This week’s Food Exec Brief covers the cocoa price collapse creating confectionery opportunity/uncertainty, a major regulatory week with FDA leadership/staffing issues and USDA proposing faster line speeds, and CPG giants racing to reformulate as GLP-1 drugs change consumer eating habits.
Key takeaways:
- 💰 Strategic pivots define the financial landscape: Kraft Heinz scraps its planned split and commits $600 million to revive its U.S. business, Heineken cuts up to 6,000 jobs to fund an AI-driven restructuring as beer volumes slide, and Nestlé deploys a sweeping supply chain overhaul to restore margins after a difficult 2025.
- ⚖️ Regulatory uncertainty intensifies across multiple fronts: FDA leadership instability raises food safety enforcement concerns, the GRAS status of processed refined carbohydrates faces a challenge, and the USDA proposes removing line speed caps for pork and poultry processors.
- ⛓️ Cocoa prices collapse, but the relief is complicated: Cocoa plunges to its lowest price in over two years, but hedging dynamics mean major manufacturers won’t feel full relief immediately, and StoneX projects a global surplus of 287,000 tonnes for the 2025/26 season amid lingering supply-side risks.
- 🤖 Legacy infrastructure creates innovation bottlenecks: General Mills deploys AI to “innovate how we innovate” as it targets 25% growth in new product net sales, while plant managers across the industry face mounting pressure to integrate aging equipment with modern systems without halting production.
- 🏪 GLP-1 drugs force a fundamental rethink of the product portfolio: About 20% of U.S. households now include a GLP-1 user, EY-Parthenon projects up to $12 billion in lost snack sales over the next decade, and companies from PepsiCo to General Mills are accelerating reformulation and smaller-pack strategies to adapt.
- 🤝 M&A and portfolio reshaping accelerate as growth stalls in core categories: McKinsey finds CPG deal value surged more than 50% to ~$152 billion in 2025 even as deal count fell, while the food tech ecosystem reshapes how CPG companies manage risk, speed to market, and competitive differentiation.
💰 Financial recalibration: Major players make bold strategic bets
Industry leaders shift from cost-cutting to targeted reinvestment:
- Kraft Heinz scraps its planned corporate split and commits $600 million to revive its U.S. business, with CEO Steve Cahillane directing resources toward marketing, sales, R&D, and product improvements rather than incurring the dis-synergies of a separation. Full-year 2025 net sales declined 3.5% to $24.9 billion, with volume down 4.1%, but Cahillane sees the challenges as “fixable and within our control.” The investment will raise marketing spend to 5.5% of net sales and increase R&D by approximately 20%. (Learn more)
- Heineken is cutting up to 6,000 roles, approximately 7% of its 87,000-person global workforce, over the next two years, citing declining beer volumes (down 2.4% in 2025) and the need to fund growth through AI-driven productivity savings. CEO Dolf van den Brink, who steps down in May, acknowledged the cuts are “partly also due to AI, or digitization.” The broader beverage manufacturing trend extends to Molson Coors, Pabst, and AB InBev, all of which have announced cuts or closures, as beer demand in developed markets faces structural long-term headwinds. (Learn more)
- Nestlé is executing a sweeping global supply chain overhaul, targeting 16,000 role reductions by the end of 2027 while standardizing nine end-to-end business processes, including procure-to-pay and hire-to-retire cycles, to reduce regional variation and unlock operational efficiency. Its 2025 annual report reveals e-commerce now accounts for over 20% of total group sales, having grown organically by 13.5% last year, and key growth platforms will receive an additional $700 million in investment in 2026. (Learn more)
- The food industry outlook improves only marginally for 2026, with grain-based food manufacturers continuing to face weak consumer sentiment, input cost pressures, and promotional spending demands from retailers. Companies with strong balance sheets are positioned to invest; those without face a difficult environment for margin recovery. (Learn more)
Why it matters: The divide is growing between companies that are confidently investing in growth, such as Kraft Heinz’s brand reinvestment and Nestlé’s operational overhaul, and those focused on cutting costs merely to survive. Executives must assess whether they are leveraging this period to build a lasting competitive advantage or just managing immediate cash flow. The strategic choices made in 2026 will determine which companies emerge as leaders in the upcoming business cycle.
