The Consumer Analyst Group of New York's (CAGNY) annual conference in Orlando, Fla., last week spotlighted a focus on long-term strategies for consumer products companies, regardless of geopolitical, regulatory, and tariff risks.

After years of volatility, 2024 was largely normalized as demand reverted to pre-COVID-19 conditions and pre-inflation cycles. More unknowns arrive in 2025 amid a weak consumer backdrop and a risk of renewed higher inflation and policy uncertainty. We rate 27 of the 31 companies that presented at CAGNY. Unrated issuers were W.K. Kellogg, Freshpet, e.l.f. Beauty, and Celsius Holdings Inc. Most rated companies are investment-grade, except Coty Inc. (BB+/Stable) and US Foods Inc. (BB/Positive).

Packaged Food

The 2025 forecast is cautious and below the long-term algorithm of most industry names presented on the first day of CAGNY.   Common themes included commitment to snacking (despite near-term pressures in certain categories), investing in technology and media to support brands and volume growth, driving productivity, and supporting innovations, recognizing that the consumer environment remains weak. Most companies will report top-line sales below their long-term trends in fiscal 2025 into 2026.

Portfolio shifts and ongoing innovations and renovations remain part of their long-term strategies. Consistent dividend payouts and share repurchases, absent mergers and acquisitions (M&A), remain part of capital allocation strategies. M&A still drives long-term growth.

General Mills Inc. noticeably did not affirm or provide updated guidance for its fiscal year (ending May 2025). The company cited uncertain customer order patterns and potential tariff impacts, although it sources about 95% of its goods in the U.S., but cautioned more uncertainty around steel and packaging costs. It also warned of a muted 2026 with limited contributions from price and mix. The company expressed optimism that pet ownership and humanization trends would support long-term growth prospects for the category, despite recent softness. We heard its peers echo similar sentiments.

Conagra Brands Inc. dove deeper into the snacking and frozen categories and provided a backdrop on consumer behavior changes including the aging population, expanding ethnic diversity, increase in Generation Z and millennial households, change in family household types, and consumer demand for convenience and healthy options. The company also offered more insights into glucagon-like peptide-1 (GLP-1) medications--the evolution, potential market penetration, and how its products could fit in, especially under new labeling in its Healthy Choice frozen meals and higher protein profile. Still, Conagra lowered its guidance for fiscal 2025 following supply chain disruptions that affected its frozen meals with chicken and vegetables.

The Kraft Heinz Co. made no major announcements and continues to work on restoring growth in its non-sauce businesses. McCormick & Co. Inc. continues to outperform the broader packaged food group and can expand in line with or above its long-term targets with its advantaged portfolio. The company said it remains fluid on tariffs and will provide an update when there is more clarity.

Cost inflation continues to pressure margins for several issuers.   High cocoa costs weigh on the outlook for The Hershey Co. and Mondelez International Inc. Hershey provided various 2026 earnings per share range changes from 2025, depending on cocoa prices. It is undertaking pricing and productivity initiatives and expressed confidence in the resilience of the chocolate category, but Hershey won't restore earnings per share to its long-term algorithm until cocoa costs normalize. Former basketball star and Hershey pitch man Shaquille O'Neal did not show up this year, but the company announced actor Jennifer Aniston as its new brand ambassador for the lagging Skinnypop brand.

Mondelez expressed its commitment to the chocolate category, despite near-term cocoa cost pressures. It laid out a clear strategy for the category and mentioned that it was exploring lab-grown cocoa. Mondelez also spent more time on the cake and pastry category, highlighting its scale and growth opportunity.

The JM Smucker Co. pointed to record coffee prices that could hurt its near-term view, along with its strategy of returning sweet baked snacks to growth. Its Uncrustables brand remains the bright spot. We will see if Smucker can realize the revenue synergies from Hostess with distribution in the convenience channel.

Food Ingredients

Sugar and sodium reduction and protein products for snacks and beverages are in high demand.  Kerry Group PLC, International Flavors & Fragrances Inc. (IFF), and Ingredion Inc. highlighted opportunities with changes in consumer tastes and preferences for healthier, nutritious, and sustainable products demanded by consumers, especially Gen Z. Still, having the right product mix is relevant for these manufacturers, which partly explains why Kerry and IFF have been reshaping their portfolios through large dispositions of lower-margin businesses to refocus growth in higher margin specialty ingredients where most of the growth is.

Margins are rebounding and leverage near long-term targets.  Ingredion stood out as it showed its margin improvements and portfolio diversification over the years, continuing to demonstrate a disciplined approach to growth investing by emphasizing capital expenditure over high-priced M&A. The company remains focused on Latin America and highlighted that tariffs are less of a risk because it serves and produces locally.

IFF's operating turnaround continues with margins rebounding closer to our long-run expectations of closer to 20%. It's in the final stages of its asset dispositions. It highlighted its technical capabilities, especially with probiotics. It also reiterated its commitment to deleveraging to its 3x debt to EBITDA target largely through asset sales and getting back to basics and discipline under a new management team.

