NEW YORK — US food industry analysts expect 2026 to be mostly a redux of the sector’s challenging year in 2025, projecting flattish growth that could tip up or down amid noisy business, macroeconomic and political environments.

Makers of grain-based foods, in particular, may face added pressure this year. In tandem with the White House’s MAHA Commission, the recently released 2025-2030 Dietary Guidelines for Americans recommend lower grains consumption, and the US Department of Health and Human Services and US Department of Agriculture are pushing to classify refined grains as “ultra-processed foods.” Surging use of GLP-1 weight-loss drugs, now rolling out in pill form, also could further squeeze consumer demand for baked foods.

Still, analysts said, the affordability crisis stands as the chief obstacle to improved growth for packaged food companies, as their scramble to deliver more value hasn’t quelled shoppers’ outcry over high food prices.

“Broadly speaking, I remain very cautious on packaged food,” said Robert Moskow, an analyst at TD Cowen. “There’s a chance that headwinds that hurt 2025 could get worse in 2026. GLP-1 expansion is the most obvious thing that’s going to accelerate. There are going to be oral formats and probably more effort by the federal government to make it more affordable. The adoption rate in 2025 far exceeded what our internal estimates were. So I think that with companies exposed to snacking categories that have been benefiting for years from expandable consumption, the logic would be that it’s also compressible when people take these drugs and cut back on mindless munching.”

In its 2026 consumer staples outlook, TD Cowen forecast big food companies to generate organic sales growth of 1.5%, up from just 0.3% in 2025 but lower than the Wall Street consensus estimate of a 2% gain. Earnings-per-share growth is pegged at 2.5%, returning the sector to positive territory from a 17.3% EPS decrease last year.

Food and other consumer staples companies generally have sounded a subdued tone to investors regarding 2026 expectations, according to TD Cowen’s report. In an interview, Moskow called it a “struggle” to identify meaningful tailwinds that would energize growth for the packaged foods sector.

“The bull case would be that maybe all of those efforts to improve affordability last year by rolling back prices and narrowing price gaps to private label may help stabilize volumes,” Moskow said. “But my data does not indicate any kind of material improvement, or it indicates only a modest improvement in the volume decline trend. I’m still in negative territory.”

Arun Sundaram, an analyst at CFRA Research, expects the industry to tally low-single-digit organic sales growth this year. He said pricing likely will drive growth in the first half of 2026, while better balance between price and volumes should come by the second half.

“2026 is shaping up to be another challenging year for the packaged foods industry, though the setup looks different from 2025,” Sundaram said. “Price and mix growth should moderate as the industry laps prior price increases and steps up promotional activity. By contrast, volumes should begin to improve as companies reinvest in price and innovation.”

Adjusting to headwinds and catching tailwinds won’t be easier in 2026, given the range of uncertainties food companies face, analysts said.

“2026 is going to be a little more of the same; the headwinds really haven’t dissipated,” said Mitchell Pinheiro, an analyst for Sturdivant & Co. “The primary headwind is a weakening consumer. And when I say weakening, I mean it’s bifurcated. The high-end consumer is fine, but the low end is definitely getting pinched. That’s why we’ve seen headwinds from a food manufacturer perspective. Margins get tighter when more of the sales are going through the value channels, mass and club. And store brands are strong.

“While the food companies all had taken substantial price increases to offset their costs, I think we’re now going to see a new round of increased promotional activity. So we have a lot of headwinds to margins and really nothing on the horizon to stimulate consumption growth.”

Analysts hold mixed expectations for 2026 about the impact of the Trump administration’s tariffs — a chief disruptor in 2025. While tariffs hiked costs and forced margin-protection actions, companies will be cycling that impact this year. Some may choose to pass through tariff costs they absorbed last year, but that could turn off consumers. A welcome sign came in November, when the administration ended tariffs for a range of agricultural/food commodities (notably coffee, cocoa and pasta). President Trump’s blanket tariffs may stand on shaky legal ground with the US Supreme Court.

