The Economics of CPG Right Now (Fall 2026)

U.S. consumer packaged goods entered fall 2026 with a split verdict: dollars up, units flat to negative. Circana reported that the U.S. retail food and beverage industry grew 2.2% in the first half of 2026, with volume growth flat and price/mix up 2.3%. The most recent read is thinner: retail food and beverage sales increased 0.2% during the four weeks ending August 29, while unit demand declined 1.8%, per Circana data reported by Chain Drug Review.

Our read: this is a share market, not a growth market. When dollars barely grow and units fall, an incremental unit is a transfer from another brand, and it gets paid for out of contribution margin — through trade, retail media, or both. The old escape hatch — list-price increases — is narrowing while demand is still negative.

BLS reported food-at-home CPI was 2.2% higher in August 2026 than a year earlier, with a 0.0% seasonally adjusted monthly change. USDA ERS reported the July 2026 print unchanged from June 2026 and 2.7 percent higher than in July 2025.

Dollars are up. Units are not.

The growth inside the H1 number was narrow. Circana reported price/mix growth of 2.3% landed at the lower end of its expected range due to uncertainty in fresh food pricing: fresh food rose 0.4% in price/mix versus a year ago while packaged food categories rose 3.7% as cost pressures continued.

Circana expects volume sales to remain flat through the balance of 2026 as strain on wallets persists and consumers grow more efficient in their spending. It forecasts U.S. retail food and beverage growth in the 2–3% range in 2027, closer to pre-pandemic averages of 2.5–3.5% and well below the nearly 7% CAGR between 2019 and 2024.

USDA ERS forecasts 2026 food-at-home prices up 2.5 percent, with a forecast interval of 1.7 to 3.3 percent. That 2.5 percent is slower than the food-at-home 20-year historical average rate of price increase of 2.6 percent. For 2027, ERS forecasts food-at-home prices up 2.1 percent, with a forecast interval of -5.7 to 10.5 percent.

Our read: a negative print sits inside that official 2027 interval, so a plan that needs 2–3 points of price is a bet on the top half of a wide range.

Price-taking stopped working

Hershey reported that second-quarter 2026 organic, constant currency net sales increased 3.6%, driven by net price realization of approximately 12 points. Volume declined approximately 8 points, primarily reflecting elasticity impacts in North America Confectionery and International, partially offset by growth in North America Salty Snacks.

Hershey also reported gross margin of 45.3% in the second quarter of 2026, compared to 30.5% in the second quarter of 2025, an increase of 1,480 basis points. Our read: margin repair and demand repair are different things. A gross margin can improve in the same quarter volume falls.

Kraft Heinz reported that second-quarter 2026 organic net sales decreased 1.3 percent versus the prior year period, with price up 1.3 percentage points and volume/mix down 2.6 percentage points. Operating income was a loss of $6.4 billion, driven by non-cash impairment losses of $7.4 billion.

Kraft Heinz is increasing its incremental investments by $100 million, to approximately $700 million in 2026. Its updated fiscal 2026 outlook for organic net sales, now down 0.5% to down 2.0%, includes an approximate 100 basis point impact from incremental SNAP headwinds.

Unilever is the counterexample. It reported H1 2026 underlying sales growth of 4.8%, with 4.2% volume and 0.6% price, accelerating in the second quarter to USG of 5.8% and 5.5% volume growth. North America grew 2.7% USG with 3.2% volume and (0.5)% price.

General Mills reported that full-year fiscal 2026 organic net sales were down 2 percent, due in part to weaker consumer sentiment and significant volatility that weighed on category volume growth and drove a higher share of consumer purchases on promotion.

Costs: one-time relief, structural tariffs

Following the Supreme Court's decision that IEEPA does not authorize tariffs, the U.S. Court of International Trade has ordered CBP to refund approximately $165 billion in unlawfully collected IEEPA duties, Skadden reported.

The mechanics matter as much as the ruling. Skadden reported that over 330,000 importers paid IEEPA duties across more than 53 million entries, and a potential government appeal could significantly delay the receipt of refunds.

