With the recent major shifts in our economy and significant policy changes announced nearly every day, the food, beverage, and CPG industries are bracing for the impact on demand not only from consumers, but as influenced by the U.S. government as well. While it’s true the only constant is change, and anyone with experience in the grocery and retail markets knows to expect the unexpected, we thought we’d take a closer look at the biggest changes we’ve seen so far in 2025 and discuss what we’ll be watching closely in the second half of the year.

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‍Tariffs Causing Global Disruption

While the food & beverage industry is one of the more insulated industries from the impacts of tariffs – with imports accounting for less than 20 percent of the food consumed within the United States, according to USDA – select categories (including fruits and vegetables) and other CPG categories do not have the same tariff-resistance.

‍Health and beauty categories in particular are likely to be impacted, as it relies on a complex system of both imports and exports between the U.S., Europe, and Asia. For example, according to analysis from BCG, 65 percent of inputs for beauty products are imported. Tariffs could lead to shortages of certain products domestically and/or overages on products that aren't making their way into international markets. 

For food & beverage products that are typically imported (think, cheeses, wine, and coffee) prices will undoubtedly rise. Consumers who still wish to purchase those products may find they have less choices, and many consumers may find themselves priced out of those products entirely.

With major retailers like Walmart already announcing price increases, giving permission for other retailers to do the same, consumer behavior will undoubtedly change. Exactly how is yet to be determined. 

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MAHA Movement Presenting Opportunities

One area where the federal government’s new policies present opportunity for the food, beverage, and CPG industries is with the so-called “Make America Healthy Again” movement and growing pressures to move away from artificial dyes and ingredients. 

Added to that is the recent popularity of GLP-1 medications, further increasing consumer focus on healthier, less-processed foods. In a panel discussion presented by ReFED, it was said that one in eight Americans are estimated to have used a GLP-1, and GLP-1 users tend to cook more at home, opt for smaller portions, and rely less on ready-to-eat or fast food. GLP-1 users are also more likely to eat protein than they were before they started the medication. All of these changes are already having a large impact on consumer behavior in the food industry.

This is a time where the food industry is at a crossroads, trying to draw a line between what is best for the health of Americans and what is least disruptive to their own business models, which are - in part - born out of a commitment to keep products affordable. While we fully believe food companies have the best intentions for consumers in mind, much of the decision-making process will revolve around the pace at which consumers and government demand change. How quickly new regulations are passed and enforced will have a large influence on how rapidly CPGs will need to change their product mixes, discontinue current SKUs, and find alternatives – all of which are - historically speaking - contributors to excess inventory. 

At the same time, while regulations may move quickly, it’s often the case that the consumer-driven market moves faster. If media influence and consumer awareness around these issues continues to gain steam, many companies may be faced with objections over these ingredients and products far before regulations force change. 

SNAP Changes Impacting Demand

Proposed cuts to the Supplemental Nutrition Assistance Program, or SNAP, are likely to have a major impact, if implemented, on consumer demand – especially in the discount retail and grocery markets. These funding cuts will not only negatively impact the people who rely on the program, likely leading to more food insecurity, but could also cause major disruptions for the companies who count on them as customers.

While some may say a decrease in benefits could lead to higher demand for lower-cost products (a benefit for discount retailers and grocers), it could also put strain on the off-price retailers attempting to source adequate supply for this demand. Loss of benefits may also drive more low-income Americans out of the market entirely, as they turn to food banks and other charitable organizations to fill the gap. While the exact impact is unknown, the market disturbance is expected to be real.

‍Building Resiliency

At Spoiler Alert, we believe that companies should always be looking for ways to build resiliency into their supply chains so that, when markets inevitably change and disruptions eventually happen, they remain in a position to capitalize on any potential opportunities. 

In the current market, we are closely watching how these developments will impact excess inventory and inventory management decisions. We remain ready to provide support for companies looking for new strategies in managing distressed products through discounting and donations. If you’d like to speak with a member of our team about how Spoiler Alert can support your organization, please reach out and set up a conversation!