2026 Perspectives in Private Equity: Consumer
This article is part of the “Perspectives in Private Equity” series.
While private equity’s appetite for consumer businesses cooled when interest rate hikes threatened to dampen consumer demand, there have been signs of renewed momentum building. In 2025, global consumer M&A deal values rose significantly even as overall deal volumes remained broadly flat, reflecting a shift toward larger transactions. We observed more activity in consumer products, with a particular focus on premium products with enduring brands and experiential retail, while the application of emerging technology and AI to map and respond to changing consumer behaviors is another emerging trend.
Trade Policies Impact Portfolios
A headline grabbing concern for private equity’s consumer-focused portfolio companies in 2025 was the dynamic tariff environment and the realization that evolving trade policy could significantly impact the bottom line.
Consumer brands importing products for sale in the United States had previously faced stable U.S. tariff and trade requirements, with any changes to trade or tariff policy being implemented with plenty of notice. As such, manufacturing decisions were based on relationships with producers and cost of production rather than the imposition or threat of imposition of additional tariffs based on the country of origin or type of product. Given the heightened emphasis on sourcing in tariff and trade policies, sponsors in a variety of sectors have recognized this is a very different landscape
We see sponsors investing in customs compliance competences and conducting wholesale reviews of procurement strategy, deepening their understanding of component provenance in order to fully understand current and potential tariff impact. Strategic planning and flexibility are required to ensure risks are mitigated and opportunities identified. The new administration’s trade policies can now make or break whether certain consumer products can be sold into the U.S. at a profitable margin, so companies need to elevate systems and processes to ensure resilience.
Underwriting Challenges Prevail
Even for the most seasoned investors in consumer products and services, the current landscape is not for the faint of heart. With higher interest rates and stubborn inflation impacting the cost of living at the same time as technological innovation is shifting consumer preferences, the threat of a prolonged period of economic uncertainty makes it difficult to build clear value propositions.
The U.S. Supreme Court will rule in the first half of this year on whether all of the President’s tariffs are lawful, but we can expect new tariffs to come in their place if judges rule some must be taken down. The backdrop is therefore one of uncertainty on numerous fronts and investors must factor numerous variables into investment decisions.
Lengthier and more granular due diligence processes have been a theme of 2025 and we certainly expect that to continue in the year ahead, as buyers seek to build supply chain flexibility and craft alternative sourcing strategies in light of tariffs. Valuation gaps between buyers and sellers also remain pervasive, highlighting the need for strong preparation and explaining longer deal timelines.
Emerging Technologies and AI
Despite these challenges, the potential for emerging technologies to transform retail businesses creates exciting opportunities for investors. Consumer businesses that leverage technology to improve operations, enhance customer experiences, or develop innovative products are increasingly attractive to private equity investors and are more likely to succeed in the current market environment. For example, the retail analytics market is expanding rapidly, driven by advances in AI and machine learning — the global retail analytics market was valued at approximately $10.4 billion in 2025 and is projected to reach $43.3 billion by 2034, underscoring the scale of the opportunity.
By making greater use of data analytics and technology solutions, private equity firms are strengthening their ability to map changes in consumer behavior and align and modify their portfolios in response to market trends. With funds increasingly deploying sophisticated tools to enhance sourcing and investment decision-making, there are also countless opportunities to deploy digital capabilities to drive value creation.
Retail businesses are investing in digitization across the board, for both commercial and operational effectiveness. Whether it is via e-commerce platforms, more personalized and targeted marketing and customer engagement, streamlined inventory management or product innovation, investors with the knowhow to create consumer value with tech will be the ones that boost customer loyalty and deliver sustainable long-term growth.
