How Consumer Brands Are Unwinding a Century of Growth Through Portfolio Surgery

While everyone watches for the next big acquisition, the smartest companies are getting smaller on purpose

The headline grabbed attention: Mars acquires Kellanova for $39.5 billion. It was 2024’s largest consumer products deal, a classic consolidation play that made perfect sense. Mars strengthens its position in snacks. Kellanova’s brands get more scale. Shareholders get paid. The business press declared it a new era of M&A activity.

What they missed was the more interesting story happening in the footnotes: what Mars would do after the deal closed. Because the real action in consumer goods isn’t about getting bigger—it’s about getting focused. And that means selling off pieces that don’t fit, even if they’re profitable.

The Portfolio Purge

Unilever announced in March 2024 that it would spin off its entire ice cream business, including Ben & Jerry’s and Magnum. Not because ice cream wasn’t making money—Ben & Jerry’s remains a cultural icon with loyal customers. But because Unilever decided that ice cream didn’t share distribution, manufacturing, or R&D synergies with its other businesses. It didn’t fit the “Growth Action Plan.” So it had to go.

J.M. Smucker divested Cloverhill and Big Texas brands in January 2025, along with select private-label products. The company had just acquired Hostess Brands in 2023 for $5.6 billion. Now it was shedding assets to focus on what it just bought. Constellation Brands sold Svedka vodka to refocus on premium spirits. Kimberly-Clark acquired Kenvue for $48.7 billion, immediately triggering questions about which brands would be deemed “non-core” and quietly shopped to private equity.

This isn’t crisis management. This is strategy. And it’s accelerating.

Why Companies Are Choosing to Get Smaller

The arithmetic is straightforward. Consumer products companies have spent decades assembling sprawling portfolios through acquisition. The theory was simple: more brands meant more shelf space, more negotiating leverage with retailers, and more opportunities to cross-sell. Economies of scale would drive down costs. Shared distribution would improve margins.

That worked when grocery stores were the primary distribution channel and brand loyalty was stable. But consumer behavior has fragmented. E-commerce has changed distribution economics. Direct-to-consumer brands have proven you don’t need a giant corporate parent to reach customers. And private equity has created a liquid market for mid-sized brands, making it easier than ever to sell pieces of your portfolio.

The result: many large consumer goods companies now look at their portfolios and see complexity rather than synergy. Margarine doesn’t share manufacturing with shampoo. Frozen pizza doesn’t benefit from the same R&D as cleaning products. And trying to manage fifty brands across ten categories means nobody gets enough attention or investment.

So companies are carving themselves up. But they’re calling it “strategic repositioning” rather than admitting they overpaid for acquisitions that never delivered promised synergies.

The Private Equity Angle

Private equity loves this trend. Divestitures accounted for an increasing share of consumer M&A even as overall deal value declined post-2018. In a recent survey, 60% of consumer products M&A practitioners said they expect to sell assets within the next three years—significantly higher than the 42% across all industries.

Why? Because private equity firms know how to extract value from “stranded” brands. They buy divisions that large companies consider non-core, cut corporate overhead, focus the management team, and either grow the business or flip it to another buyer. The brand that was languishing in a conglomerate’s portfolio suddenly becomes someone’s entire growth strategy.

This creates a curious dynamic. Big companies shed brands to simplify operations and satisfy activist investors demanding better margins. Private equity buys those brands, runs them for a few years, then looks to sell—often back to another strategic buyer who thinks this time they can make the consolidation math work. The brands get passed around like trading cards, each transaction generating fees for bankers and consultants.

The Premium Pivot

There’s a second trend layered on top of portfolio simplification: the flight to premium. Consumer spending has bifurcated. Higher-income consumers are trading up for quality and health benefits. Lower-income consumers are trading down to save money. The middle is hollowing out.

Smart companies are following the money upmarket. Molson Coors bought Blue Run Spirits—a high-end bourbon brand—as its first spirits acquisition. Campbell Soup acquired Sovos Brands to access better-for-you categories. PepsiCo paid $1.5 billion for poppi, a prebiotic soda brand with a fraction of the revenue but strong growth in premium segments.

This isn’t altruism. It’s recognition that volume growth in traditional categories is stagnating. Americans are drinking less soda, eating less frozen food, and becoming more selective about packaged goods. Premium positioning allows brands to charge more while appealing to consumers who are willing to pay for perceived health benefits or superior ingredients.

The irony is that “premium” often means smaller portions, simpler ingredients, and more expensive packaging—all of which cost more to produce but can command higher price points if marketed correctly. It’s a bet that certain consumers will pay $7 for a healthier snack instead of $3 for the conventional version.

The GLP-1 Shadow

Nobody wants to say it out loud, but weight-loss drugs are changing the math for food companies. A BTIG survey found that 70% of GLP-1 users reported visiting restaurants “less” or “much less” frequently. They’re cutting back on soda, pizza, and burgers. EY-Parthenon estimates that GLP-1 adoption could put a $12 billion dent in snack food growth alone.

Currently, about 6% of U.S. adults use GLP-1 medications. Some projections suggest that could reach 13-21% within a decade. That’s a meaningful shift in total calorie consumption, especially for indulgent categories.

Most food executives are downplaying the impact publicly. Hershey’s CEO called it “mild.” PepsiCo’s CEO said they haven’t seen a “direct impact.” Mondelēz estimates GLP-1 drugs might cut volumes by 1.5% by 2035—a rounding error in their view.

But behind closed doors, product innovation teams are getting different mandates. Nestlé launched Vital Pursuit, a product line specifically targeting GLP-1 users. The writing is on the wall: if a significant percentage of your customer base is taking medication that suppresses appetite, you need to have a plan for what they’re going to buy when they do eat.

This adds urgency to the portfolio simplification trend. Why keep investing in a snack brand aimed at volume when the next decade might see declining per-capita consumption? Better to focus on brands that can command premium pricing in smaller portions, or diversify into categories less affected by appetite suppression.

What This Means for Marketing

If you work for a large consumer brand, portfolio restructuring creates both uncertainty and opportunity. Uncertainty because your division might be deemed “non-core” and sold to private equity. Opportunity because focused portfolios mean clearer mandates and potentially more investment in fewer brands.

For agency partners, it means your largest clients are in constant flux. The brand you’ve been working on for five years might get sold. The new owner might want to change everything—or might not have budget for agency services at all. Long-term relationships matter less when the company itself is constantly changing shape.

For smaller brands, it’s validation that you don’t need a giant corporate parent to succeed. In fact, you might be better off staying independent or partnering with a focused investor rather than getting swallowed by a conglomerate that will neglect you for a decade before spinning you back out.

The Bigger Picture

The dismantling of consumer brand portfolios is ultimately a story about hubris. For fifty years, growth meant acquisition. Bigger was always better. Synergy was assumed, even when it didn’t exist.

Now we’re learning that synergy is hard. Integration is expensive. And managing complexity is a tax on organizational effectiveness. The brands that thrived in conglomerates were often succeeding despite their corporate parents, not because of them.

This doesn’t mean consolidation is over. Mars-Kellanova is real. Kimberly-Clark-Kenvue is happening. But what comes after those deals might be just as interesting: the quiet dismantling, the strategic sales, the “portfolio optimization” that turns a $50 billion acquisition into a $35 billion company and a $15 billion cash payment to shareholders.

It’s not the story anyone celebrates. But it’s the one that’s actually happening.