Amidst a challenging and uncertain landscape, companies highlighted agility and adaptability to changing consumer preferences, how they are leveraging AI to improve marketing efficacy and drive cost-saving efficiencies, and the opportunities in international markets to drive growth.
In February, many of the world’s top consumer packaged goods companies gathered for the annual Consumer Analyst Group of New York (CAGNY) conference in Orlando.
Brands are balancing affordability and premiumization
As economic pressures persist, consumers continue to be discerning about where they spend – seeking value while balancing affordability with quality. Companies are making affordability a priority while reinforcing premium experiences for those seeking indulgence. Kraft Heinz is expanding value-driven offerings, including low-cost meal options and value-sized portions, ensuring continued engagement despite budget constraints, and Nestlé emphasized its ability to serve consumers at every price point, from affordable to premium options across categories. L’Oréal reinforced its strategy of “democratization and premiumization,” ensuring mass accessibility while creating value for the company, while e.l.f. Beauty emphasized its focus on high-quality beauty products at accessible prices. Hershey noted that 80% of its everyday chocolate items are less than $4, and that it continues to use innovation to create excitement. Meanwhile, Diageo’s premiumization strategy reinforces “better, not more” consumption, while ensuring the company offers something for everyone.
Companies are betting big on international as U.S. growth remains challenged
Companies highlighted the opportunities in international markets, noting how emerging markets are outpacing developed regions in growth, often in the double digits. Coty highlighted that the mass fragrance opportunity in developing markets is almost double the size of developed markets. PepsiCo, Mondelēz, and Kraft Heinz are expanding into high-potential markets, focusing on increasing consumption and deepening brand penetration. Nestlé highlighted KitKat’s global success, emphasizing localized flavors and regional innovation as key growth levers. Colgate-Palmolive put a spotlight on India as a strategic priority, with its Managing Director of the country sharing a deep dive on its market-specific execution and the opportunity ahead. Localization is key, with companies investing in regional supply chains and retail partnerships to tailor offerings to local consumer preferences, with Coty and Kenvue customizing products regionally. Despite currency fluctuations and economic variability, companies remain bullish on international opportunities.
The health revolution is reshaping food and beverage portfolios
Health-conscious consumption is fundamentally shifting food and beverage innovation, with companies reformulating products, increasing protein content, and optimizing portion sizes. Conagra’s “On-Track” GLP-1-friendly badge is helping consumers navigate high-protein, fiber-rich frozen meals, and noted that its better-for-you snacking category is growing 22%. Kraft Heinz is innovating with its iconic brands, launching sugar-free Jell-O and gluten-free Kraft Mac & Cheese to meet demand for clean- label, functional nutrition, and WK Kellogg Co highlighted the nutritional benefits of its cereal brands and how it has introduced a state-of-the-art food development lab focused on healthy, functional innovations. Hershey reported strong growth in better-for- you snacking as consumers look for low-sugar, high-protein options, and highlighted the launch of a partnership with VitaKey to create a suite of health and wellness products. Ingredion is advancing sugar reduction and protein fortification technologies, helping brands develop reformulated, health-forward products. Molson Coors sees its non-alcoholic offering as a key growth area and a natural space to drive diversification. Overall, rather than seeing GLP-1 as a threat, companies are adapting and capitalizing on the growth opportunity through innovation.
Convenience and snacking: meeting consumers anytime, anywhere
The demand for convenience and flexible snacking is reshaping food and beverage strategies as consumers seek quick, satisfying options that fit seamlessly into their on-the-go and at-home routines. Mondelēz highlighted that consumers have consistent love for snacking as an everyday indulgence even during inflationary times. PepsiCo is expanding into multiple dayparts – morning, afternoon, and evening – ensuring its snacks and beverages remain a go-to choice throughout the day, and J.M. Smucker is expanding convenient offerings in cold coffee to drive incremental occasions. Conagra is ensuring its frozen foods offer nutritious, waste-free meal solutions tailored to busy lifestyles. PepsiCo is enhancing on-the-go hydration with customizable SodaStream solutions, and Molson Coors discussed how single-serve packaging is leading growth in the convenience channel. With accessibility and portability driving growth, companies are expanding product formats and touchpoints to embed their brands into daily consumer habits, ensuring relevance across all eating occasions.
