Consumers are back, getting behind quirky deals and driving M&A flow

According to Ansarada’s FY2025 Deal Indicators Report, Australia’s consumer M&A activity held steady through the year, with activity up 13% year on year in the consumer discretionary segment and down 17% in consumer staples.

It was a reasonably similar story across the ditch: consumer discretionary was up 9% while the activity level in the consumer staples segment was entirely unchanged at 0%.

Consumer spending crimped by cost-of-living crisis

In the wake of the Covid crisis, both Australia and New Zealand have experienced challenging economic conditions. Rising interest rates and property prices have hit homeowners in the hip pocket and driven rents up. Meanwhile, sharp increases in the cost of energy, insurance, groceries and out-of-pocket healthcare expenses have dented consumer confidence across the board.

PwC’s Voice of the Consumer 2025 survey notes ‘financial pressures and economic challenges are top of mind for Australians, with 74% identifying rising living costs as a major concern, with 55% feeling financially insecure’.

There’s been a corresponding rush to value, with customers bulk buying, switching brands for better deals and engaging with promotions and loyalty programs in a bid to make scarce dollars stretch further.

In search of innovation

Against that backdrop, there’s been a marked focus on strategic acquisitions, of businesses that have identified profitable niches and made them their own, challenging economic conditions notwithstanding.

Swedish outdoor and transport leader Thule Group’s $A500 million takeover of Quad Lock in November 2024 is a case in point. Founded in Melbourne in 2011 by Rob Ward and Chris Peters, keen cyclists who spotted a gap in the market for a secure smartphone mount for mountain bikes, the company swiftly became the global leader in the performance category. Its range subsequently expanded to encompass phone mounts and wireless charging docks for motorcycles and cars.

With sales in around 100 countries, the bulk of them direct to consumers, the transaction reflected the current market appetite for innovative consumer products.

Betting on beauty

So did private equity firm Gauge Capital’s July 2024 acquisition of a majority stake in homegrown tanning, skincare and haircare minnow Coco & Eve, for in excess of $A100 million, via its Soleil Collective investment platform.

Founded in Bali just six years earlier by husband and wife team Emily Hamilton and Alexander Ostrowski, the brand is marketed as cruelty free and vegan. The company’s upmarket range has garnered a cult following from customers happy to pay premium prices for products with an ethical and sustainable focus.

Supply chain gains for pharmacy giant

At the top end of the market, notable transactions included the $A8.8 billion merger between franchise network giant Chemist Warehouse and pharmaceutical retailer and wholesaler Sigma Healthcare. Announced in December 2023 and finalised in February 2025, following clearance by the ACCC, the deal evidenced the market’s healthy interest in premium Australian retail brands.