Legacy U.S. brands are losing their magic

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A giant pitcher of Kool-Aid crashing through a wall. Two men passing a jar of Grey Poupon mustard between their Rolls-Royces. A boy singing about his Oscar Mayer bologna sandwich.Television commercials lodged in the memory of any American over 50 flashed by in a darkened conference hall just before Steve Cahillane began to speak.”These brands are so iconic, so special, so well known,” the new chief executive of Kraft Heinz Co. told the Consumer Analyst Group of New York conference in February, shortly after he was hired. “But unfortunately, for too long, we have been relying too much on only that.”

Kraft Heinz’s North American sales volumes have contracted in nine of the past 10 years and have continued to slide this year.

The group is far from alone. Amid an affordability crisis for many consumers, North American or U.S. volumes were flat or falling at food companies Conagra Brands, General Mills, JM Smucker and PepsiCo, and weaker at household and personal care groups including Colgate-Palmolive, according to the latest round of quarterly results.

The S&P consumer staples sub-index has gained just 14 per cent since early 2023, even as the S&P 500 itself has almost doubled in that time.

From mayonnaise to toothpaste, the big players in the US$1 trillion-a-year consumer packaged goods (CPG) industry are being squeezed from both sides: by new entrants that appear healthier, tastier or more modern, and by own-label copies created by retailers that are cheaper. The traditional responses — creating new iterations of established classics, or spending more on marketing — no longer work as they once did.

Jeff Greenspoon, chief executive for the Americas at Kantar, a marketing consultancy, sees “the collapse of the traditional middle-market playbook.”

“As the American middle class shrinks and Gen Z‘s purchasing power continues to erode, CPGs can no longer rely on broad-based middle-tier portfolios,” he says.

U.S. bricks-and-mortar retailers sold 9.3bn fewer units of food and consumer-packaged goods in the past 12 months than five years before, according to market research company NielsenIQ.

Within that, the share of private-label products — long a feature of European grocery markets, but historically disdained by all but the most value-conscious American shoppers — gained more than one percentage point and now stands at over a quarter of total sales.

The volume decline has accelerated in 2026, with sales falling two per cent year over year in most months since February as rising fuel prices triggered by the war in Iran hit consumer budgets, according to an analysis by Bain and NielsenIQ.

New branded entrants are also taking sales. In dollar terms, consumer product sales rose two per cent last year, but the 100 “insurgent brands” tracked by Bain — businesses such as Kodiak Cakes pancake mix and chicken sausage maker Amylu Foods — captured 36 per cent of that increase, despite their tiny share of the overall market.

Anglo-Dutch conglomerate Unilever NV, which is in the process of combining its food business with U.S. spice and sauce maker McCormick, recently blamed disappointing U.S. condiments results on growing competition in premium products such as avocado oil.

Cahillane stresses that the downward drift in volumes is not confined to Kraft Heinz. “It was interrupted with COVID, where everybody’s volumes went up quite a lot because America and the world sheltered in place and ate lots of food at home,” he tells the FT. “But it’s been more of a common thread for companies like ours.”

The Kraft Heinz boss, who ran the snacks company Kellanova before its US$36 billion sale to Mars in 2025, is doubling down. He says now is the time to invest in legacy brands, not cut them loose, and is putting US$700 million behind that effort after pausing a plan to simply break his US$30 billion group up.

More than a third of that US$700 million is going towards marketing. Kraft Heinz announced a deal with Walt Disney Co. in July that will put Heinz ketchup and Philadelphia cream cheese on the menu inside Disney theme parks and cruise ships, and allow Disney characters to be printed on Kraft Heinz packaging.

“If you just challenge yourself each and every day to ask the question, ‘Why are my brands going to be relevant for this next generation of consumers?’ and you build your plan accordingly,” Cahillane says, “you can have a fighting chance to stay relevant.”

Customers turn competitors

For retailers who report that many of their lower-income customers are finishing each month with little or no cash in the bank, brands putting Disney princesses on food packaging might not be enough.

Among those shoppers, it is all about price. Kraft macaroni and cheese, a mainstay of the company’s portfolio, costs US$1 for a 7.25-ounce box on Walmart.com. But the equivalent product in the retailer’s own budget Great Value range costs just 64 cents.

In the past, private-label goods have not been popular in the U.S., with its highly regionalised grocery markets and shoppers’ preference for branded products.

By contrast, own-brand goods account for as much as 50 per cent of the market in countries such as the U.K., Germany and Spain — roughly double the share in the U.S.

But the squeeze on consumer incomes and the aggressive U.S. expansion of European discount chains such as Aldi, whose range is 90 per cent own-label, are starting to change the picture.

Retailers have also improved quality and invested in more premium selections as they aim to capture wealthier consumers and counter the perception of private-label products as inferior.

Walmart is removing synthetic dyes from all its own-label food brands, and has created a line called Bettergoods featuring such delicacies as Finely Ground Cassava Flour Red Quinoa Tortilla Chips. Costco Wholesale Corp. sells products from cheese to Scotch whisky under its premium Kirkland Signature label.

Among Gen Zers, the next big consumer cohort, two-thirds believe private-label products are just as good as national brands, NielsenIQ said.

“You’re seeing private label play a much different role than it did 10 years ago, or even five years ago,” says Randy Burt, Americas leader in consumer products at consultancy AlixPartners. “It’s really being positioned as at the same or better quality, certainly at a better price, with offerings that are not just a copy of national brands, but have their own identity.”

Analysts say the divergence in the fortunes of the wealthy, enriched by record stock and property market values, from the inflation suffered by those on lower incomes is clearly visible in the consumer goods market.

