CLEVELAND — Expect continued merger and acquisition activity in the food and beverage sector in the year ahead, said Alex Jacobs, managing director and head of Food and Beverage Group at KeyBanc Capital Markets.

"Following the passage of the 2017 tax reform bill, I expect a significant benefit to food companies and their shareholders," Mr. Jacobs told Food Business News. "Cash flow across the industry should be improved — but this benefit will not help, of course, the quest for growth. If the debt and equity capital markets remain neutral, I expect continued M.&A. activity as companies realign their portfolios and/or find cost reduction and efficiency opportunities."

In the past year, Conagra Brands acquired Angie's Boomchickapop, Nestle acquired Chameleon Cold-Brew and Kellogg acquired RXBAR.

The “quest for growth” was an overarching trend in the packaged food sector in 2017, driving leading companies to snap up specialty food and beverage start-ups, Mr. Jacobs said. Examples in the past year include Kellogg Co.’s $600 million acquisition of RXBAR, Nestle USA’s purchase of Chameleon Cold-Brew and Conagra Brands’ Angie’s Boomchickapop buy.

“Consumer behavior is changing slowly, but the effects are being felt from the largest branded consumer companies to retailers to distributors,” he said. “Consumers, especially younger consumers, are less brand loyal, are spending more in the perimeter of the store and are, I think, becoming more selective in what they buy.

“The excitement in the industry is coming from new, well-positioned brands, which are driving growth and sometimes creating new categories.”

In December, Hershey reached an agreement to acquire Amplify Snack Brands, and Campbell Soup entered into an agreement to acquire Snyder's-Lance.

On the other end of the spectrum are large-scale transactions, such as the pair of megadeals announced at the end of the year. In late December, The Hershey Co. reached an agreement to acquire Amplify Snack Brands, Inc. in a transaction valued at $1.6 billion, and The Campbell Soup Co. entered into an agreement to acquire Snyder’s-Lance, Inc. in a transaction valued at $4.8 billion.

“Is this the start of additional large-cap consolidation?” Mr. Jacobs mused.

Looking back on 2017, Mr. Jacobs added, “The primary surprise to me was the continued strength in the market and the longevity of the post-financial crisis economic expansion and bull market. If anything, 2017 was a continuation of prior trends — but magnified in intensity.”