Food Exec Brief: Data-Driven Safety, Portfolio Splits, and Resilience Investments

Welcome to this week’s Food Exec Brief, a roundup of the most important news shaping food and beverage manufacturing, from technology investments and corporate restructuring to supply chain disruption and emerging market opportunities.

Key takeaways:

• 🔍 Data-driven safety: The food industry stands at an inflection point toward predictive food safety systems powered by AI and real-time analytics, but data fragmentation remains the primary barrier to unlocking preventive capabilities before FSMA 204 compliance deadlines. 
• 💰 Technology surge: Food retailers and suppliers invested over $10 billion in technology in 2024, with AI adoption reaching 47% of retailers and 93% of suppliers as the industry engineers its future infrastructure around operational excellence and consumer engagement. 
• 🔄 Portfolio optimization: Major food conglomerates embrace strategic splits as Kraft Heinz announces breakup into two companies, following the recent Keurig Dr Pepper pattern while PepsiCo faces $4 billion activist pressure amid declining performance. 
• ⛈️ Supply chain volatility: Holiday inflation could surge 7% above base levels as structural supply disruptions, tariff turbulence, and climate pressures force retailers to choose between margin protection and customer pricing defense.
  

🔍 Technology transformation and predictive capabilities

Industry pivots from reactive compliance to AI-powered predictive food safety systems while making unprecedented technology investments across operations.

Data fragmentation blocks predictive food safety potential

The food industry approaches a critical inflection point as AI and machine learning tools exist today to enable predictive food safety systems that can “spot deviation in cold chain patterns before it leads to spoilage, or detect unusual movement in supply chains that hints at fraud,” but success depends on complete, consistent, and trusted data. The primary barrier isn’t technology availability but data fragmentation where “every player in the food chain speaks a slightly different ‘data language’” with growers recording harvest time in one format, processors logging differently, and retailers often not capturing data at all. Manual workarounds persist across the industry, with companies rekeying data between systems or relying on email, PDFs, or phone calls to close gaps, introducing errors and slowing response times when “hours matter” during recalls. The solution requires a neutral connectivity layer that allows existing ERP, WMS, and quality systems to share data securely without competitive disadvantage, enabling the shift “from a reactive mindset — responding after the fact — to a predictive and preventive one, powered by data”.

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Record technology investments reshape industry operations

Food retailers invested more than $10 billion in technology in 2024, representing about 1% of total sales, while suppliers committed an even greater share at 1.5% as the industry recognizes technology is “not an optional upgrade” but “the infrastructure that powers food safety, supply chain resilience, consumer engagement, and operational excellence.” Investment priorities center on artificial intelligence, with adoption rates reaching 47% of retailers and 93% of suppliers, while 86% of retailers test technologies to improve efficiency, 80% to enhance customer experience, and 63% to refine e-commerce strategies. Key operational focus areas include product traceability, inventory planning, asset protection, and workforce enablement, with the industry actively engineering solutions that must deliver measurable returns through incremental sales, customer attraction, and improved efficiency rather than novelty alone.

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🔄 Corporate restructuring and strategic pivots

Food giants pursue portfolio optimization through strategic splits while activist investors pressure underperforming conglomerates to unlock shareholder value.

Kraft Heinz reverses mega-merger with strategic breakup

Kraft Heinz announced plans to split into two companies, reversing much of the $46 billion merger that created one of the world’s largest food giants a decade ago, as the company struggles with declining sales amid consumer shifts away from processed foods. The first business will focus on sauces, spreads, seasonings, and shelf-stable meals, housing brands like Heinz ketchup, Philadelphia cream cheese, and Kraft Mac & Cheese with nearly $15 billion in annual sales, while the second company will contain grocery staples like Oscar Mayer, Kraft Singles, and Lunchables under CEO Carlos Abrams-Rivera with $10 billion in annual sales. The separation addresses structural challenges, as Kraft Heinz’s nearly 200 brands across 55 categories and 150 countries had made it difficult to invest in products effectively, while shares have dropped roughly 60% since the Kraft and Heinz combination. The breakup follows a trend toward portfolio optimization, continuing after Kellogg’s 2023 split and Keurig Dr Pepper’s recent acquisition-then-split strategy.

