Welcome to this week’s Food Exec Brief, a roundup of the most important news shaping food and beverage manufacturing, from M&A moves and regulatory shifts to tech innovation and sustainability trends.
Key takeaways:
- 📊 Strategic upheaval: 49% of CPG executives doubt their current business structure will survive another decade, while Kraft Heinz’s rumored $20B split sends warning signals about mega-merger sustainability.
- 💰 Regulatory delays: FDA postpones critical food traceability rule by two years following industry pushback on compliance costs, while Red No. 3 ban forces strategic reformulation decisions across portfolios.
- 🤖 AI investment surge: Vision inspection systems deliver ROI in under a year through recall prevention and labor savings, while 59% of executives predict AI agents will transform consumer relationships within five years.
- 🔬 Innovation focus: Salt and sugar reduction technologies drive Kerry’s margin expansion to 16.1%, signaling reformulation’s shift from compliance necessity to strategic revenue driver.
📊 Corporate restructuring and M&A warnings
Industry giants reckon with unsustainable business models as consumer health trends challenge traditional mega-merger strategies.
Half of CPG executives question business model viability
Nearly half (49%) of consumer packaged goods executives believe their current business structure won’t survive the next decade, according to a PwC survey—higher than the 42% average across all industries. Despite this skepticism, 29% of concerned executives plan no structural changes. The uncertainty reflects mounting pressures from tariffs, inflation, and shifting consumer expectations around health and transparency.
Kraft Heinz split signals mega-merger failure
Kraft Heinz’s rumored $20 billion business split serves as a stark warning about M&A strategies prioritizing short-term gains over brand coherence. Industry experts cite cultural misalignment between Heinz and Kraft, plus the rise of health-conscious consumers rejecting ultra-processed foods, as key failure drivers. The split follows similar restructuring at Unilever and Kellogg, highlighting how consumer health trends are forcing portfolio realignments across the industry.
💰 Regulatory landscape and compliance costs
FDA delays major traceability requirements while artificial dye bans force strategic reformulation decisions across product portfolios.
FDA delays food traceability rule until 2028
The FDA postponed implementation of critical food traceability requirements by over two years, moving the compliance date from January 2026 to 2028 following industry pressure about implementation costs. The rule, part of the Food Safety Modernization Act, would require enhanced record-keeping for foods on the Food Traceability List to help investigators during foodborne illness outbreaks. Companies successfully argued they need more time to coordinate data sharing across complex supply chains.
Manufacturers navigate Red No. 3 ban strategy
With FDA’s January 2027 deadline for removing Red No. 3 from food products, manufacturers face complex reformulation decisions affecting dozens of SKUs across cakes, candies, snacks, and beverages. Companies like Nestle, Kraft Heinz, and General Mills have committed to voluntary artificial color removal by 2026-2027. Industry consultants warn that successful reformulation requires going beyond technical fixes to address brand equity, consumer messaging, and supply chain implications.
Learn more.
🤖 Technology adoption and operational efficiency
AI-powered vision systems deliver measurable ROI while manufacturers embrace automation to address labor shortages and quality challenges.
AI vision inspection systems pay for themselves in under a year
Food manufacturers report ROI in less than 12 months from AI-based vision inspection systems, driven by three key factors: preventing million-dollar product recalls through superior foreign material detection, eliminating high-turnover inspection labor costs, and reducing waste through real-time process control. One cookie producer saved $94,600 annually by using AI vision to optimize oven temperatures, reducing scrap waste by 8.7%. The technology addresses critical staffing challenges in quality assurance roles while improving accuracy over human inspectors.
Learn more.
CPG brands embrace connected packaging evolution
Manufacturers are shifting from static to dynamic QR codes to maintain consumer engagement after packaging ships. Dynamic QR codes allow real-time content updates—crucial as brands prepare for the GS1 Sunrise 2027 transition requiring 2D barcodes. Early adopters use the technology for transparency initiatives, email capture, and consumer feedback while gaining valuable scan data. The shift addresses a critical pain point where outdated static QR codes lead to dead links and lost customer trust.
🔬 Innovation and product development
Reformulation technologies emerge as profit drivers while manufacturers balance innovation investment with portfolio optimization.
Kerry’s salt and sugar reduction drives margin expansion
Kerry Group reported EBITDA margin expansion to 16.1% (up from 15.1%) driven significantly by growing demand for salt and sugar reduction technologies across bakery, snacks, and beverages. The Irish ingredients company achieved 3.0% volume growth with strongest performance in the Americas (3.7% volume growth) as brands respond to regulatory pressures and retailer standards. The shift reflects reformulation’s evolution from reactive compliance to proactive growth strategy, with Kerry investing further in bio-fermentation and taste platforms.
Mars partners with Pairwise for CRISPR-enhanced cacao
Mars Inc. licensed CRISPR gene-editing tools from biotech company Pairwise to develop climate-resilient cacao plants capable of withstanding disease, heat, and environmental stresses affecting West Africa’s cocoa supply. The partnership follows cocoa prices reaching record highs of $12,000 per ton amid drought and disease pressures. Mars Plant Sciences Director Carl Jones emphasized the technology’s potential to “support and strengthen global supply chains” through transparent, responsible plant breeding innovation.
📈 Manufacturing investment and capacity
Food manufacturers continue facility expansion despite economic uncertainty, with particular strength in dairy and cold storage infrastructure.
Food manufacturing investment continues with caution
Despite economic uncertainty around tariffs and inflation, food and beverage manufacturers continue major facility investments, with over 30 projects announced since early 2025. Notable developments include Chobani’s $1.2 billion New York dairy facility, JBS USA’s $135 million Iowa sausage plant, and Walmart’s new Kansas beef processing facility. Architecture and engineering firms report clients are taking measured approaches to capital expenditure, with some previously green-lighted projects under review, but overall investment momentum remains strong in dairy, meat processing, and cold storage expansion.
The Food Exec Brief provides weekly insights for food and beverage manufacturing leaders and publishes every Friday. Want to get essential food industry news delivered to your inbox? Sign up for our weekly and daily newsletters.
