected to grow at this rate through 2020. Other beverages with strong growth include ready-to-drink tea, coffee, and probiotic drinks.

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1 No longer a one-off: How pop-ups became part of retailers’ core strategy,” DigiDay. June 15, 2017. 
2 “Pop-up stores gain traction as america's retail scene convulses,” Business Times. June 1, 2017.
3 “Restaurants face digital dilemma,” Fortune. June 9, 2017.
4 “H2-Organic: 25 percent of americans looking to purchase specialty water,” FoodDive. July 6, 2017.

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