As the food and beverage industry looks ahead to 2026, optimism is returning, albeit selectively. Consumer demand remains resilient, and profitability will be determined by policy impacts, operational discipline, margin clarity, and capital strategy. For founders and leadership teams, expectations of robust mergers and acquisitions (M&A) activity and historic generational wealth transfer are shaping how value is perceived both inside and outside the business. On the consumer side, changing preferences and behaviors will create both opportunities and challenges for business owners. In this outlook, we highlight four themes that will shape stakeholder decisions in 2026.
1. Understanding cost drivers and profitability
Margin pressure isn’t new in the industry, but the level of scrutiny in 2026 will be higher. Leading companies are moving beyond top-line gross margin and focusing on unit-level and channel-level economics. These five cost areas will differentiate the strong performers:
- SKU and customer profitability. True profitability requires understanding margins after trade, freight, manufacturing complexity, shrink, and deductions. It’s critical to understand which SKUs and customers actually create value.
- Cost to serve by customer and channel. Profitability is shaped by order frequency, fulfillment complexity, service levels, and returns — not just product margin. Leaders quantify these drivers to identify where complexity destroys value and where differentiated service pays off.
- Trade spend and deductions. Trade can drive velocity or quietly erode margins. Companies that connect planning, accruals, deductions, and ROI will outperform peers.
- Manufacturing and supply chain economics. For brands reliant on co-manufacturers, economics are often driven by yields, changeovers, minimums, and obsolescence risk — not just per-unit pricing.
- Pricing and pack architecture. Margin improvement is increasingly structural: optimizing pack sizes, channel-specific pricing, and promotion depth can improve contribution margin without sacrificing demand.
Profitability is no longer just a result — it’s a capability. The ability to measure and respond quickly is becoming a competitive advantage.
2. A strengthening M&A market — with a higher bar for quality and readiness
2026 M&A activity in the sector is expected to show improvement relative to 2025, with investors remaining disciplined, though facing pressure to deploy capital and identify opportunities to acquire growing assets. Both strategic buyers and private equity are active; however, investment standards remain tighter than in prior cycles. Growth alone is no longer enough — buyers are also focused on quality, durability, and preparedness.
For companies considering an exit or capital infusion in 2026, here are five questions to ask to help ensure maximum stakeholder value.
- Margin sustainability: Are margins supported by repeatable economics or driven by temporary pricing actions?
- Trade spend governance: Is trade disciplined, measurable, and well-accrued? Or is it used as a catch-all to manage the P&L?
- Supply chain resilience: How exposed is the business to co-manufacturer concentration, ingredient volatility (both on pricing and availability), and tariff risk?
- Channel mix clarity: Do management teams understand true profitability across various sales channels, such as retail, DTC, club stores, and food service?
- Financial discipline: Are your forecasting, close processes, and reporting strong enough to support a transaction?
Addressing these matters well in advance will provide your company with an advantage when going to market.
3. Tax planning spotlight: Section 1202 qualified small business stock (QSBS)
For founders and early investors in food and beverage companies, QSBS remains one of the most powerful — and most misunderstood — tax planning opportunities heading into 2026.
When structured and maintained correctly, QSBS can allow eligible shareholders to exclude up to 100% of federal tax on the sale of qualifying stock, subject to statutory limitations. Additionally, many states also allow for gain exclusion under Section 1202, making the potential overall savings significant. As transaction activity increases and partial liquidity events become more common, QSBS is increasingly influencing entity structuring decisions and exit timing.
Why QSBS matters
Many food and beverage businesses naturally fit the profile of potential QSBS issuers. They’re:
- Domestic C corporations.
- Operating companies rather than investment vehicles.
- Founder-led brands in early or mid-growth stages.
It’s important to note that qualification isn’t automatic, and eligibility can be compromised as companies scale.
Key QSBS considerations for growing companies
If QSBS is a potential strategy for you, pay careful attention to the QSBS eligibility criteria as your company grows.
- Entity structure and original issuance matters: QSBS applies only to qualifying C corporation stock. Conversions from pass-through entities may still qualify, but timing, valuation, and documentation are critical. Additionally, Congress casts a wide net in disqualifying stock that’s issued shortly before or after a redemption of stock. This disqualifying redemption is a common trap for taxpayers.
- Asset thresholds and active business requirements: Balance-sheet growth, acquisitions, or changes in business activity can affect eligibility if not monitored carefully. After July 4, 2025, the gross assets of the corporation must be under $75 million immediately after the issuance.
- Holding period and liquidity timing: QSBS benefits generally require a minimum holding period that can influence the timing of sales, recaps, and partial liquidity events. After July 4, 2025, the stock must be held for at least three years before the taxpayer has any gain exclusion under Section 1202.
- Transaction structure implications: QSBS often favors stock sales, creating negotiation dynamics that are best addressed before a letter of intent is signed.
QSBS works best when considered early and intentionally, alongside long-term exit planning. The difference between qualifying and not qualifying can materially change your after-tax outcomes. Failed QSBS eligibility is often attributable to founders that assume QSBS eligibility without formal analysis, restructure too late in the growth cycle, introducing nonqualifying activities or assets unintentionally, or lack documentation needed to support eligibility. If you’re considering QSBS, reach out to your advisors now to discuss eligibility criteria and a structure that works best for your circumstances.
4. Wealth management and the coming generational transfer
For many founders, 2026 marks a pivotal moment where business growth, transaction readiness, and personal wealth planning converge. As baby boomers continue to retire over the next decade, unprecedented amounts of wealth will transfer between generations. With proactive planning, owners and their families can thoughtfully structure transitions to preserve value, enhance outcomes, and manage tax exposure. Key considerations include:
- Aligning business and personal goals. Decisions on exit timing, reinvestment, and diversification directly influence capital structure and transaction strategy.
- Preparing the next generation. Successful transitions often include early exposure to financial fundamentals, clear governance structures, and intentional leadership development — not just estate planning documents.
- Planning for flexibility, not just an exit. Explore partial liquidity events, dividend strategies, minority investments, or trust-based ownership structures that allow for control and optionality.
When business strategy, tax planning, and wealth planning are aligned, decision-making becomes clearer, and transitions are smoother — financially and personally.
Our Plante Moran Wealth Management team members can help guide business owners on their personal financial path through business transitions and the impact of a transaction to their personal wealth. We’d be happy to put you in touch with our colleagues as we collectively help you navigate solutions for your business and personal life.
A holistic view of value creation in 2026
In 2026, value creation in food and beverage and consumer products extends well beyond growth or headline multiples. Amid shifting consumer behavior, evolving policy priorities, and supply chain pressures, owners can position for successful exits by demonstrating operational discipline and a credible growth runway. A future‑focused approach today helps move faster, reduce risk, and preserve value — at exit and across generations.