The White House also set metals tariffs in an April 2026 proclamation: articles made entirely or almost entirely of aluminum, steel, or copper will pay a flat 50% on their full value, and derivative articles substantially made of steel, aluminum, or copper will pay a flat 25% on their full value.

Retail prices are diverging by category. USDA ERS reported beef and veal prices were 9.4 percent higher in July 2026 than in July 2025, and forecasts a 9.8 percent increase in 2026, with a forecast interval of 7.0 to 12.6 percent.

Sugar and sweets prices were 7.4 percent higher in July 2026 than in July 2025, primarily for candy and chewing gum, which includes most types of chocolate candy. ERS forecasts a 7.1 percent increase for 2026, with a forecast interval of 6.0 to 8.2 percent.

Nonalcoholic beverage prices were 4.1 percent higher in July 2026 than in July 2025, due primarily to higher prices for beverage materials including coffee and tea. ERS forecasts a 4.3 percent increase for 2026, with a forecast interval of 3.3 to 5.3 percent.

Our read: that is the price umbrella an emerging brand inherits when it sells next to those categories. The refund order is a claim against the past, not a lower cost of goods for the next production run, so one-time duty recoveries do not belong in forward gross margin.

Demand is trading out, not just down

NielsenIQ and World Data Lab said the more than $1.1 trillion U.S. FMCG market is increasingly polarizing, with growth concentrated in premium and value tiers while mainstream products lose share.

NIQ reported that private labels are increasingly competing at both the value and premium ends of the market, putting pressure on traditional brands from both directions.

PLMA reported that over the six months ending June 14, store brand unit sales increased 0.2% while national brand unit sales declined 0.5%. Store brand unit market share rose to 23.8%, an all-time high, according to Circana, PLMA's exclusive data provider.

Circana, in a mid-2026 webinar reported by Dairy Reporter, said a significant impact of 2026 SNAP policy changes has been the loss of roughly 2 million SNAP households and a decline in EBT spending of about $10 billion compared to 2025.

USDA approved 23 states for food-choice waivers. Circana found that SNAP and EBT trips that included carbonated soft drinks fell by eight percentage points year over year and by nine percentage points in waiver states, and SNAP candy purchases declined by six percentage points in waiver states.

eMarketer, citing PwC, reported that households with a GLP-1 user cut grocery spending by 5.5% after six to eight months on the drug. Citing McKinsey, it reported that within six months of starting treatment users cut spending on chips and savory snacks by 11.5%, sweet bakery by 8.5% and cookies by 7%.

Our read: private label, SNAP and GLP-1 are shrinking the same basket from three directions. A mid-store brand with no claim and no cost advantage is positioned to absorb all three. It shows up in the unit forecast first — and most plans still assume last year's basket.

Where the capital is going

Food Dive reported that companies with better-for-you, high-protein, international or sustainable positioning made up 67.7% of branded acquisition activity in 2026 to date, according to Corporate Finance Associates, the highest share since 2019.

Three of this year's biggest transactions involved players in the ingredients sector, Food Dive said, including McCormick's $44.8 billion merger with Unilever's foods business, IFF's $4.3 billion sale of its food ingredients segment, and Ingredion's agreed $3.6 billion purchase of Tate & Lyle.

WARC Media forecast global retail media spend of $200.4 billion in 2026 and $223.4 billion in 2027, when it will account for 15.2% of total worldwide ad spend.

On the ground, that market is concentrated. In 2025, Amazon captured 78.0% of all U.S. retail media expenditure, with Walmart taking 7.5%, leaving just 14.5% for all other networks combined, according to Walrus Intelligence data reported by WARC.

Our read: capital is paying for defensible positions — a health claim, a protein platform, a global footprint — not for distribution breadth. Retail media is not a growth strategy in that market; it is the rent you pay to be visible in a door you already won, and it belongs in the door P&L, not a campaign budget. The cheapest unit you will ever sell is the reorder from a shopper who already bought you.