Despite moderating, inflation hovers stubbornly above the Federal Reserve’s 2% target, and consumer attention remains fixed on high food prices. Tariff rollbacks and relaxed commodity costs (such as for coffee and cocoa) should help, but analysts noted food manufacturers must do more on pricing, especially with consumer anxiety over a softer job market and lackluster wage growth.

On the plus side, the One Big Beautiful Bill Act will bring tax cuts and more spending and investment dollars to consumers and businesses, with the latter also benefiting from the ability to write off expenditures for machinery, equipment and technology. The stock market, though volatile, has stayed robust into the new year.

“Macro headwinds remain, including GLP-1 adoption, MAHA-related policy scrutiny and SNAP restrictions,” Sundaram said. “That said, there are also meaningful tailwinds, such as stronger at-home eating trends, larger tax refunds this year and the potential for increased M&A, given a more constructive regulatory backdrop. With midterm elections approaching, we also expect the administration to lean into affordability-focused stimulus efforts, such as recent initiatives to cap credit card interest rates.”

In its “Volume Rebound Unlikely” 2026 outlook report, co-authored by Moskow, TD Cowen estimated that EPS for the large-cap food companies it covers fell 18% year over year for calendar 2025 but will rise 4% for 2026. That compares with a 6% EPS decline in 2025 and a 5% uptick in 2026 for covered companies in the overall consumer staples sector (including packaged foods, alcoholic and non-alcoholic beverages, and health and beauty care). Organic sales for consumer staples grew an estimated 1.3% in 2025 (versus 0.3% for food) and are forecast to increase 2.3% in 2026 (versus 1.5% for food).

EPS performance for the covered food companies, based on FactSet and TD Cowen data for 2025, ranged from down 36% for Hershey to up 2% for McCormick, the only one with a gain. EPS shrank by 25% for Conagra, 20% for General Mills, 18% for J.M. Smucker, 17% for Kraft Heinz, 16% for Mondelez and 10% for Campbell’s.

Of the eight companies, five — General Mills, Hershey, McCormick, Mondelez and Smucker — are on track to beat their estimated 2025 EPS this year, based on Wall Street’s consensus projections, while Campbell’s, Conagra and Kraft Heinz (slated to split into two companies) are expected to fall short, TD Cowen said.

Source: New York Stock Exchange

“US big food companies lacked exposure to the fastest-growing food categories in 2025: eggs, yogurt and fresh meat,” the TD Cowen report said. “Smucker benefited from growth in packaged coffee, McCormick from spices and seasonings, and Simply Good Foods (to some extent) from snack/nutrition bars. However, exposure to declines in sweet snacks, cookies/crackers, salty snacks, frozen dinners/entrees and lunchmeat proved highly challenging, especially for Conagra, PepsiCo and Kraft Heinz.”

Product categories posting year-over-year volume growth for the 52 weeks ended Dec. 27, 2025, included yogurt, spices and seasonings, frozen potatoes, fresh meat, refrigerated dough, RTD protein shakes, fully cooked meat, cheese, snack/nutrition bars, frozen vegetables, pizza and shelf-stable soup, according to NielsenIQ data from TD Cowen. Categories seeing volume declines were pasta sauce, processed meat, frozen appetizers, salty snacks, desserts, eggs, butter and spreads, condiments, frozen dinners and entrees, lunchmeat, RTD cereal, candy, packaged coffee, cookies and crackers, bread and sweet snacks.

Overall, big food companies’ portfolio reshaping efforts so far haven’t yielded the results, Moskow said.

“There’s been a lot of activity for sure, and for the most part, they’ve done it in a thoughtful way,” he said. “I guess where I’m surprised is that despite all the activity, the organic growth rates have gotten weaker, not better.”

Volume trend improvement remains “by far the biggest issue for food companies,” Sundaram noted.

“Volumes have been weak across the sector for roughly three years, driven primarily by cumulative price increases, but also by structural factors like GLP-1 adoption and shifting consumer preferences away from ultra-processed foods,” he said. “The positive is that 2026 should be a less inflationary year for packaged food companies. That matters because it allows companies to reinvest savings into price. In 2025, elevated commodity costs and tariffs made it difficult to do so. The recent removal of reciprocal tariffs on several food and agricultural products should provide relief this year.”

