Two-Thirds of the $14.2 Billion UPF Label Estimate Is Reformulation. Spend It Where You Grow.

Key takeaways:

• A University of Chicago model values a federal UPF label at $14.2B annually. This baseline includes two-thirds in optional, self-directed reformulation costs.
• The model’s break-even analysis shows a $1.2M reformulation for an average-selling SKU never pays off. Prioritize recipe investments on high-volume products and health-positioned SKUs.
• Screen every ingredient statement now, schedule relabels with planned redesigns, and add a recurring 4% ingredient premium into growth plans before a final rule is in place.

Under the definition a University of Chicago team used to price a federal ultra-processed food (UPF) label, 72% of in-scope packaged foods in USDA’s branded food database would qualify as ultra-processed. That’s 325,240 products, and they account for about half of what U.S. households spend on groceries.

The team, from the university’s Initiative on Enabling Choice and Competition in Health Care, estimated the cost of a labeling mandate at $14.2 billion a year, broken down into three separate bills, each requiring a different decision.

It’s worth noting that the model was built on an unapproved definition. The HHS and the FDA sent their UPF definition to the White House Office of Information and Regulatory Affairs (OIRA) on August 3, 2026, filed as a white paper. As of November 4, it’s still pending review with no legal deadline.

With no federal text to work from, the authors applied the May 2026 Healthy Eating Research (HER) definition. They call their estimates lower bounds and agree that “ultra-processed” describes how a food is made and says little about whether it’s healthy. 

Regardless of the limitations and unknowns, the study’s cost estimates can help companies start planning.

The $14.2 billion breaks down into three costs with different timelines

Source: University of Chicago ECCHC, October 2026

The smallest line is the only one a Paperwork Reduction Act analysis would count. Paperwork comes to 1.4% of the total burden, according to the study. Recipe work and ingredient costs make up the rest, so a single $14.2 billion figure gives your CFO little to approve or reject.

The FDA’s analysis of the January 2025 front-of-package labeling proposal estimated $333 million a year in costs, $227 million of which was reformulation. But that proposal doesn’t require changing a recipe.

Reformulation only pays back for your highest-volume SKUs

The study includes a break-even test. The average affected formula brings in about $1.65 million a year. At a 7.4% net margin, that’s $122,400 in annual profit at risk if a label turns shoppers away.

If you look at a $1.2 million reformulation over 10 years, that product would need to lose 115% of its sales to justify the cost. A product can’t lose more than all of its sales. So at the FDA’s cost per formula, the authors conclude an average seller would never be reformulated for sales reasons alone.

The break-even point drops with the cost per formula. At $500,000, a product needs to lose 48% of sales before reformulating pays. At $150,000, the threshold is 14%.

With this in mind, there are two decisions to make. Reformulation money belongs on SKUs with revenue that’s well above your portfolio average. And anything that lowers your cost per formula, such as reworking a shared base or seasoning system across a whole product family, widens the set of SKUs worth saving.

Start with products consumers already perceive as healthy

The definition reaches further than most category managers would guess, because one marker ingredient is enough. In the authors’ screen, it flags flavored milks; yogurts, even plain varieties thickened with pectin or gelatin; and sparkling water with natural flavor. Confectionery, soda, and baked sweets come in at 92% to 99.8% flagged. Rice is 7%, and frozen vegetables are 11%.

The model assigns its steepest sales losses to the roughly 15% of affected spending in categories consumers see as healthy, including bread, cereal, yogurt, and bars. For the 45% in categories shoppers already treat as indulgent, like candy, soda, snacks, and desserts, it assumes almost no response. Blended, the model projects about a 9% sales loss on flagged products under a warning-style label.

More shoppers now know the term, too. In the International Food Information Council’s 2026 Food & Health Survey of 3,005 U.S. adults, 52% said they’re familiar with “ultraprocessed food.” That’s up from 44% in 2025 and 32% in 2024. Among those familiar with it, 56% said they decide by reading the ingredient list.

This means your better-for-you lines present both the highest vulnerability to mandatory labeling and the strongest case for reformulation. If these lines also drive your growth plans, you have even more reason to prioritize reformulation investments on them.

Determine which SKUs to reformulate, relabel, or retire

The study classified 449,877 products by checking ingredient statements in the USDA’s public database against HER’s marker classes. You have the same data in your portfolio’s specification system.

A rules-based screen, or an AI tool set up to read ingredient statements against the marker list, can quickly produce a first-pass SKU list. Have your regulatory team review ambiguous ingredient names. That’s where the study’s classifier needed interpretation rules.

Then put every flagged SKU in one of three categories:

• Reformulate SKUs with revenue well above your portfolio average and products sold on a health promise. Conduct the break-even test with your own revenue, margin, and cost per formula before approving a project.
• Relabel SKUs in categories where shoppers already know what they’re buying. Schedule the change with your next package redesign. The model estimates the cost of a coordinated relabel at about $326 per UPC a year, compared with $6,000 to $8,000 per UPC for a change made off the design calendar.
• Retire low-volume SKUs that would need a reformulation they can’t earn back. The line time and R&D budget they free up can go to the SKUs you’re keeping.

Get the sort approved ahead of regulatory developments. A UPF label hasn’t yet been proposed. However, for reference, the FDA’s front-of-package proposal, which is still pending, would give companies with $10 million or more in annual food sales three years after the final rule’s effective date. Three years covers a coordinated relabel. It’s a tight window for dozens of reformulation trials, shelf-life studies, and customer approvals run back to back.

Incorporate the ingredient premium into growth plans now

Recipe work and relabeling are one-time projects. The ingredient premium recurs every year the reformulated product is on the shelf. Substitutes add 4% of sales in the model, within a range of 3% to 5%, and manufacturers pass 70% of that on to shoppers. Prices on flagged products rise 1.52%.

Sourcing is another issue. In the study, sugar replaces corn syrup in reformulated products, adding about 1.3 million tons of sugar demand. Roughly 390,000 tons of that would be imported under the tariff-rate quota. Replacing modified fats would add palm oil imports, as the trans fat phase-out did.

If your reformulation list relies on a few common substitutes, your competitors’ lists probably do too. Secure supply and pricing for those inputs ahead of time.

Three develops could impact your planning 

• If OIRA finishes its review and HHS publishes the definition, re-screen against the published criteria in place of HER’s. Status updates post on reginfo.gov.
• If an agency proposes a UPF label, that proposal would set compliance dates and have its own cost analysis.
• If SNAP eligibility or litigation uses the definition, the authors expect either use to push costs above their estimate, because reformulation would become a condition of market access.

Until then, you can start screening and sorting now, using your ingredient data.