The CPG business is undergoing a shift, but without a crystal ball to determine where macroeconomic factors such as the rise of AI and changing consumer preferences will land the industry in a decade from now, we’ll have to rely on recent news and survey responses from those on the front lines.
According to PwC’s 2025 CPG Executive Survey, almost half of CPG executives (49%) believe their current business model won’t survive the next decade – a rate that is seven times higher than the average across other industries, per PwC’s Global CEO survey findings – due to “flat growth, low margins and economic volatility.”
Those sentiments have begun to translate to action in some areas of food and beverage. In recent years, we’ve seen large conglomerates such as Kellogg’s (now Kellanova and WK Kellogg) splinter and sell off business segments. Rumors began to fly earlier this summer that Kraft Heinz is considering a similar move nearly a decade after the merger between its two halves has failed to produce sustainable gains.
At the mid-size and emerging brand level, operators are increasingly leaning into M&A, strategic investment partnerships and joint ventures to mine manufacturing and supply chain synergies.
Over the past month, Tia Lupita sold to Vilore Foods in a deal that is aimed with providing it the manufacturing and operations support it needs to continue to scale, snack pack maker Sunnie secured investment from Santatera Capital (a firm that has touted its strategic advice and operational expertise as its key differentiator), and GOOD PLANeT Foods signed a joint venture with Schuman Cheese to scale their respective plant-based cheese brands in retail, just to name a few examples.
In the case of Schuman and GOOD PLANeT, the two were already closely linked as fourth-generation cheesemaker Schuman, operator of plant-based brand Vevan, provided co-manufacturing services for the upstart, but this new venture will bring both brands under the same business structure. Many others have also leaned into shoring up their manufacturing and supply chains as they brace for chance.
But while these recent moves signal some business operators are thinking ahead, PwC’s report argues that “awareness isn’t translating into action.” Of the CPG executives that reported their business model won’t be viable within the next 10 years, nearly one-third aren’t planning to restructure a single function: “In other words, leaders know change is needed but many haven’t committed to the urgency required,” the report claims.
Some however are turning to AI. The PwC report found that nearly 60% of CPG executives are using AI to reduce costs, but those efforts are largely for tasks like forecasting and back-office process automation. A handful of brands – including Fila Manila, NotCo and Starday Foods – are using AI to streamline product innovation, however the practice is still far from mainstream within the industry.
While looking within could help businesses navigate the road ahead, almost half of all executives surveyed said external factors such as consumer preferences, competitive pressure and economic uncertainty are their largest barriers to growth.
A recent report from the National Retail Federation (NRF) suggests that the barrier of tariffs is here to stay, at least for a while with volume imports in 2025 expected to decline by 5.6% compared to the previous year – meaning that consumer prices will continue to rise and fewer goods will make it to store shelves. The latest CPI data also backs up those expectations.
But it’s not all doom and gloom, and some CPG business operators see a light at the end of the tunnel, so long as they exercise focus to get there. The report claims that companies projecting higher growth rates (+5% or higher) are taking a focused innovation approach that “precisely” aligns with consumer needs.
In the past week better-for-you frozen food outfit Saffron Road executed its most “ambitious” brand overhaul in its 15-year history, realigning its portfolio to be seed oil-free and higher in protein as the MAHA movement and growing use of GLP-1 drugs are poised to impact consumer buying habits.
Conagra Brands and B&G Foods have been selling off select brands and working to adapt their portfolios to better align with consumer demands for clean label and better-for-you products. Not to mention powerhouses like PepsiCo leaning into M&A, shelling out billions to buy both prebiotic soda Poppi and grain-free focused Siete Foods this year.
“In other industries, targeted acquisitions and alliances focused on differentiated capabilities have proven to be powerful complements to internal R&D,” the report states.
Just like innovative portfolio strategies, the report emphasizes that businesses should also continue to modernize sales strategies, particularly as online grocery continues to pull a larger share of the market. The report found that the majority of executives believe AI agents will play a large role in consumer buying decisions over the next decade, meaning that aligning products to match search criteria could become increasingly important to product-market fit.
“As DTC scales, it could open the door to convergence,” the report states. “Leading companies could use DTC not just to sell products but to potentially build cross-category ecosystems, in ways that can engage the whole consumer, beyond just a product.”
That is playing out already as food and beverage companies reach beyond their own niches and work to collaborate with other industries, such as beauty and home goods spaces. The increase in CPG food and beverage brands aiming to take a lifestyle approach is another clear indicator that brands understand to sustain business growth they need to infiltrate more than just consumers’ pantries and refrigerators.
“Legacy structures and cultural inertia remain deeply embedded, and large-scale efforts to self-disrupt falter when even one function or region isn’t fully on board,” the report states. “For CPG companies, the future won’t be won by speed or scale alone. It will be shaped by those who self-disrupt.”