“The industry is undergoing a fundamental reset driven by a K-shaped consumer economy, rapid media fragmentation and the concentration of retail power,” says Greenspoon of Kantar.

Unlike branded goods groups, retailers rarely have their own integrated food manufacturing capability. But increasingly, they do not need it — a rapid expansion of third-party manufacturers has made it easier for them to quickly duplicate the innovations cooked up by brand houses. Walmart has opened three milk and two beef processing plants, but even this giant retailer relies mostly on contract manufacturing.

A long period of low interest rates, and a 2017 tax change that provided incentives for business investment, led to a sharp increase in contract manufacturing capacity, says Oisin Hanrahan, chief executive of Keychain, a tech platform that connects food companies and retailers with manufacturers. Now there is excess capacity.

“It’s a perfect catalyst for private label and for emerging brands, and a perfect storm for big [consumer groups] to get crushed,” Hanrahan says.

Some branded companies also discreetly make private-label products. Aldi, the German discounter, recently displayed bags of Dole pesto ranch salad mix next to its own Little Salad Bar brand in a newly opened store in New York City. All carried the same US$3.29 price.

Scott Patton, Aldi USA’s chief commercial officer, called the Dole product a “trial flavour.” “Before we put it in private labels, we want to see how it sells,” he said on a store tour. “If it works out well, we’re going to work with Dole to make it private label.”

Some consumer goods executives say their products are worth the extra outlay. Rod Little, chief executive of Edgewell Personal Care, points to his Schick brand razor blades. Their primary branded competitor is Gillette razors from Procter & Gamble, and both products work out at more than US$2 a blade, far more than private-label razors available online.

But only Schick and Gillette have the tolerance thresholds to consistently make the same blade every time, according to Little. “We make a private-label [product], but it’s a much simpler process,” he says. “Typically, in consumer tests, there’s a noticeable performance difference.”

Marketing misfires

Procter & Gamble, the world’s largest consumer-goods company, is also betting on what it calls the “irresistible superiority” of its products to maintain market share.

Sales volume at the group, which no longer makes food but counts Tide laundry detergent and Pantene shampoo among its key brands, failed to grow in the latest quarter.

Chief executive Shailesh Jejurikar, a 37-year veteran of the company, set out three key changes in the industry landscape. One is inflation. “Even the consumers who have money are much more disciplined and thoughtful about how they spend it,” he told the consumer conference this year, the same event where Kraft Heinz aired its video journey down memory lane.

Another is the fact that P&G’s biggest customers have themselves become bigger. Every percentage point of market share that Walmart, Costco and Amazon.com Inc. add consolidates their negotiating power with suppliers.

Some are now exploiting their growing heft as online sales platforms to sell advertising exposure to consumer companies, in effect turning their suppliers into clients. Sales of so-called retail media in the U.S. are expected to rise 20 per cent this year to US$73 billion, according to eMarketer.

The need to pay retailers for enhanced visibility in front of shoppers points to the third change. “It is much more challenging to get consumers’ attention and educate them on the benefits of our brands in today’s fragmented media landscape,” Jejurikar said.

He has noted that P&G could once make almost a third of consumers aware of a new initiative in its home-care marketing campaign within a year. That share has now dropped below 10 per cent, he said.

Seth Cohen, P&G’s chief information officer, has said the company previously was able to update adverts on television one to four times a year. Now it needs to generate 10 to 200 times that number of updates on online platforms including social media. The information must also win the favour of AI models combing the web.

It and rivals including Unilever are increasingly turning to the online marketing techniques often used by insurgent rivals, including paying influencers and using platforms such as TikTok.

“We would contract with [influencers] to get them to enforce brand messaging for us on behalf of the folks that they represent,” says Cohen. Then come more freewheeling campaigns, in which individuals might make positive online comments about a new product in return for being entered into a prize draw, he adds.

Influencer campaigns can veer off course, as brewer Anheuser-Busch InBev learnt following the conservative backlash to a Bud Light beer campaign featuring transgender personality Dylan Mulvaney. But they can also be powerful.

In its latest BrandZ report, Kantar speaks of enlisting and co-ordinating large numbers of people with small online followings to create what it terms “manufactured virality”, giving the impression of a groundswell of enthusiasm for a product.

Kraft Heinz was not a sponsor of the recent FIFA World Cup but still managed to promote its brand with jokey online posts. One featured an AI-generated image of a packet of ranch dressing that could be taken through airport security, so fans who had tasted it while visiting the U.S. could take the distinctive flavour home.

Not finished yet

For all the noise around insurgent brands and the growing popularity of retailers’ own-label ranges, big consumer brands are far from finished in the U.S.

Their control over manufacturing and distribution and their established relationships with large retailers — most of whom stress that they intend to continue stocking big brands alongside their own creations — are significant strengths.

The substantial balance sheets of companies like Kraft Heinz, General Mills and others mean they can outspend insurgents over long periods — or simply buy them. PepsiCo, whose sluggish financial performance last year made it a target for activist investor Elliott Management, has spent US$3.2 billion on acquisitions such as Mexican-American snack foods brand Siete Foods and prebiotic drinks group Poppi.

Occasionally, new entrants can also find themselves targeted by a retailer’s private-label range, rather than an established brand. Shares in Celsius Holdings, a maker of energy drinks, have fallen by a quarter since March, when Costco launched a competing product under its Kirkland Signature house brand at a significantly lower price. Celsius said it has a “loyal consumer base built around functional, great-tasting and better-for-you energy.”

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