An illustrative $4.99 waterfall

The table below is illustrative arithmetic — not an industry average and not a benchmark from any source above. Replace every line with your actual deal.

Our read, still illustrative: the brand keeps $2.38 of the $4.99 shelf price — about 48 cents of every shelf dollar — and $0.95 of contribution, 19 cents per shelf dollar. Trade alone is about a quarter of net sales. The asymmetry is the point: a 1% unit decline costs about 1% of contribution, and recovering that with price would take roughly a 0.4% higher net price with zero volume loss. Assume the volume loss is real and price the trade offer accordingly.

What this means for contribution, trade, and doors

Otonomaxx analysis, not a restatement of the sourced data above.

• Price is a share decision, not a revenue decision. In a flat-unit category, a list-price increase mostly buys a retail partner margin and a competitor's trade offer — and the shopper who traded down rarely trades back on a deck.
• Trade is your largest controllable marketing line. In the illustrative stack it is about a quarter of net sales. Measure it as cost per incremental unit, not as a percent of gross sales, and cut offers that buy units you would have sold anyway.
• Density beats spread. In a flat-unit category a new door does not create demand; it creates service cost, deductions and a forecast you will miss. Fewer doors at higher velocity is the version that survives.
• The middle of the aisle is the exposed position. Record store-brand unit share plus premium private label leaves a mid-price national analog with no claim and no cost advantage. Pick a side.
• Rebase the household, then the forecast. Basket shrink lands in specific aisles before it lands in your category number. If the model uses last year's basket, the units are wrong before the price is.
• Treat one-time money as one-time money. A refund check or a tariff ruling is not run-rate COGS. If margin depends on a claims process, the valuation does too.
• Margin repair is not demand repair. A gross-margin print can improve in the same quarter volume falls.

Founder action plan: Q4 2026 through Q1 2027

Plan against the published numbers. Circana expects volume sales to remain flat through the balance of 2026 and forecasts 2–3% growth in 2027. USDA ERS forecasts 2027 food-at-home prices up 2.1 percent, with an interval of -5.7 to 10.5 percent. Neither supports a plan that assumes category units return on their own.

Next 30 days

• Split every account forecast into price/mix and units. If units are up, name the share you are taking.
• Model your top 20 SKUs on the illustrative stack, then replace every line with your actual deal terms.
• Check whether you paid IEEPA duties. Over 330,000 importers paid duties across more than 53 million entries, and the Court of International Trade ordered CBP to refund approximately $165 billion in unlawfully collected duties.
• Re-quote packaging. Articles made entirely or almost entirely of aluminum, steel or copper pay a flat 50% on full value under the April 2026 proclamation; derivatives pay 25%.

Next 60 days

• Rebuild promotion plans at SKU level. General Mills tied its fiscal 2026 organic decline in part to a higher share of consumer purchases on promotion.
• Set price architecture by position. NIQ reported growth concentrated in premium and value tiers while mainstream products lose share, with private labels competing at both ends.
• Rebase the basket in the aisles you sell. eMarketer, citing PwC, reported a 5.5% grocery-spending cut in GLP-1 households after six to eight months; citing McKinsey, it reported six-month cuts of 11.5% in chips and savory snacks, 8.5% in sweet bakery and 7% in cookies.
• Put retail media in the door P&L. WARC Media forecast global retail media spend of $200.4 billion in 2026.

Before winter 2026–27

• Do not underwrite price. BLS reported food-at-home CPI was 2.2% higher in August 2026 than a year earlier, with a 0.0% seasonally adjusted monthly change.
• Plan the SNAP line. Circana put the 2026 policy effect at roughly 2 million fewer SNAP households and about $10 billion less EBT spending versus 2025; USDA approved 23 states for food-choice waivers, and Circana found SNAP/EBT trips including carbonated soft drinks down 8 percentage points year over year and 9 points in waiver states.
• Bring velocity and incrementality to buyer meetings. Store brand unit market share was 23.8% in the six months ending June 14, an all-time high.