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U.S. food manufacturers are warning of a prolonged decline in spending as inflation and ongoing global uncertainty give cash-strapped grocery shoppers little incentive to buy more cereal, chips and cookies.
After years of inflation-driven price increases, consumers appear to be left out. Despite investments in innovation, marketing, packaging changes and more, shoppers still haven’t returned to the category at the level many executives had hoped.
“I’m worried about the American consumer,” Dirk Van de Put, CEO of Mondelēz International, said in an interview. Consumer Analyst Group, New York Conference. “Until consumers’ disposable income goes up or costs go down significantly, I don’t know what will change.”
The latest company to warn of a bleak consumer environment is Cheerios maker General Mills. The company told attendees this week it was looking forward to the event. Fiscal Year 2026 Sales It would fall between 1.5% and 2.5%, which, if realized, would be the third straight year of declining sales.
The price of home-cooked meals is expected to rise by 1.7% in 2026, a slight improvement from 2.3% last year. According to data from the USDA Economic Research Service. The increase marks a departure from the COVID-19 pandemic at a time when food price inflation has actually soared. 40-year high. According to government data, prices surged 11.4% in 2022 alone.
As prices continue to rise, albeit at a slower pace, consumers are seeking out promotions, bargaining for cheaper alternatives, or reducing their total purchase amount. Van de Put said these dynamics were not expected to change in the near term and predicted that consumers would potentially face “very difficult circumstances” over the next three years.
Sean Connolly, CEO of Conagra Brands, said the maker of Slim Jim and Healthy Choice was still feeling the effects of inflation 14 months ago but decided to hold off on another price increase after four consecutive years of implementation.
“We said, ‘You know what? Consumers are just reaching their breaking point, so we’re going to eat the last wave of inflation and keep prices where they are,'” Connolly told Food Dive. He pointed out that other companies that have opted for further price increases in 2025 are now in “correction mode.”
“They pushed the consumer too far,” he said.
Mondelēz’s business has been partially cushioned by the fact that only 25% of its sales come from the United States, and because consumers continue to love snacking and engage in this behavior more than 3.5 times a day. In 2026, Mondelēz expects organic net revenue growth in the range of up to 2%.
Van de Put pointed out that more families are buying biscuits, a category that includes Mondelēz’s Oreo, Ritz and Chips Ahoy. — Both the frequency and quantity of purchases are decreasing due to a decrease in disposable income.
“The sector is healthy,” Mondelēz CEO Dirk Van de Put said in an interview, noting that U.S. biscuits account for nearly two-thirds of the company’s North American business. “It just becomes a question: When do consumers feel they can spend more money?”
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Christopher Doering/Food Dive
Different Definitions of Value
At the end of last year, Circana lowered its 2026 growth forecast. Retail food and beverage sales fell 2% to 4% in August, compared to the 3% to 5% range expected in August. The company noted that shoppers are spending less and seeking more value. “Serious” price competition and the use of AI-assisted technology will help curb growth “even while cost pressures persist”.
In response, food companies are now further strengthening their value propositions.
In some cases, this means lowering prices. General Mills has cut prices on nearly two-thirds of its North American groceries, and PepsiCo has responded. Announcement of price reduction plan Save up to 15% on many snack brands. PepsiCo and Uncrustables maker JM Smucker have also reduced the number of SKUs they offer to focus on products with the fastest velocity and margins.
“We have seen an increased interest in value, especially among middle- and lower-income consumers,” General Mills CEO Jeff Harmening told the audience at CAGNY. “Spending patterns are changing due to cost of living and housing cost pressures, and value is a key expectation that will remain in place going forward.”
But value for consumers isn’t just about cost. Many people are willing to pay more for products containing protein or fiber because of their nutritional value, while others will pay for special, limited-time flavors or experiences.
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Christopher Doering/Food Dive
Conagra decided to prioritize volume growth and get the right mix of trendy products, packaging and marketing that would resonate with inflation-weary consumers. For example, the Chicago-based food manufacturer launched new protein-packed products in its Evol, Birds Eye, and Frontera lines and expanded Dolly Parton’s indulgent brand into Cookies ‘N Custard Cups.
Connolly told Food Dive that recent sales data shows the frozen and snack food giant’s sales and volumes are holding up “better than most of its closest competitors.” Nonetheless, Conagra expects the change in organic net sales to increase by 1% compared to a decrease of 1% compared to fiscal 2025.
Bob Nolan, Conagra’s senior vice president of demand science, warned that in today’s environment, simply lowering prices is not enough to attract consumer interest.
“Low prices on yesterday’s items don’t resonate with consumers, especially the younger generation,” Nolan said. “They want the food to be interesting and exciting. Yes, they want to create value, because they have money to manage, but that alone is not enough to make sales.”
