The trend: Rising costs and weakening consumer spending pushed Kraft Heinz, Hormel, and Mondelez to cut their full-year guidance.

• Hormel—parent of Planters, Skippy, and Spam—lowered its outlook, citing higher commodity costs, bird flu, and a fire at its Arkansas peanut butter plant. The company now expects adjusted earnings per share (EPS) to fall 8 cents to 9 cents below its prior 38 cents to 40 cents target for its fiscal Q4, which ended October 26.
• Kraft Heinz tightened its guidance after a 2.3% YoY drop in Q3 sales and growing signs of pressure on US consumers. It lowered the low end of its expected organic net sales decline to 3%, from 1.5%, and reduced its adjusted EPS forecast to $2.50 to $2.57 per share, down from $2.51 to $2.67.
• Mondelez also cut its outlook, citing rising raw material costs—especially cocoa—and consumers’ growing focus on value. It now forecasts organic revenue growth of 4%, down from 5%, and a 15% decline in adjusted EPS on a constant-currency basis, versus the 10% drop it projected in July.

Value-focused consumers: Persistent inflation, a slowing labor market, and the government shutdown are making consumers increasingly cautious.

• Consumer confidence fell for the third straight month in October to its lowest level since April, as Americans became more pessimistic about the economy and job market, per the Conference Board. A separate gauge that tracks expectations for the next six months slipped to its lowest point since June and has remained below the threshold that typically signals a likely recession since February.
• On Kraft Heinz’s earnings call, CEO Carlos Abrams-Rivera cited “one of the worst consumer sentiments we have seen in decades,” which is leading US shoppers to pull back on spending.
• Mondelez CEO Dirk Van de Put echoed that view, noting that declining volumes reflect shoppers’ economic concerns. The shift has heightened consumers’ focus on value: Lower-income buyers are opting for smaller packages that carry a low overall price tag, while higher-income consumers are trading up to larger, better-value packs, especially when discounted.
• At the same time, more consumers are turning to private labels to save money, extending a trend that gained momentum as inflation surged in 2021 and 2022. Among CPG products, the price gap between store and national brands has remained steady at about 20%, according to Circana—giving private labels an edge in matching consumers’ value-driven shopping habits.

Our take: Beyond consumers’ increased focus on value, the food industry is contending with other challenges.

• Rising raw material costs—driven by tariffs, lower crop yields, and other supply pressures—are squeezing margins.
• The MAHA movement’s scrutiny of ultraprocessed foods has also fueled concern, with 60% of consumers surveyed by PwC expressing worries about their health impacts.
• Meanwhile, about 1 in 8 US consumers (12.4%) now take GLP-1 drugs, according to Gallup, leading to smaller portion sizes and reduced overall food spending.
• Finally, the expected cutoff in SNAP benefits this week due to the government shutdown is likely to trigger an abrupt spending drop among the program’s roughly 42 million recipients.

With costs rising and consumers pulling back, food companies face a tough road. Some may need to reprioritize to focus on holding share rather than chasing growth.