Big food companies are breaking apart, with Kraft Heinz, Unilever, Hain Celestial, and Keurig Dr Pepper all splitting up. This trend is driven by a surge in private equity carve-out deals, which jumped from $19.37 billion to $23.72 billion in the first half of 2025.
Coca-Cola is investing $10 billion in US manufacturing through 2030, covering bottling plants, production facilities, and distribution centers across at least eight states. This investment includes expansions of Fairlife plants in Michigan and New York.
GLP-1 Adoption Impacts Food Demand
GLP-1 adoption has reached 11% of US adults, up from 3% in 2024. This shift is having a significant impact on food demand, with users consuming 700 fewer daily calories and reducing their intake of processed foods and sugary drinks.
As a result, $73 billion in global food brand value is at risk, with confectionery and savory snacks taking 53% of the impact. Brands such as Nestlé, Conagra, and Danone are repositioning to meet the changing demand.
Inflation Masks True Costs
Despite a reported food inflation rate of 1.3%, manufacturers are facing significant cost increases. Diesel prices rose 77.8% year-over-year, while grain costs jumped 17.7% and oilseeds were up 15.8%.
These increased input costs are being absorbed by manufacturers, rather than being passed on to consumers. However, this difference between input costs and consumer prices is not sustainable in the long term.
Long-term Commodity Threats
A longer-term commodity threat is building, with the UK’s Food and Drink Federation warning that food inflation could reach 3.9% by December 2026 and 6.4% by July 2027. El Niño risks are also adding to the pressure, with analysts forecasting a 14% drop in global agricultural output over two years.
Rice is particularly at risk, with 26% of production threatened. Raw sugar also saw its largest monthly gain since October 2010 in August.
Brands without clear functional differentiation or a compelling value story are at risk. Premium and value brands are growing, while mid-market brands are losing shelf position. Private label sales are also on the rise, with Walmart’s Bettergoods approaching $500 million in first-year sales.
