In developed markets, the way people eat is changing. Taste, price, and convenience remain central, but consumers are buying more prepared meals, takeout, and private label foods. Health consciousness, climate pressures, and digital tools are all playing a role.
Legacy packaged food companies have been slow to adapt. A decade ago, packaged food companies delivered a 15% total shareholder return; today, it’s just 2.9%, the lowest for a major sector (see Figure 1).
Whether jump-starting that performance is a matter of minor tweaks or major transformation depends on one question: Is today’s disruption cyclical or structural? While there are some elements that are cyclical, including consumer confidence and discretionary income, we believe that most of the challenges facing the food industry are here to stay. Some are accelerating.
The sector is ripe for change, but so far, no breakout leader has emerged. For packaged food companies, this is a moment of both uncertainty and opportunity. The race is on, and it’s theirs to lose or win.
Structural trends shaping the future of food
Five trends disrupting the food sector today—namely, health consciousness, climate disruption, information transparency, food tech, and geopolitics—should be considered structural.
- Health consciousness: Increasing concerns about the nutritional value of ultra-processed foods and popular appetite-suppressing anti-obesity drugs are accelerating a shift away from traditional packaged foods.
- Climate disruption: Climate volatility is upending some global supply chains. Drought risk is rising, and certain crops are getting increasingly expensive and their supply unreliable.
- Information transparency: From front-of-pack labeling regulations to AI-led grocery planning and information tools such as Yuka and Instacart, consumers have never had more access to information about their food.
- Food tech: Over the past five years, venture capital (VC) investment in food technology has outpaced the combined R&D spending of the top 10 global food companies by a factor of 1.7 times. With regards to breakthrough innovation, food companies are falling even further behind, since 70% of food companies’ R&D spending is focused on brand extensions and improvements to existing products. Comparing VC food tech investment with just food company breakthrough innovation expenditures, food companies are being outspent almost six to one.
- Geopolitics: Wars and trade barriers can materially impact the flow and cost of food ingredients.
Typically, a disrupted industry eventually finds a new heavyweight. In tech, it was Apple. In autos, Tesla. In food, however, the field remains open.
What is clear is that there is a lot of growth to be had by companies that combine health, taste, and convenience. Packaged food companies are already masters of convenience and taste, have massive scale, and have created strong consumer brands. With innovation focused on true unmet needs, they could become the disrupter rather than the disrupted. Grocery retailers with strong private label brands and a variety of formats (e.g., ambient, refrigerated, fresh, frozen, prepared, etc.) could seize the advantage. Or fast-casual restaurants could win with fresh, tasty, convenient options. Tech platforms’ AI-powered meal planning and grocery shopping might play a key role. Or scale insurgents, such as Chobani, could continue to build themselves into food leaders of the future.
Several paths could succeed at once. All will require bold, forward-looking action.
What to do now: Three strategic imperatives
Focusing on three things will clarify the products, capabilities, processes, and business plans that can help build toward sustainable, accelerating growth:
- Future-proof the business.
- Make the core relevant again.
- Lead in the critical categories of the future.
Future-proof the business. To build resilience, packaged food companies should begin by understanding which disruptions could be on the horizon over the next 5 to 10 years and then develop plans to mitigate those risks.
For example, in a warming world, ingredients such as tomatoes or water may become scarce. That has real implications for everyday favorites such as ketchup or beer. Companies must think through not only the climate’s impact on their business but also potential macroeconomic or geopolitical shocks to the supply chain, as well as possible regulatory constraints focused on health or other topics.
What’s the policy outlook? Front-of-pack labels, in-store marketing restrictions, and sugar taxes are already affecting packaged food company profits in countries from the UK to Chile. If innovations such as GLP-1s and other anti-obesity drugs gain wider use, companies will have to consider the impact that possibility will have on indulgent snacks. More than 70% of US users of GLP-1s already report eating less, especially less salty snacks and desserts.
Consumer attitudes must always be in focus as well. Today, 65% of consumers in the US and Europe believe that ultra-processed foods are unhealthy. In lieu of ultra-processed foods and unhealthy options with high sugar, fat, and salt content, consumers are buying more natural foods. But other considerations sway food choices as well, including time, cost, taste, and access.
Former Kraft Heinz CEO Miguel Patricio has credited innovation and future-back planning with reinvigorating his employees. Patricio has said that had the company taken this approach 10 years ago, demographics would point to different moves, such as selling its baby food business in China (where the birth rate is dropping) and shifting investment into pet food.
While planning for the future, executives can ask themselves three key questions:
- From supply chain to consumer perceptions of health, which are the individual and collective disruptions that could threaten our business resilience and license to operate?
- Which steps can we take today to prepare and safeguard our business for the future we envision? Should we be considering alternative formulas, for example, or sourcing from new geographic regions?
- Which early signals of change should we be tracking?
Make the core relevant again. This is the greatest challenge facing packaged food companies today, but if the core business fades, the rest won’t matter. Winning back consumers starts with revitalizing existing categories and product portfolios.
This approach is already reinvigorating classic categories, including yogurt, cottage cheese, and frozen meals. Chobani redefined a sleepy, largely irrelevant yogurt category with higher-protein, low-sugar natural Greek yogurt. Even excluding contributions from recent acquisitions, Chobani’s US retail gross revenue increased by almost $590 million year over year for the 12-month period ending June 14, 2025. That’s a 23% climb in a time frame during which the 10 largest food companies combined lost more than $1.4 billion in the US, according to Nielsen. Good Culture has similarly breathed life into cottage cheese by improving taste and packaging while also pitching its high nutrition and protein.
In the end, affordable, tasty, healthy convenience will win, but who the winner or winners will be is not yet known. That’s today’s window of opportunity. Leaders that act with discipline and imagination can shape the structure of tomorrow’s food industry. This is their moment to lead.
