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- 2026-03-25 Big food’s troubles go from bad to worse
Nearly a century ago the unlikely combination of a margarine business and a soapmaker created Unilever, one of the world’s largest conglomerates. Now it is being unwound. On March 20th the British company announced that it is exploring selling its remaining portfolio of food products, which includes Hellmann’s mayonnaise, Knorr soups and Marmite, to McCormick, an American spicemaker, having rid itself of its ice-cream division last year. That would leave the company focused on personal-care and household-cleaning products.
Between 2021 and 2024 large food brands increased their prices in America by a cumulative 11 percentage points above inflation, reckon analysts at td Cowen, an investment bank.
Shoppers turned to cheaper private-label offerings from retailers such as Costco and Aldi, as well as upstarts.
That has been bad news in particular for Kraft Heinz, which last year said it would break itself up. Its new boss, who took over in January, has paused the separation in order first to get the business on surer footing.
A survey published last year by ey, a professional-services firm, examined the change in spending patterns of consumers already taking them, and concluded that weight-loss drugs could erase a cumulative $12bn of snack sales in America over the next decade, around 3% of the total. And although most users currently live in the rich world, generic versions are beginning to roll out in India and other markets in the global south, which company bosses had been eyeing as a source of future growth.
Big food is aware of the difficulties that lie ahead. Many of the industry’s largest companies have developed new product lines aimed at health-conscious shoppers. And nearly all have appointed a new chief executive since the beginning of 2025.
That includes Nestlé, the biggest of the bunch, which last month said that it too would sell its ice-cream business. Among other things, the Swiss company is betting on healthy frozen meals.
On March 23rd Danone, a French dairy giant that has benefited from the rising popularity of yogurt, announced that it would gobble up Huel, a British maker of protein-packed meal-replacement drinks. For Unilever, however, meal-time is ending.
The shares of the 12 American packaged-food companies in the S&P 500 index, including Kraft Heinz, General Mills and Hershey, are down by a weighted average of 9% over the past year.
After proving surprisingly resilient through the post-pandemic surge in inflation, sales are flagging. Competition from upstart brands and regulators’ wariness of ultra-processed foods are starting to pose a threat just as shoppers are tightening their belts. Leaner times could beckon.
Starting in 2021, packaged-food companies jacked up prices to protect profit margins in the face of rising costs of ingredients and workers. While politicians railed against “greedflation”, consumers in America, the companies’ biggest market, continued to spend ever more on their goodies.
Lately, however, sales for most of the firms have stagnated or are in decline.
- One reason is the cumulative strain on shoppers’ wallets from stubborn inflation and a cooling jobs market. Donald Trump’s Big Beautiful Bill, which eliminates food subsidies for perhaps 1.3m Americans, will not help.
- Nor will the rising adoption of weight-loss drugs, which lessen cravings for junk food in particular. According to one estimate, around 4% of American adults took these last year, double the share two years before.
Meanwhile, big food’s higher prices have created an opening for smaller brands (particularly at the premium end of the market) and retailers’ in-house labels (mostly at the cheap end).
What is more, big retailers including Walmart, Costco and Target have responded to Mr Trump’s tariffs by forcing suppliers and consumers to swallow the increase in costs while bearing none of the burden themselves, notes Bernstein, a broker.
The final problem for big food is regulation. Robert F. Kennedy junior, health secretary and leader of the “Make America Healthy Again” movement, is leading a crackdown on the use of food dyes and other chemicals in ultra-processed foods.
John Baumgartner of Mizuho, another bank, points to the uproar at breakfast tables when General Mills temporarily removed artificial colours from its Trix cereal a decade ago. “Food manufacturers will have to walk a fine line between satisfying regulators and consumers,” he says.
A few years ago Kellogg’s, another mainstay of supermarket shelves, split itself into WK Kellogg, containing its American cereal business, and Kellanova, with the rest of its portfolio. These are now being acquired by Ferrero and Mars, two more food companies, respectively.