Packaged food companies are still struggling to make their products more affordable in the eyes of consumers, despite price breaks, price-pack architecture changes, and quality adjustments and reformulations, analysts said.

“It’s going to take longer to burn in the reality of these higher prices,” Pinheiro said. “It’s taking longer for consumers to adjust. I don’t think the level of promotional activity following these price increases has been as strong as in the past because there has been some rationality in trying to maintain margins.”

In a report last April, TD Cowen said the big packaged food manufacturers have maintained “unsustainably high margins” by lifting prices to offset post-pandemic inflation without making sufficient quality improvements. In response to consumer backlash, companies mostly just kept prices unchanged — absorbing higher costs — or they lowered prices to raise affordability, TD Cowen said in a December follow-up analysis. Those strategies “necessitated even harsher revisions to margins and EPS than we expected,” the report said.

Source: New York Stock Exchange

“The price-quality equation is still unfixed,” Moskow said. “It’s probably because of two reasons. One, a lot of those actions to improve affordability really meant keeping prices flat while the impact of tariffs and other inflation flowed through their numbers. When you look at what consumers actually paid for the big food brands in general, pricing was up 1%. That was less than the overall grocery store, but it was cold comfort for lower-income consumers looking for ways to get pricing down. So it wasn’t enough on an absolute basis to really excite consumers and bring them back to the categories.

“Secondly, on the other side of the equation, the quality upgrades just haven’t been brought enough or impactful enough. We counted 16 major initiatives in innovation. The majority of them failed to return the brands to positive growth.”

Brand investments made by food and beverage companies so far haven’t stabilized declining volumes, which remained at a negative 2% pace since the beginning of the year, according to TD Cowen. Of 16 investments — such as premiumization, reformulation and price cuts — made by companies including Campbell’s, Conagra, General Mills, Hershey, J.M. Smucker, Kraft Heinz, Mondelez and PepsiCo, just seven initiatives returned the brand to growth.

“That says to me that the rhetoric from the make America healthy again (MAHA) movement — the shift to fresher foods, the preference for fresher foods — is dominating consumer’s mindset and making it harder for brands that are just saying, ‘Hey, we’re making our mac and cheese cheesier,’” Moskow said.

Much of the packaged foods space needs additional price investment, Sundaram said.

“Many companies wanted to do more on price in 2025, but unforeseen inflationary pressures, particularly tariffs, forced productivity savings to be used defensively rather than passed through to consumers,” he explained. “We expect a more promotional environment in 2026, with those promotions largely funded by productivity savings, which should limit the impact on margins.”

Shoppers are still spending but trading down, seeking more deals and being selective on discretionary purchases, Sundaram said.

“We expect consumers to remain cautious in 2026, particularly if unemployment ticks higher or real wage growth moderates,” he said. “On the positive side, higher tax refunds and a broader policy focus on affordability could support sentiment and overall retail spending.”

In general, food manufacturers have “navigated tariffs reasonably well,” the CFRA analyst said, adding that the impact has varied widely depending on exposure.

“Looking ahead, 2026 appears more benign from an inflation standpoint,” Sundaram said. “The administration has already rolled back several agricultural tariffs, though Section 232 steel and aluminum tariffs remain a headwind for categories like canned foods. Importantly, companies will begin to lap many of these pressures, while other commodity costs have eased (e.g. grains, eggs). Labor/wage-related pressures have also eased.”

Rising public and government scrutiny of processed foods remains a headwind for the packaged foods industry, but the jury is still out on whether that will bring financial consequences this year, analysts said.

Last month’s release of the Dietary Guidelines for Americans raised recommended consumption of meat and other proteins, full-fat dairy, and fruit and vegetables but minimized intake of grain-based foods. The new Guidelines labeled refined grain foods like white bread, crackers, breakfast cereal, chips, baked sweets and pasta as “highly processed foods” and ignored the historical value of enriched/fortified grains.

