In this week’s Food Exec Brief, we’re covering:
- Kraft Heinz CFO projects inflation slightly above 5% next year, and the market responded with broad packaged food gains on November 4.
- Nearly a third of middle-income US households couldn’t afford enough food in August, the biggest increase in over four years.
- Diesel averaged $6.35 a gallon in October, up 71% in a year, as raw material costs rose for a 25th straight month.
The pricing freeze is thawing
Kraft Heinz CEO Steve Cahillane told investors on the company’s Q3 call that price increases are likely in 2027, ending a period of North American price cuts. CFO Andre Maciel projects inflation slightly above 5% next year. On November 4, shares for General Mills rose 5%, Campbell’s 6%, Conagra 6%, and J.M. Smucker 3%, with no company-specific news of their own driving the change. Conagra’s recent volume decline (-5.4% in its latest quarter) is a reminder that the sustainability of these price hikes is subject to consumer demand elasticity. (Learn more)
Mondelez had its strongest volume-led quarter since mid-2023, with Q3 organic net revenue up 2.1% and adjusted gross profit up 14%. Volume and mix grew 1.8 points, the third consecutive quarter where volume, not pricing, drove growth. CEO Dirk Van de Put said “profitability improved meaningfully,” and adjusted EPS rose nearly 5% to 78 cents. North America is still the weak spot; revenue grew 1.1%, volume was flat, and adjusted operating income fell 6.4%. (Learn more)
Kraft Heinz agreed to sell a majority stake in its North American coffee business to an affiliate of One Rock Capital Partners for $650 million enterprise value, retaining a 30% non-controlling stake. The sale covers Maxwell House, Gevalia, Nabob, Yuban, Tassimo, Ethical Bean, and Sanka, along with manufacturing facilities in Jacksonville, Florida, and Vancouver, British Columbia. Net proceeds of about $500 million go toward debt reduction. The deal is expected to close in mid-2027, pending regulatory approval. (Learn more)
The consumer has less room than you think
A survey of 2,000 US shoppers conducted in August found that 31% of middle-income households (earning $50,000 to $100,000) said they did not have enough to eat, up from 19% in December. That’s the sharpest food insecurity rise in the study’s history. Food insecurity among seniors also nearly doubled, with 17% now reporting they can’t afford enough food. Financial insecurity among seniors rose 16 points to 46%. (Learn more)
About 11% of US adults now take GLP-1 medications for weight loss, up from 3% in 2024, and food companies are split on how to respond. Conagra added a “GLP-1 friendly” label to some Healthy Choice meals. Danone skipped the label on Oikos Fusion, marketing “muscle + digestive health support” instead. FleishmanHillard’s Kristie Sigler says “the jury is still out” on whether GLP-1 labels drive purchases. The experts favor building brands that benefit from GLP-1 eating patterns over brands that depend on the drug trend. (Learn more)
A University of Chicago model puts mandatory UPF labeling at $14.2 billion in annual industry costs, with 72% of packaged foods in USDA’s branded database qualifying. Two-thirds of the total is discretionary reformulation spend, not a fixed compliance cost. For a product selling $1.65 million a year at a 7.4% net margin, a $1.2 million reformulation needs to prevent more than a 115% sales loss to pay off over 10 years. Most low-revenue SKUs don’t pass that test. (Learn more)
Input costs have found a new floor
The national average for diesel reached $6.35 a gallon in October, up $2.63 from a year ago, a 71% increase, according to EIA data cited in the FIE Input Cost Index. The Index was down five points this week, but raw material prices have risen for 25 consecutive months, and 16 industries reported paying more in October, food and beverage manufacturers among them. ISM Prices Paid eased slightly in October but remains well above the 50 threshold. (Learn more)
Five ingredients are emerging as the next supply chain pressure points: natural colors, vanilla, olive oil, almonds, and cassava starch. Each is sourced from a geography exposed to weather, disease, or policy disruption. California supplies about 80% of the world’s almonds; a 2025 study projects yield declines of 17% by 2100 under moderate warming. Thailand’s cassava harvest failed this year due to cassava mosaic disease. The planning question is whether substitutes are built into formulations before a disruption forces an emergency switch. (Learn more)
Manufacturing PMI reached 55.5% in October, the 10th straight month of expansion after a 10-month contraction, but food and beverage told a different story inside the headline. New orders and production declined in the food sub-index while employment, inventories, and raw material prices all rose. ISM historically correlates a 55.5% reading with roughly 2.7% annualized GDP growth. One ISM respondent from the food sector noted that diesel rates and a trucker shortage are pushing freight costs to levels they “have never seen.” (Learn more)
