Praveen Paramasivam

(Reuters] – U.S. packaging-food companies in niche markets are attractive targets to larger players, such as Kraft Heinz(NASDAQ:) or Mondelez ($NASDAQ:), who want to diversify their product offerings in a highly competitive marketplace.

Many early investors are tightening their purse strings due to rising interest rates and the economic impact of the pandemic, forcing several smaller companies to consider M&A as the next viable step.

Charles Coristine is chief executive officer of LesserEvil popcorn and mini cookies manufacturer.

PetPlate said that bankers have called PetPlate more than usual in relation to potential takeovers this year.

Gertrude Allen, PetPlate CEO said that they are approached by strategic banks about once every week.

Above Food, an American manufacturer of plant-based foods, said that it expected to get more enquiries about potential takeovers this year due to current trends.

According to CB Insights data, deal-making in America’s food and drink sector rose 18% over the first three months, even though 2021 was a record year in terms of mergers and acquisitions.

Arun Sundaram, CFRA Research Equity Analyst said: “Now that balance sheet valuations are down and have been restructured, it is possible for larger packaged foods companies to pursue bolt-on acquisitions or large-scale acquisitions.”

Mondelez, a Toblerone manufacturer, announced earlier this week that it will spend $1.3B for Grupo Bimbo’s Mexican confectionery company, Ricolino. This is its second-largest deal of the year.

Meanwhile, Hershey, which acquired Lily’s and Dot’s Pretzels last year for $1.2 billion, told Reuters that M&A would continue to play an important role.

“The world’s biggest food businesses must constantly reinvent themselves,” Jonathan Yoni Regev, Farmer’s Dog CEO said. And probably one of the best ways to do that is through M&A,” Farmer’s Dog CEO Jonathan Yoni Regev said.