⚖️ Regulatory turbulence: A consequential week in Washington
Multiple simultaneous regulatory shifts demand immediate strategic attention:
- FDA leadership instability is raising serious food safety concerns, as ongoing staffing reductions (the agency lost 3,859 roles in FY2025 and an additional 473 in FY2026) create gaps in inspection capacity, regulatory approvals, and enforcement consistency. Industry observers warn that “brain drain” from the departure of veteran scientists and inspectors compounds the structural risk, with the FDA’s Human Foods Program not expected to be fully operational until mid-2026. (Learn more)
- HHS Secretary announced that the FDA will “act on” a petition seeking to revoke the GRAS status of corn syrup, high-fructose corn syrup, and dozens of other processed refined carbohydrates, unless food companies can demonstrate these ingredients are safe and not contributing to obesity or chronic disease. The GRAS framework, which allows companies to self-certify ingredient safety, was described as a “loophole hijacked by the industry.” While this doesn’t point to the regulation of ultra-processed food, manufacturers using these ingredients face scrutiny that could accelerate reformulation timelines. (Learn more)
- USDA proposed on February 17 to remove longstanding line speed caps for pork and poultry processing plants operating under modern inspection systems, arguing current restrictions are outdated and that allowing facilities to set their own speeds based on their processes and equipment will lower production costs and improve supply chain efficiency. The National Chicken Council called the current patchwork “a significant disadvantage globally,” while labor groups warned the proposals, which remove FSIS worker safety attestation requirements, risk increased musculoskeletal injuries in an already hazardous industry. A 60-day public comment period is now open. (Learn more)
Why it matters: The regulatory environment is simultaneously loosening in some areas (line speeds, GRAS flexibility) and tightening in others (ingredient safety reviews, GRAS reform). Companies can no longer assume regulatory stability as a baseline. Proactive engagement with public comment processes, reformulation planning, and legal risk assessment is now a core operational function, not a periodic compliance exercise.
⛓️ Commodity markets: Cocoa collapse brings relief, with caveats
The reversal of 2024’s crisis creates new opportunities but requires careful interpretation:
- Cocoa prices have plummeted to their lowest level in over two years, trading around $3,500 per tonne in mid-February 2026. This is a dramatic reversal from the approximately $12,000 per tonne peak reached in April and December 2024. StoneX has projected a global cocoa surplus of 287,000 tonnes for the 2025/26 crop year and 267,000 tonnes for 2026/27, driven by improved production in Ivory Coast, Nigeria (which reported a 27% year-over-year jump in January exports), and other growing regions. (Learn more)
- However, major manufacturers will not fully benefit immediately, because most large players hedge cocoa supply well in advance. Mondelēz acknowledged it is already covered for 2026 at previously agreed positions, and Hershey’s CFO said he hopes to see “some deflation” as the company gets “deeper into 2026.” Smaller, unhedged companies may have an immediate advantage accessing spot prices, while larger competitors must wait for existing hedges to unwind. The next 12-18 months will determine whether the market truly normalizes or enters a new phase of volatility. (Learn more)
- Building resilient supply chains requires verified data, not just supplier assurances, a challenge the cocoa price crisis has made vivid. Industry leaders are investing in digital traceability tools that create verified, real-time visibility from farm to facility, enabling faster response to disruptions, more accurate cost modeling, and the audit-ready documentation that both regulators and retail partners increasingly demand. (Learn more)
Why it matters: The cocoa collapse illustrates how commodity volatility punishes both the unprepared and, counterintuitively, those hedged too aggressively. Executives should review hedging strategies and data infrastructure simultaneously, because knowing where prices are heading matters less than having the systems to respond effectively when they move.
🤖 Technology transformation: AI drives innovation while legacy systems resist
The gap between digital leaders and laggards widens across the industry:
- General Mills is using AI to reimagine its product development process, deploying digital consumer personas to surface unmet needs, AI image generation to produce prototypes “in seconds,” and conversational tools to gather real human feedback faster than ever before. CEO Jeffrey Harmening told CAGNY investors the company is “innovating how we innovate,” targeting approximately 25% growth in net sales from new products, even as the company lowered its fiscal 2026 organic sales outlook, now expecting a decline of as much as 2%. (Learn more)
- Bakery automation is stalling despite strong industry interest, primarily because of a widening skills gap, leaving manufacturers caught between the promise of efficiency gains and the practical reality of operating and maintaining increasingly sophisticated systems without adequately trained staff. The challenge is building the internal human capability to extract value from it consistently. (Learn more)
- Connecting legacy systems to modern platforms without halting production has become one of the defining operational challenges of 2026, with plant managers across sectors facing aging infrastructure that was never designed for data integration. Practical middleware and phased connectivity strategies are enabling companies to extract data from existing equipment without the cost and disruption of full replacement, a critical path for companies that cannot afford large-scale capital projects but cannot afford operational blind spots either. (Learn more)
Why it matters: Technology ROI in food manufacturing increasingly depends not on what a company installs, but on whether its workforce can use it effectively. The companies closing the skills gap now (through training investment, thoughtful change management, and targeted AI deployments) will widen their operational advantage over the next three to five years.