This followed last May’s MAHA Commission report that singled out “ultra-processed foods” (UPFs) — highly processed grains, sugars and fats — as the main driver of chronic disease. And back in July, the HHS and the USDA requested public input to help set a uniform definition of UPFs. Also, the USDA has granted waivers to 18 states to exclude certain foods — candy, sugary beverages and, in some cases, highly processed sweet foods and ingredients — from being purchased with Supplemental Nutrition Assistance Program (SNAP) benefits.

Source: New York Stock Exchange

“The constant news flow of negative rhetoric is damaging to these big brands,” Moskow said. “You have these new Dietary Guidelines, and it’s unclear whether that in and of itself changes consumer behavior. But I think the more headlines that are out there reinforcing this vilification of processed foods and blaming processed foods for chronic disease problems presents a serious challenge to brand value.”

UPFs have shifted “from a background debate to a front-and-center policy and litigation risk,” Sundaram said.

“We expect pressure to intensify in 2026, particularly around marketing to children, labeling and ingredient disclosures,” he said. “That said, many companies are already acting proactively through reformulation, better-for-you innovation and an increased focus on attributes like protein, which should help mitigate longer-term risks.”

Consumers, too, have been migrating toward higher-protein foods and away from sugary, more processed items for several years now, Sundaram said.

“As a result, potential changes to the Dietary Guidelines may have less incremental impact on behavior than headlines suggest, though they could reinforce existing trends and influence product development priorities over time,” he said. “Many packaged food companies have announced reformulation plans, but we expect pressure to accelerate in 2026. In the near term, this likely brings higher complexity and costs, including R&D, supplier changes, and packaging or labeling updates.”

Food manufacturers are well along in refocusing on better-for-you offerings, Pinheiro noted.

“Even all your salty snack companies have better-for-you brands, and that’s where the growth tends to be,” he said, citing Utz Brands’ burgeoning Boulder Canyon brand. “Everybody has been moving in that direction.”

It has been a similar case for packaged bread companies, Pinheiro said, pointing to brands such as Flowers Foods’ Nature’s Own (clean label) and Dave’s Killer Bread (organic).

“White bread is viewed as ultra-processed, so their white breads in core big loafs are seeing pressure,” he said. “But they’ve converted, and a lot of people are buying. Dave’s Killer Bread is a billion-dollar brand. There are a lot of better-for-you breads, and they’re the ones that are growing, double-digit consumption growth.”

He added, “It might be a marketing opportunity for a lot of these companies. … And when you go clean, margins tend to go higher.”

Analysts agreed the rising use ofappetite-squelching GLP-1 medications— intensifying this year with the launch of lower-cost pill forms from Novo Nordisk and Eli Lilly — will impact food manufacturers, particularly makers of packaged foods. It’s just a question of how much.

“GLP-1 drugs remain a source of negative sentiment for packaged food stocks,” Sundaram said. “Most management teams have not yet directly cited GLP-1 adoption as a primary driver of weak volumes, instead pointing to pricing and cautious consumers. That could change as pill-based GLP-1 options roll out, increasing accessibility and convenience. Categories most at risk are impulse-driven, high-sugar and calorie-dense snacks, while relative winners should include protein-forward, portion-controlled and functional nutrition products.”

Households with a GLP-1 user reduce their spending on salty snacks, fresh baked snacks and cookies more than other food categories as the urge to snack fades, TD Cowen said in its 2026 outlook, citing studies by Numerator and Cornell University.

Source: New York Stock Exchange

TD Cowen projects the rollout of more oral formats to hoist new GLP-1 prescriptions above the current run-rate of 1.5 million per year to 2 million annually, or 0.75% of the adult population. The report said if GLP-1 users cut their intake of processed foods by 25% — assuming many are “super-users” of processed foods — then GLP-1 growth will create a 20-basis-point headwind to annual volume consumption for TD Cowen’s covered food companies.

