2026 Food & Beverage Economic Outlook: Affordability, Tariffs, GLP-1 Drugs and More

Roberts: Primarily it’s going to be a move toward affordability. Certainly throughout 2025, affordability was top of mind for consumers — and for brands and retailers alike. Even though tariffs were rolled back late in the year, consumers are still seeing prices higher than they’re comfortable with, especially with wage growth having slipped.

So heading into 2026, affordability takes precedence over so much else in food and beverage. There’s a lot of interest in health and wellness, and sustainability, and we’re seeing the impact of GLP-1 drug users on retailers, brands and categories. But primarily it’s boiling down to: What can consumers afford? Where will they spend that food dollar? How will they stretch it?

We’ve also seen it on the restaurant side with value-oriented menus throughout 2025. Expect that to continue well into 2026 — not just in QSR, but in full-service and casual restaurants, really trying to compete with Chili’s and its offerings, which have resonated with consumers and translated into several successful quarters. Those increases will taper off eventually, but they’re still anticipating growth.

Consumers are looking for where their food dollar is best maximized — restaurants for convenience and quality, or grocery and even convenience stores, which have gained traction. So affordability will dominate, with sustainability, and health and wellness becoming secondary, if not tertiary.

Is There a Consumer Breaking Point on Grocery Prices?

Hanacek: We hear it all the time — inflation, rising costs, and when are consumers going to rebel against rising food costs? Is there a breaking point for shoppers as prices keep rising in grocery stores?

Roberts: I tend to think of it in terms of their overall budget — what they can fit into their basket with the dollars they have. That’s why we’ve seen growth in more affordable grocery retailers. Aldi and Lidl had strong years. Private label has had significant growth and set records the last two years. I expect another record year in 2026.

And private label isn’t just about value anymore — it’s also about quality. Walmart’s Better Goods line is a good example. Costco and Trader Joe’s have done very well in private label too. That’s going to be a key way consumers maximize budgets.

That doesn’t mean restaurants are going to suffer across the board. It depends on the segment. Value-oriented restaurants will have to work harder to stand out, especially as consumers increasingly look for something with a bit more quality.

Lessons From a Year of Tariff Turbulence

Hanacek: Nobody could have predicted what happened with tariffs this year, and you can’t really predict next year either. But we can learn from it. What can the industry take away from everything we’ve seen over the past year?

Roberts: The key takeaway is: Almost everything is negotiable. We’ve seen growing consumer discontent with tariffs and concern about affordability. That’s shifted policy. November brought rollbacks on tariffs on key imported ingredients — coffee, cocoa, dozens of items the U.S. depends on imports to get.

There were also rollbacks in areas with American supplies that still need augmentation — beef, orange juice, etc. There’s a love-hate relationship with tariffs, especially with talk of proposed paybacks to consumers. My guess is that’ll end up as tax credits rather than refunds.

Consumers understand tariffs affect affordability. That led to pushback and a turn away from tariff-heavy policy. But some planned tariffs remain extremely high — like 107% on Italian products — which I suspect is a negotiation starting point.

Plant Closures and Layoffs: A Sign of What's Ahead?

Hanacek: Days before we recorded this, Tyson announced a major plant closure. And over the past month or two, we’ve seen a rash of high-profile layoffs and closures across food and beverage. Is this a trend that continues into 2026?

Roberts: I think we will see some consolidation. Some companies have overextended their portfolios. I expect that not only in manufacturing but also in restaurants. Pizza Hut is rumored to be going on the market, and Papa John’s has explored sales.

Consumers may brace for fewer choices — or at least different owners. Manufacturers are realizing they have more capacity than they need, especially with consumption dropping off in certain categories. I think consolidation and M&A will continue in 2026.

What’s Driving Decreased Consumption?

Hanacek: The industry is huge — but what’s driving decreased consumption? We know younger generations are drinking less beer. But beyond that, what’s happening?

Roberts: The non-alcoholic beverage space is booming as younger consumers move away from alcohol. But the big issue for manufacturers is going to be GLP-1 drug usage.

Usage is ticking up. Prices are coming down. Walmart and Costco will carry them. The administration is trying to reduce costs.

And studies show GLP-1 usage reduces total calorie intake — especially in categories historically resilient to recession: confections and snacks. Snacking has grown for two decades, but this is one area where GLP-1 seems to be reducing consumption. We may see real falloff in snacking brands in 2026.

Hot and Cold Categories for 2026

Hanacek: Who thrives in 2026, and who’s got an uphill climb?

Roberts: Snacks and confections could struggle as consumers pull back on indulgent spending.

Non-alcoholic beverages are poised for growth. Younger consumers are mixing alcoholic and non-alcoholic beverages, lowering total alcohol intake. The mocktail trend continues.

THC and cannabis-based beverages are also gaining momentum. There was a lot of interest at major shows in 2025. Regulatory clarity still needs to be sorted out in 2026, but once it is, that category has big potential. It’s been one of the real beverage success stories this past year.

Key Indicators to Watch in Early 2026

Hanacek: To wrap up, what early-year indicators should processors keep an eye on?

Roberts: The first consumer price index numbers of December and January will tell us where the consumer really is.

We’ve had very negative consumer sentiment — among the lowest on record. If we don’t see improvement, consumers will pull back and look for more affordable options. Manufacturers need to brace for that.

If consumer sentiment and CPI don’t trend in the right direction, we’re going to see some real consumer behavior shifts.