🏪 Consumer revolution: GLP-1 drugs force the industry’s most consequential product rethink
Anti-obesity medications are restructuring demand in ways too significant to manage incrementally:
- About 20% of U.S. households now include at least one GLP-1 user, with adoption having more than doubled in the 12 months to December, according to PwC analysis. GLP-1 users consume on average 40% fewer calories, with dessert consumption down 84% and alcohol use down 33%, while fresh produce intake is up more than 70%. Family grocery baskets are 4%-6% smaller, and EY-Parthenon estimates GLP-1-linked diet changes could mean up to $12 billion in snack sales lost over the next decade. Major companies that previously took a wait-and-see approach now view GLP-1s as permanent, with nearly three dozen non-healthcare companies mentioning GLP-1 drugs or weight loss on earnings calls so far this year, up from just five two years ago. (Learn more)
- Kraft Heinz is betting that “under-invested” core brands can regain relevance through a renewed value equation, with CEO Cahillane unveiling a detailed turnaround plan at CAGNY that includes new product innovation, improved quality and packaging, and expanded pack sizes, all grounded in consumer insight rather than nostalgia alone. The company’s early momentum in its Taste Elevation portfolio, where roughly 70% of revenue is now gaining market share, suggests the strategy can work, but analysts warn this remains a “show-me story.” (Learn more)
- Coca-Cola is pursuing a three-principle strategy to adapt to shifting consumer preferences: accelerating innovation speed, expanding into adjacent beverages that meet evolving health and functionality demands, and maintaining a disciplined portfolio. The company’s incoming CEO signaled urgency on innovation at his first CAGNY appearance, underscoring that even the world’s most recognized beverage brand cannot rely on legacy equity alone to navigate this environment. (Learn more)
Why it matters: GLP-1 adoption has crossed a threshold at which it is no longer a niche phenomenon but a structural force reshaping category economics. Companies that adapt their R&D pipelines, pack architectures, and product formulations now will be positioned for the next decade; those that wait will face a shrinking addressable market in their highest-margin categories.
🤝 Strategic M&A: Portfolio reshaping becomes the defining growth lever
Deal value surges even as transaction count falls, signaling a higher-conviction, more selective market:
- McKinsey’s analysis of CPG M&A in 2025 reveals a market in structural transition: total deal count fell to 140 transactions from 180 in 2024, yet deal value grew by more than 50% to approximately $152 billion, driven by a handful of megadeals including Keurig Dr Pepper’s ~$24 billion acquisition of JDE Peet’s and Kimberly-Clark’s ~$49 billion acquisition of Kenvue. In food specifically, excluding the 2024 outlier Mars-Kellanova deal, total food deal value increased by nearly 70% in 2025, with Ferrero’s $3.1 billion acquisition of WK Kellogg signaling renewed appetite in strategically important categories. (Learn more)
- Food tech is fundamentally reshaping how CPG companies assess risk, manage innovation velocity, and compete, with emerging technology platforms creating new capabilities in demand forecasting, ingredient traceability, formulation optimization, and consumer insights and creating new vulnerabilities for companies that fail to integrate them. The convergence of AI, digital twins, and supply chain visibility tools is no longer a future scenario; it is a present-day differentiator being built into acquisition strategies. (Learn more)
- New opportunities are emerging for plant-based and cultivated products, as next-generation ingredient technologies improve taste, texture, and cost economics, creating viable pathways to mainstream adoption that previous generations of alt-protein products failed to achieve. For manufacturers, the strategic question is no longer whether to participate in this space but how to integrate these capabilities without cannibalizing existing portfolio positions. (Learn more)
Why it matters: The CPG M&A environment rewards decisive portfolio action. Companies that proactively shed non-core assets and redeploy capital into high-growth categories, whether through acquisition, internal R&D, or technology investment, are gaining separation from those waiting for organic growth to return. With activist investor pressure rising, management teams that cannot articulate a compelling portfolio thesis face increasing external pressure to act.
The Food Exec Brief provides weekly insights for food and beverage manufacturing leaders and publishes every Friday. Want to get essential food industry news delivered to your inbox? Sign up for our weekly and daily newsletters.
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