State of Food and Beverage: The choices CPG leaders can make to renew growth
McKinsey’s April 2026 State of Food & Beverage report lands a sentence that deserves to be pinned above every CPG commercial leader’s desk: private label wins on price, small brands win on function, and many large brands find themselves caught in the middle, without a meaningful edge on either dimension.
The data behind that sentence is stark. Since 2023, TSR for the world’s largest F&B CPG companies has declined roughly 7% while the S&P 500 has expanded 9%. Volume growth is stuck below 1 percent annually. Private label is gaining share in every market McKinsey surveyed, and 86% of US consumers now rate private label as equal to or better than branded products on value.
The clearest picture of the squeeze comes from McKinsey’s own consumer survey data.
Look at the gaps. Private label outscores big brands by 34% points on price and 20 on value. Small brands outscore big brands by 19 points on functionality. Big brands retain a lead on quality, values, and emotional connection, but quality is now table stakes across all three tiers, and emotional connection does not protect a basket when the shopper is standing in front of the shelf comparing a $3.50 branded pasta sauce to a $1.80 private label one they have already decided is “just as good.”
This is not a cyclical dip. It is the old playbook running out of road.
Reference: McKinsey & Company – Big brands lose to private label on price and to small brands on function
The uncomfortable truth about where the growth went
The report identifies four ways consumers are diverting spend away from incumbents: trading down to private label, trading up to disruptor brands with differentiated function, paying more for food away from home, and cooking more from scratch. Each of these is a vote of no confidence in the middle of the shelf. Consumers are not rejecting branded CPG outright.
They are rejecting products that offer neither the price of private label nor the functional proof of a disruptor. The numbers make the scale of the redistribution clear.
Reference: McKinsey & Company – Small independent brands: 13% of US F&B sales in 2021, 35% of category growth by 2025
Small independent brands held just 13% of the US F&B market in 2021 and contributed 15% of growth from 2021 to 2023. By 2025, they are delivering 35% of category growth. Private label is contributing another 48%. Large brands, which still command a third of total sales, are picking up 2% of the growth. That is not a rounding error. That is the growth engine of the world’s biggest F&B companies quietly seizing up while the category around them keeps expanding.
The uncomfortable part is that this has been building for a decade. Pandemic-era pricing tailwinds masked it. Inflation-led revenue growth from 2021 to 2023 masked it further. Now that price has reverted to historical norms and volume has not recovered, the question every CRO is being asked is the same: if we cannot raise price and we cannot grow volume, what exactly is the plan?
McKinsey’s answer is a dual agenda. The boardroom reshapes the portfolio toward structurally growing pockets: health, functionality, premiumisation, the right geographies. The organisation lifts performance by winning on product, rebuilding brand relevance, and unlocking AI-driven productivity, an estimated 200 to 300 basis points of P&L cost reduction that should be redeployed into reinvestment rather than banked as earnings protection.
Where most CPGs will actually fail
Agenda 1 gets the board attention. Agenda 2 is where the real work sits, and where most organisations underestimate what it takes. “Winning on product” is not an R&D problem. It is a commercial execution problem. A superior product that is out of stock in the stores that matter, under-supported at the shelf, over-discounted through lazy promotional mechanics, and invisible to a field force managing 40 calls a week on instinct, is not a superior product in the market. It is a line on a marketing deck.
The same logic applies to affordability. The report notes that leading players are redesigning price-pack architecture by occasion, channel, and region, distinguishing between relative and absolute affordability, and building differentiated assortments across grocery, club, convenience, and discount. That is operationally complex work. Most CPG commercial teams do not have the granular data, the decision systems, or the execution visibility to do it well. They default to the blunt levers McKinsey warns against: broad promotions, delayed price increases, and trade spend that nobody can fully reconcile against outcomes.
And then there is the retailer. Deductions continue to rise. Post-event TPM analysis, where it happens at all, lands weeks after the money has gone. Finance and commercial argue over whose number is right. The promotional calendar is built on last year’s plan with a few tweaks because nobody has time to rebuild it from first principles.
What agentic AI actually changes for commercial leaders
The report is right that AI can fund the ambition. It is less explicit about where that productivity actually comes from. Most CPGs we work with discover quickly that the biggest trapped value is not in back office automation or media mix modelling. It is in the commercial engine, the daily work of field reps, key account managers, trade marketers, and the finance teams chasing retailer deductions.
This is where Aforza’s point of view is direct. Horizontal AI copilots summarise meetings and draft emails. That is useful. It is not transformative.
Agentic AI, built for CPG, is different. It does the work.
Ava, Aforza’s Vertical AI, reviews every store visit photograph for compliance against the agreed planogram, without a human reviewer in the loop. She flags the right next action for each account based on the full commercial context, distribution, promotional performance, outstanding deductions, share of shelf. She drafts promotional plans grounded in actual post-event ROI rather than last year’s template.
Ava validates retailer deductions against TPM claims line by line and recovers margin that previously leaked out unchallenged. She takes the administrative load off the field so that reps spend meaningfully more time selling and less time typing.
The difference matters because of where the productivity lands. AI that helps head office work faster does not rebuild household penetration. AI that makes every field visit more effective, every promotion more profitable, and every deduction more defensible, does. That is the flywheel McKinsey describes: efficiency funds investment, investment restores volume, restored volume compounds performance. But the efficiency has to come from the right place.
The commercial organisation is where the flywheel turns or stalls
Aforza customers, including Asahi, Edrington, AG Barr, Lee Kum Kee, Super Bock Group and Alicorp, use this approach to make every visit more productive, protect margin that was previously leaking through unmatched deductions, and rebuild share one account at a time. Field productivity gains of 50% per visit are not theoretical, they are documented and real. The common thread is not that these companies bought software. It is that they rebuilt how their commercial organisation makes decisions, with agentic AI doing the operational lifting that their people used to do by hand.
This is where Aforza has done something no other CPG platform has. The Ava Library is the industry’s first packaged library of agentic AI use cases purpose-built for consumer goods. Not a toolkit. Not a set of APIs waiting for a systems integrator to assemble. A living library of pre-built agents that already know how to review a store visit for perfect store compliance, validate a retailer deduction against the originating trade promotion, surface the next best action for a key account, draft a promotional plan from post-event ROI, reconcile distributor sell-out data, and dozens of other jobs that sit at the heart of the CPG commercial day.
🔗 You can download a copy of the Ava Library here
This matters because the biggest gap between the McKinsey report and the average CPG strategy deck is the gap between what to do and how to do it. Every commercial leader reading State of Food & Beverage now has a clear diagnosis. Very few have a credible path to execution that does not start with two years of data foundations, a custom AI build, and a change programme their organisation has no appetite for.
The Ava Library compresses that path. It turns “we should use AI to fund the ambition” from a board slide into a set of working agents that start delivering productivity inside the first quarter.
The McKinsey report tells CPG leaders what to do. The harder question is how. If Agenda 2 depends on AI-funded reinvestment, the commercial organisation is where that flywheel either turns or stalls, and the speed at which you can put agentic AI to work across it determines whether the reinvestment math actually compounds.
Where is yours losing the most value today, and what would it take to get it back?
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