BusinessJul 20, 2026
Big Food's Growth Engine Stalls as Consumers Change Shopping Habits
Staples Outlook
Rhea Lobo
Discover
The packaged food sector is in a full-blown crisis. Shoppers are buying fewer items, private labels are eating market share, and weight-loss drugs are permanently shrinking the appetite for processed staples. The stocks look cheap, and the market has its reasons.
Grocery unit sales fell 1.8% in June versus a year earlier, according to Bain and Company analysis using NielsenIQ data.
Prices are still rising 2% to 3% annually, but that cushion is no longer enough to keep total sales growing. Groceries cost roughly 33% more than they did in 2019, and consumers have hit a wall.
Bain found that 80% of Americans are actively trying to spend less, with many cutting grocery bills by switching to cheaper brands, buying fewer items, and relying more heavily on coupons. The squeeze comes as SNAP benefit cuts, higher gas prices, and years of food inflation converge.
The K-shaped economy is squeezing packaged food from two directions at once. Wealthier shoppers are moving toward fresh ingredients, protein-forward products, and cleaner labels. Lower-income households are migrating to private label, which now holds roughly 24% of grocery unit share nationally.
GLP-1 weight-loss drugs are accelerating the shift at the top end. Bernstein estimates that 14% to 15% of US adults now use these medications, up sharply from 5.8% in early 2024.
Oral versions and planned Medicare coverage for seniors are expected to push adoption higher. GLP-1 users are consuming fewer carbohydrate-heavy, sugary, and salty foods, exactly the core of most legacy packaged food portfolios.
Regulatory pressure is adding another layer. Federal and state policymakers are targeting artificial dyes, additives, and ultra-processed foods. Walmart and Target are already pushing suppliers to reformulate products.
General Mills reported organic sales down 2% in fiscal 2026 and guided to another year of flat-to-declining revenue. Kraft Heinz and Campbell's are under similar pressure.
Conagra recently halved its dividend and guided to a net sales decline of up to 3% and mid-single-digit volume declines in the coming year.
Conagra's new CEO was unusually direct on the most recent earnings call, signaling price increases on the frozen portfolio even knowing it would cost volume.
While these actions may pressure volumes in the short term, they are essential to restoring margins and funding the investments necessary to support the long-term health of our categories."
John Brase, Conagra
Valuation multiples reflect the damage. Conagra trades at roughly 9.8 times forward earnings, a near-60% discount to the S&P 500. General Mills, Campbell's, and Kraft Heinz all trade around 11 to 12 times. Each has lost roughly 50% to 70% of its value over the past decade even as the broader market more than tripled.
Bernstein analyst Alexia Howard flagged that the ongoing Iran conflict is pushing oil higher, dragging fertilizer, packaging resin, and freight costs up with it. In 2021, food makers passed those costs on to shoppers who had stimulus money. That option is gone now.
Retailers are refusing to absorb supplier price increases because they do not want to lose already-stretched consumers. Their own private label businesses give them the leverage to push back hard.
Bernstein downgraded General Mills, Conagra, Campbell's, and Kraft Heinz to Underperform, arguing investors should expect a prolonged period of weak sales and margin compression. The stocks may look cheap, but that doesn't make them bargains.
