In the food and beverage industry, post-COVID cost inflation has significantly influenced brand decisions in recent years. Companies strive to meet consumer demand for affordability and must manage their price levels to remain competitive. Leading brands like PepsiCo are setting the tone for this shift by cutting prices by up to 15% to ease everyday food costs. 

Economic pressure on consumers, however, is only one half of the picture. In addition to preventing products from being too expensive, brands need to understand the values consumers seek to align themselves with. Entering 2026, wellness and functional ingredients have emerged as key trends in the food industry, and the beverage industry similarly focused on simplified items, protein, and sustainable packaging. These considerations go beyond pricing and require products geared toward consumer lifestyles.  

How Food Brands Are Rethinking Pricing

Clarkston Consulting partner and consumer products industry lead Steve Rosenstock highlighted the need to balance pricing and value as he explored the implications of Pepsi’s price reductions. Below are the key takeaways for food and beverage companies: 

1. Affordability Remains a Priority

Product affordability is a necessary component of meeting consumers where their needs lie. To address concerns about persistent inflation, key players in the industry have been cutting prices as a signal to consumers. Pepsi set the stage for this trend with price reductions for brands like Doritos and Cheetos, aiming to boost competitiveness by appealing to customers. 

General Mills’ decision to reduce prices on nearly two-thirds of its North American grocery portfolio reflects a broader effort to protect volume and remain accessible to cost-conscious customers. Target’s grocery prices demonstrate a similar trend on the retail side, as the brand leveraged discounting to support shoppers during the holiday season. These strategic moves are critical to stabilizing short-term demand while protecting customer loyalty. 

2. Relevance Beyond Price

Ensuring affordability is the first step toward long-term brand strength, which is increasingly driven by alignment with consumer values. Customer preferences are constantly evolving, but brands that track interest in shifts like better-for-you options will be positioned to adapt.  

In recent years, the food and beverage industry has seen a clear migration toward product offerings that focus on wellness outcomes, resulting in substitutions away from traditional snacks in favor of healthier options. Regulatory pressure also contributes to these trades, with the FDA’s red dye ban leading brands to promote natural alternatives. As functional ingredients take center stage, companies will continue to reposition products to appeal to relevant consumer demands. 

3. Strategic Portfolio Adjustments

This combination of price cuts and product adjustments requires additional portfolio recalibration for food and beverage companies. Simplifying assortments and reallocating resources enables organizations to steer their focus toward high-growth or more relevant offerings. By implementing these strategies for long-term success, brands position themselves to invest more in product innovation as well.  

Making deliberate tradeoffs away from lower-velocity SKUs and legacy offerings creates operational flexibility, which is key when companies are looking to reposition products or launch new items. Between trends regarding fiber, protein, and products that improve emotional-wellbeing, food and beverage companies can seize opportunities to differentiate and maintain relevance.   

Getting Started 

Value creation today involves an integrated approach that rebalances pricing and cost with consumer demand. For companies to adapt to market trends, affordability is crucial to appeal to customer concerns about inflation. However, to truly win consumer demand, brands need to create a deeper connection between product offerings and shopper lifestyle goals.  

Once the question of cost is answered, consumers seek to purchase items that improve their health, mood, and daily needs. By integrating these factors strategically into portfolios, food and beverage companies can prepare for long-term growth and innovation. 

To learn more about how your business can strategically meet the needs of today’s consumers, contact Clarkston today. 

Contributions from Hannah Yang