Food Service Distributors

Sysco Corp. and US Foods stood out as they highlighted their solid operating performances. They emphasized how food-away-from-home continues to take share from food-at-home, supporting industry growth. Sysco delivered on its targets and reiterated its fiscal 2025 guidance. It has been increasing revenue in the mid-single-digit percents, despite slower restaurant traffic due to market share gains from regional distributors. Similarly, US Foods has similarly expanded due to market share gains.

Both are leaders in a highly fragmented industry and capturing share from smaller players. US Foods highlighted its digital capabilities that drive efficiency and better service, a key competitive advantage.

Non-Alcoholic Beverages

Growth remains intact for the Coca-Cola Co.  Coca-Cola noted its above-long-term target organic growth rates that have benefitted from strong international growth, the scale and strength of its bottler network, and the success of its total beverage strategy. It reconfirmed more room for growth globally. Coke made no major announcements and acknowledged refranchising the remaining bottlers could take time. The company did not discuss its ongoing tax litigation with the IRS. It reiterated commitment to its long-term leverage target of 2x-2.5x.

PepsiCo Inc. has a renewed focus on price.  Pepsi maintained its commitment to leveraging the strength of its beverage and snack business with retailers after both underperformed expectations in North America last year. Its beverage business has been benefitting from innovation in zero-calorie offerings but faces channel headwinds in convenience, where the company is looking to gain distribution share in small format stores. Snacking meaningfully underperformed for the first time in 2024, as Pepsi faced a more value conscious consumer after taking aggressive pricing actions to offset inflation. In response, the company plans to make meaningful changes to its price pack architecture to regain sales momentum.

Pepsi will also look to expand its snack brand presence in the away-from-home channel and participate in more meal occasions as consumers shift to more frequent meals throughout the day. It will continue investing in its digital advertising and innovation into healthier offerings. Overall, Pepsi signaled an intention to leverage its portfolio and distribution network to reignite growth rather than fill a product void through large M&A or to more aggressively reshape its portfolio through dispositions. As such, capital allocation priorities are unchanged, which continues support leverage of 2x-2.5x.

Alcoholic Beverages

Near-term pressures are likely cyclical and not structural.   Diageo PLC cited that it does not believe GLP-1s are hurting demand, but acknowledged them as a headwind along with the smaller consumer wallet due to inflation and cannabis. It believes that despite these pressures, consumers continue to spend on alcohol and the premiumization trend will persist. Diageo touched briefly upon tariffs, citing uncertainty since the U.S. and China are its largest markets and excluded tariffs in its guidance. The company highlighted its need for working capital and cash flow improvements and will pursue disposals where appropriate to reduce leverage.

U.S. beer category volumes are still under pressure.  Molson Coors Beverage Co. highlighted its growth opportunities in the convenience channel, ongoing renaissance of the Coors Banquet brand, and success of Madri in the U.K. and other Western European markets. It also touted success in sustaining outsize market share gains from 2023, when several industry players gained share from Bud Light. However, the industry continues to face volume declines in its core North American beer categories, which will require ongoing advertising and promotional investments to support organic growth. It will fund them with ongoing cost savings and operating efficiencies.

Growth relies on market share gains and pricing to offset soft category volumes. But given the weak macroeconomic environment in which consumers seek value, we believe price increases will be difficult to implement. Therefore, we believe sustaining annual sales growth above 1% in its core Miller Lite and Coors Light brands may be challenging. Molson Coors nonetheless will lean into digital marketing and approach each channel differently, expanding its omnichannel approach and driving channel-led innovation. The company reiterated its bolt-on M&A strategy, most recently Fever Tree, and its commitment to maintaining leverage below 2.5x.

Household Products And Personal Care (HHPC)

In contrast to packaged food companies, HHPC and beauty companies continue to deliver low- to mid-single-digit percent organic revenue growth.   Their categories are generally more resilient with less substitution risk, even during weaker economic times. Only Procter & Gamble Co. was a bit cautious in its guidance to the lower end of its ranges for fiscal 2025, citing potential volatility in 15% of its business. The company did not provide specifics around tariffs but cited that they pose a new layer of potential volatility.

Church & Dwight Co. Inc. had a strong 2024 and is set to deliver on its Evergreen model. Its announced strategy on and commitment to its historically volatile specialty products segment was a surprise. The company will continue offering probiotics, and has developed new brands that will help in chicken hatching and joint health.

Technology and digital investments are paying off.  Clorox Co. believes it is poised to capture megatrends and address consumer needs. It has restored organic growth and deleveraging as it laps the 2023 cyber attack. Kenvue Inc. acknowledged a difficult 2024, but expects improvements in 2025 after it phases out of its transition services agreement with former parent Johnson & Johnson. Coty has meaningfully improved its operating performance and reiterated its desire for investment-grade ratings. It has less exposure to China than many of its peers and offers products at various prices.

S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and possible responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly (see our research here: spglobal.com/ratings).

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