India’s retail and consumer sector is entering a phase of measured recovery, with deal activity rebounding even as capital turns sharply selective. The sector logged 146 deals worth about USD 1.5 billion in the first quarter of the current year (2026), marking a 21 per cent rise in volumes but a steep 60 per cent drop in value, according to the Grant Thornton Bharat Dealtracker.
The divergence signals a clear shift away from large-ticket bets towards smaller, strategic transactions, with investors prioritising profitability, premiumisation and brand-led growth over scale. Activity remained concentrated in fast-moving consumer goods (FMCG), food processing and personal care, while private equity continued to anchor deal flow through mid-sized, growth-stage investments.
The report highlights a widening gap between resilient deal activity and compressed deal values, with momentum supported by domestic consolidation and increased outbound activity, even as investors remain focused on disciplined, strategic deal-making over large-scale bets.
Mergers and Acquisitions (M&A) Trends
On a broader level, volumes increased 21 per cent from 120 to 145 deals, while deal values declined 59 per cent from USD 3.4 billion to USD 1.4 billion. When it comes to M&A, the activity strengthened in volume terms in Q1 2026, with 40 deals valued at USD 358 million, reflecting an 18 per cent increase in volumes from 34 deals in Q4 2025. Even in M&A, there was a 33 per cent decline in values from USD 532 million.
The report pointed out that activity remained concentrated in food processing (13 deals), personal care and FMCG (18 deals), with a clear focus on portfolio expansion, premiumisation and capability building.
The top M&A deals of the quarter were Hindustan Unilever’s acquisition of a 49 per cent stake in Zywie Ventures for USD 90 million and Cupid’s 12 per cent stake in Baazar Style Retail for USD 37 million. In personal care, the biggest deal was Marico South-East Asia Corporation’s 75 per cent stake in Skinetiq Joint Stock Company. Marico dominated the FMCG and food processing segments as well with the acquisitions of 93 per cent stake in Zea Maize- 4700BC popcorn for USD 25 million and 60 per cent stake in Cosmix Wellness for USD 25 million.
“Personal care emerged as a standout segment, attracting a fair share of capital, led by marquee transactions and continued investor interest in science-backed, ingredient-led and premium beauty brands. The segment is undergoing a structural shift from mass to efficacy-driven and specialised offerings, with direct-to-consumer (D2C) brands scaling through omnichannel strategies,” Naveen Malpani, Partner and Consumer Industry Leader, Grant Thornton Bharat LLP, pointed out in the report.
While personal care topped M&A value at USD 155 million, the report added that retail tech and consumer services remained relatively subdued, with cautious participation from acquirers. Consumer durables and electronics also witnessed limited activity, reinforcing the broader trend of caution in discretionary segments.
Private Equity (PE) Landscape
In PE, the quarter saw steady deal flow but more calibrated capital deployment, with investors shifting towards mid-sized, growth-stage investments and smaller ticket sizes. Activity remained resilient in Q1 2026, with 105 deals valued at USD 1.1 billion, marking a 22 per cent increase in volumes from 86 deals in Q4 2025.
On the other hand, values declined sharply from USD 2.9 billion to USD 1 billion, marking a dip of 64 per cent. FMCG and food processing remained key value drivers, supported by strong deal flow and continued investor conviction. Textiles, apparel and accessories clocked the highest number of deals (22) in the quarter.
The top PE deals of the quarter were General Atlantic’s acquisition of a 7 per cent stake in Balaji Wafers for USD 278 million. In food processing, Apax Partners’ USD 167 million investment in Fresh Food (India) topped the charts, followed by USD 70 million investment by 360 One Asset in Iscon Balaji Foods.
Personal care and consumer electronics saw more selective investments, reflecting a calibrated approach with smaller ticket sizes, as highlighted in the report. The top five M&A and PE deals accounted for 57 per cent of total deal value. Beyond traditional dealmaking, digital commerce is also reshaping where capital flows.
Rising Stature of Ecommerce
Ecommerce and emerging consumer brands continued to attract funding, particularly in digital-first and health-focused segments, with deals such as Swish (USD 38 million) and The Whole Truth (USD 51 million). India’s ecommerce market is projected to reach USD 250 billion by 2030, nearly tripling from about USD 90 billion today, according to a joint report by Google and Deloitte. The report highlights a structural shift in online consumption, with shoppers moving away from linear search-led purchases to a continuous cycle driven by discovery, validation and faster fulfilment. This is precisely why investors are backing digital-first and quick commerce-led brands.
Growth will be led by Gen Z consumers, with the 220-million cohort expected to contribute 45 per cent of total online spending by the end of the decade. The expansion will be further supported by 150 million new users entering the digital economy and a rise in per capita spending.
Within ecommerce, the rise of quick commerce is giving the new-age brands a new platform to reach consumers more efficiently. A report by Bain and Company, written in collaboration with Flipkart, revealed that while traditional e-retail remains core (over 80 per cent of overall e-retail market), quick commerce in India has doubled annually over the past two years and is projected to reach USD 65 to USD 70 billion by 2030.
Quick commerce is projected to contribute 45 to 50 per cent of incremental e-retail GMV over the next five years, the ‘How India Shops Online 2026’ report added.
Shifting Trends In India’s Retail Industry
Consumer health and wellness trends are gaining the attention of food and beverage companies. Around 90 per cent of food and beverage companies are investing more in products directed at consumers’ health and wellness preferences, as per a separate report by Deloitte.
The ‘2026 Consumer Products Industry Global Outlook’ report by Deloitte noted that 80 per cent of beauty and personal care (bpc) companies are making significant investments in artificial intelligence, robotics and automation to make their operations more efficient.
Even as categories fragment and digital acceleration reshapes markets, local brands now account for nearly 79 per cent of fast-moving consumer goods (FMCG) value share in Asia and continue to grow, as per a report by Wordpanel by Numerator (formerly Kantar). Ten years ago, local brands captured 74 per cent of FMCG spending and grew twice as fast as global players.
India’s FMCG industry is gearing up for its next wave of growth, as a report has highlighted that 40 per cent of all FMCG consumption in India is expected to take place through online channels by 2030.
A report by Rubix revealed that India’s consumer goods exports are gaining traction, with the export shares of companies like Dabur, Emami, Marico, and Tata Consumer Products, touching 20 to 35 per cent in FY2025 amid rising global demand. Exports of beverages and packaged foods grew at a healthy compounded annual growth rate (CAGR) of 16 per cent and 13 per cent, respectively, from the financial year 2022 to 2025.
As the sector recalibrates, the outlook points less to a slowdown and more to a structural reset in how capital engages with consumption. With premiumisation, health-led categories and digital-first brands continuing to expand, deal momentum is likely to remain steady, but increasingly selective. |