“As GLP usage keeps increasing, you’ll see more attempts to introduce specific product lines targeted to GLP users who need more protein in their diets and more bone density,” Moskow said. “You’re already seeing a little, not a lot. Are they doing enough? I’m hesitant to say no, because I’m not sure whether doing a lot will be effective. There’s an opportunity out there to develop higher-quality food for GLP users.”

Government health coverage has expanded patient access to GLP-1s, which could push private insurers toward broader coverage, according to BofA Global Research’s “US Consumer Staples Year Ahead 2026” report.

“Until broader access is provided through commercial plans, we’d expect GLP-1s to have a minimal impact to food and beverage consumption,” BofA said. “Those paying out of pocket for these drugs tend to skew towards the high-income consumer, which does not overlap with the target demographics for companies within our food and beverage coverage, particularly center-store players General Mills, Conagra, Kraft Heinz, J.M. Smucker and Campbell’s.”

Nevertheless, a fast-growing group of US consumers will be exercising more portion control, Pinheiro said.

“It all comes down to consumption,”he said. “Population growth will notbe able to offset the declining consumption trends from GLP-1s. So it will be alonger-term issue, and obviously investors are very concerned about that.”

One needle mover for food manufacturers this year could be mergers and acquisitions, including divestitures, as they reshape their product portfolios with higher-growth brands and ferret out laggards to sharpen performance and make themselves more attractive to investors, analysts said. They noted that, for years now, the food sector has trailed growth in the broader market indexes fueled by technology, most recently the AI boom.

“These food companies have underperformed like it’s nobody’s business, and what’s interesting for the bigger companies, in particular, is the cost of capital is not that high,” Pinheiro said. “So the tailwind could be acquisition growth as far as just getting people more excited about this group, and I think that’ll be what wakes up the packaged food group for investors, the M&A.”

Source: New York Stock Exchange

Moskow described the food industry M&A outlook as “hard to predict” but said there are “some pretty significant split-ups happening,” referring to the breakups of Kraft Heinz and Keurig Dr Pepper. Kraft Heinz plans to split into two public companies, dubbed Global Taste Elevation Co. and North American Grocery Co., while Keurig Dr Pepper is acquiring JDE Peet’s to combine with Keurig and then spin off the merged business.

“I think particularly the Kraft one is designed to open up either one of those business units for a potential takeout or increase the attractiveness for a takeout,” Moskow said. “But as far as the timing for when that might happen, it could be years.

“The vast majority of M&A activity will still be big companies acquiring higher-growth emerging brands. There’s still a lot of portfolio reshaping that they want to do. I think the asking price from the sellers has been too high. Otherwise, they’d be doing more.”

Two big acquisitions were recently finalized: Mars Inc.’s $35.9 billion purchase of Kellanova (in December) and The Ferrero Group’s $3.1 billion purchase of WK Kellogg Co (in September). With those transactions, the two publicly traded Kellogg Co. spinoffs went private.

Other transactions in 2025 included Associated British Foods’ deal to acquire Hovis Group, Post Holdings’ purchase of 8th Avenue Food & Provisions (and subsequent sale of 8th Avenue’s pasta business to Richardson International), Hershey’s acquisition of LesserEvil, TreeHouse Foods’ purchase by a private equity firm, Bunge and Viterra’s completion of their long-awaited merger, Flowers’ closing of the Simple Mills acquisition and PepsiCo’s wrap-up of its Siete Foods purchase.

“We expect another active year for M&A,” Sundaram said. “Activity is likely to skew toward portfolio reshaping, including strategic spinoffs, divestitures and bolt-on acquisitions in faster-growing, better-for-you categories. Many companies are actively repositioning portfolios to gain exposure to higher-growth areas like protein.”

For center-store packaged food companies where volumes have been weak for over a year, investor attention will center on “how management teams plan to revive growth, whether through price investment, innovation, marketing or M&A,” he said.

“Sentiment is very weak due to soft sales, margin pressure and macro headwinds such as GLP-1 adoption, MAHA initiatives and SNAP cuts,” Sundaram said. “Much of this negativity appears priced in, with valuation multiples sharply lower and dividend yields elevated. That could attract investors, particularly if interest rates continue to decline in 2026.”