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Activist investor targets PepsiCo with $4 billion stake

Elliott Investment Management has taken a $4 billion stake in PepsiCo, citing “an opportunity to revive the snack and drinks company” following years of double-digit price increases and weakened demand. The activist firm identified critical issues including “a lack of strategic clarity, decelerating growth, and eroding profitability in its North American food and beverage businesses” while noting potential in the company’s growing international operations. PepsiCo faces mounting pressures as the company lowered full-year earnings expectations citing increased tariff costs and consumer spending pullbacks, with tariff costs rising after increases on imported aluminum from 25% to 50%. Elliott’s intervention comes as PepsiCo stock has declined nearly 10% over the past 12 months, though shares climbed over 3% following the activist announcement, with Elliott stating goals to “help the company sharpen focus, drive innovation, become more efficient, and unlock the value that its leading brands, unmatched scale and world-class employees deserve.”

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⛈️ Supply chain disruption and cost pressures

Structural supply chain volatility threatens holiday pricing stability while climate pressures demand resilience investments across processing infrastructure.

Holiday inflation surge predicted amid structural disruptions

Supply chain costs could rise as much as 7% above base inflation in the 4th quarter, as “tariff volatility, labor pressures, and fractured trade flows are no longer temporary disruptions” but “structural realities that demand a redesign of how supply chains operate.” The disruption forces retailers into difficult choices, as industry experts question “should they defend the customer by not raising prices to match their costs, or should they protect their margins?” with volatility now representing the “new default setting.” Agricultural economists warn of severe price impacts, with scenarios envisioning milk prices jumping from $7 to $14 and produce prices doubling, making strawberries feel “like luxury goods” over the next six months. Tariff-related uncertainty will likely persist through 2026, creating particular challenges for non-perishables, specialty ingredients, and packaging materials with long lead times required for promotional periods and major holiday seasons.

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Climate pressures demand supply chain resilience investments

The 2025 UK growing season proved one of the toughest in memory, with spring drought conditions not seen since 1893 and soil moisture at record lows, leading to yield losses of up to 50% for potato, pea, and salad growers. These climate shocks ripple quickly through processing and retail networks, exposing three critical weaknesses: contract rigidity with last-minute order cancellations forcing farmers to plough edible crops back into fields, lack of buffer storage with no significant strategic reserves, and water/energy inefficiency in processing plants accounting for 11% of industrial water use. Successful adaptation requires industry-led solutions including processing innovation like Nestlé’s 20% water use reduction through closed-loop cooling systems, expanded “perfectly imperfect” product ranges, cold-chain investment similar to Dutch cooperative storage hubs, and collaborative risk-sharing models that distribute input cost fluctuations across farmers, processors, and retailers. Without action, “recurring shocks could add billions to food bills annually, destabilise processors and retailers, and push more farmers out of business.”

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🌱 Market innovation and consumer trends

Plant-based dairy outperforms meat alternatives while innovation drives accessibility and consumer acceptance across food categories.

Plant-based dairy defies category performance trends

Plant-based dairy products generated roughly $22.5 billion in global sales in 2024, significantly eclipsing the $6.1 billion claimed by plant-based meat analogs, driven by better price accessibility, improved taste profiles, and consumer familiarity with dairy alternatives. The dairy category demonstrates pricing advantages, with plant-based milk and butter prices falling 1% between 2023 and 2024 at retail, compared to 4% increases for plant-based meat alternatives, while plant-based milk leads household penetration at 40% compared to meat and seafood alternatives at only 13%. Innovation drives category expansion with manufacturers exploring diverse bases including watermelon seeds, pea milk, and corn milk, though almond milk maintains the largest market share. In foodservice, plant-based yogurt items increased 35.7% on menus between Q1 and Q2 2025, while plant-based cheese menu incorporation grew 4.9%, indicating strengthening acceptance and integration across food applications.

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