Co-Manufacturing in Food & Beverage: Where the Industry is Headed, and How Private Equity Should Play

The U.S. Food & Beverage co-manufacturing industry is at an inflection point. Three converging forces are reshaping who buys from co-manufacturers, what they expect, and how operators must compete: the explosive growth of emerging brands, the continued expansion of Private Label, and the increasingly selective outsourcing decisions of large CPGs. Together, these forces are creating a market that is larger, more fragmented, and more demanding than at any point in its history. The U.S. F&B co-manufacturing market surpassed $100 billion by 2023 and is assumed to have reached $120 billion in 2025, growing at two to four times the rate of the broader food industry.

By Ozan Ozaskinli, Ecehan Berk Pehlivanoglu, Jordy Lemus and Baris Emre Isik

We would like to thank the following contributors for sharing their perspectives, providing thoughtful feedback, and supporting the development of this white paper.

Their insights and practical input materially strengthened the content and helped ensure it reflects real-world experience.

Shari Matras, CPG Revenue Growth Strategist, CEO at BrandNext Partners

Brett Conradt, CPG Advisor & Investor, Principal at Charlotte Advisory Partners

David Skinner, Former Managing Director of James Skinner Baking Company, Founder & CEO at CPG Canary

Karl Schraer, Supply Chain Executive and Board Member

We are grateful for their time and support. The authors are solely responsible for the content of this paper, including any errors or omissions.

Executive Summary

The U.S. Food & Beverage co-manufacturing industry is at an inflection point. Three converging forces are reshaping who buys from co-manufacturers, what they expect, and how operators must compete: the explosive growth of emerging brands, the continued expansion of Private Label, and the increasingly selective outsourcing decisions of large CPGs. Together, these forces are creating a market that is larger, more fragmented, and more demanding than at any point in its history. The U.S. F&B co-manufacturing market surpassed $100 billion by 2023 and is assumed to have reached $120 billion in 2025, growing at two to four times the rate of the broader food industry.

This paper introduces a framework for understanding the resulting landscape: the co-manufacturing spectrum. On one end sit small-brand-focused co-manufacturers, agile operators built to support emerging brands with formulation development, flexible and small minimum order quantities, and high-touch service. On the other side sit large-brand and Private Label platforms, scaled operations built around efficiency, contractual rigor, and throughput. Most operators sit somewhere along this continuum, and the question of where to compete is among the most consequential strategic decisions in the industry.

The winners in this environment are not simply the operators with the most capacity. They are the co-manufacturers that have built efficient systems: pricing systems that monetize complexity rather than absorbing it as overhead; planning systems that turn high-mix production into a repeatable process; and quality systems that satisfy the demands of both emerging brands and Large CPGs and retailers. The shift from “selling machine hours” to “building an operating system for profitable complexity” is the central theme of this paper.

For private equity investors, co-manufacturing represents a compelling opportunity in the lower-middle and middle market ($50–300M+ enterprise value). Buy-and-build remains the dominant thesis in a sector where many targets are founder-owned businesses with aging owners. Our analysis of 100+ co-manufacturing companies and 32 acquisitions (50%+ PE-driven) indicates sustained deal interest in the space, with 2024 representing a high point in our sample. More recent market conditions, however, suggest a more selective deal environment rather than a broadly accelerating one. Multiples range from ~8x EBITDA for operational turnarounds to 12–14x for platforms with category-tailwinds, with most other scaled platforms clearing in the ~10–12x range when operational health and customer quality are credible. Scale alone does not earn a premium multiple, and already-built-out platforms often offer less forward value-creation upside than the headline print suggests. The key to generating returns is matching the fund’s operational capabilities to the right investment archetype: high-mix platforms reward commercial and systems-building expertise; scaled platforms reward lean operations and procurement discipline.

This paper is structured in seven sections. Section 1 examines the demand forces reshaping the industry. Sections 2 & 3 introduce the co-manufacturing spectrum and the rising capability threshold. Section 4 presents the operational playbook for co-manufacturers. Section 5 provides the investor playbook, including two primary investment archetypes and reference deal economics. Section 6 offers a practical diligence toolkit: a 20-question scorecard across five buckets designed to give PE deal teams a structured, repeatable method for evaluating targets. Section 7 concludes with the outlook for the industry and the characteristics of the platforms that will command premium valuations.

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