Expansion of the food away-from-home sector
The "away-from-home" food category is seeing significant growth, driven by evolving consumer behaviors, channel expansion, and a greater focus on premiumization and convenience. Sysco and US Foods highlighted the resilience and expansion of the food- away-from-home sector, emphasizing the long-term trend of out-of-home dining growth outpacing food-at-home consumption. Kraft Heinz is expanding its away-from-home footprint beyond condiments, tapping into higher-margin, non-commercial channels such as hotels, travel, and leisure. J.M. Smucker highlighted the whitespace opportunities it sees in the away-from-home channels, already making meaningful progress within travel and university channels. As consumer preferences for convenience, premium experiences, and diverse flavors grow, companies are actively investing in foodservice partnerships, menu innovations, and tailored product offerings to capture this demand.
Global tastes and bold flavors are driving new product innovation
Consumer demand for diverse and globally inspired flavors is driving product innovation. Companies emphasized their investments in regional flavor expansion, with Conagra noting that a lot of growth is coming from multinational households. Companies from McCormick to Conagra discussed the expansion into flavors inspired by Mexican, Latin-American, and Indian cuisines. In snacking, PepsiCo is bringing Indian and Latin American favorites like Kurkure and Sabritas to U.S. shelves, and Hershey discussed the power of combining its sweet and salty portfolios together. In beverages, Diageo showcased global activations that used regional taste profiles to drive brand innovation. As multicultural flavors gain traction, brands are reimagining familiar products through a global lens to capture evolving consumer palates.
AI is supercharging marketing: precision, efficiency, and personalization…
In an acceleration from last year, AI was front and center with companies highlighting how the technology is reshaping brand- building strategies, enabling them to deliver hyper-personalized experiences while improving ROI, especially in a fragmented digital landscape. P&G and Mondelēz noted they are using AI to customize advertising assets, reducing costs and development timelines from weeks to days, and Diageo is using AI-driven insights to tailor global activations. Colgate-Palmolive described how it is using generative AI to help decide the most effective way to deploy content, including changing visuals, to drive engagement.
…While also driving supply chain efficiencies and cost savings at scale
As companies prioritize efficiency and profitability, AI was also highlighted as a cornerstone of supply chain transformation. In presentations from L’Oreal to Clorox, AI is being used to streamline operations, improve cost management, and increase productivity. General Mills has optimized shipment routing to cut transportation and warehousing expenses, with PepsiCo and Kraft Heinz enhancing forecasting accuracy, warehouse automation, and logistics. Kenvue is leveraging AI tools to accelerate speed to market, P&G is applying advanced technologies to optimize inventory planning, targeting up to $1.5 billion in cost savings, and Molson Coors is leveraging technology to optimize distribution and in-store execution. AI-driven analytics are also helping companies navigate inflation, as dynamic pricing models and supply chain predictions allow for more responsive cost management.
The humanization of pets continues to drive premiumization and innovation
An ongoing theme was how pet owners increasingly view their pets as family, resulting in growing demand for premium, natural, and functional pet nutrition. Companies such as FreshPet are focusing on high-quality ingredients, minimally processed fresh formats, and protein-rich diets to align with shifting consumer expectations. Retailers are scaling distribution networks for fresh pet food while brands invest in education and marketing to reinforce the benefits of human-grade ingredients. Clorox noted that pet owners are willing to pay premium prices for high-quality products, such as odor innovation in pet litter. Companies highlighted their innovation with fresh and functional pet foods, driving premiumization in one of the most resilient consumer spending categories.
M&A continues to be a strategic tool for portfolio evolution and growth
M&A continues to be a key lever for companies to strengthen their portfolios, expand into high-growth categories, and enhance profitability, but with ongoing emphasis on disciplined capital deployment. Companies noted they are targeting acquisitions that bring differentiation, access to new consumption occasions, or geographic expansion. L’Oréal’s recent acquisitions in premium skincare and fragrance reflect its strategy of scaling value-added categories, and Molson Coors highlighted how its investment in Fever Tree adds to its premium non-alcohol business. Diageo noted the disposal of its shareholdings in Guinness Nigeria and Guinness Ghana to drive value creation, and General Mills highlighted that it has executed more than a dozen acquisitions and divestitures since fiscal 2018 to reshape its portfolio. Celsius Holdings announced its acquisition of Alani Nu the day prior to its presentation, creating a better-for-you, functional lifestyle platform.
Tariffs were acknowledged, but not a focus
While tariffs remain a potential headwind, most companies communicated confidence in their ability to offset risks through local sourcing, pricing strategies, and operational efficiencies. Local production is a key defense, with companies including Ingredion, General Mills, and others focusing on localized supply chains to reduce exposure to tariffs and global trade disruptions. Companies are monitoring raw material and packaging costs, adjusting their sourcing strategies to avoid tariff impacts on key ingredients. Most companies addressed the topic in reactive Q&A discussions rather than proactively in their strategic outlooks.