U.S. food manufacturers are warning of a prolonged downturn in spending as inflation and lingering global uncertainty give cash-strapped grocery shoppers little incentive to purchase more cereal, chips and cookies.

After several years of inflation-driven price increases, consumers appear tapped out. Despite investments in areas such as innovation, marketing and packaging changes, shoppers still haven’t returned to the category at the level many executives had expected. 

“I am worried about the U.S. consumer,”  Dirk Van de Put, Mondelēz International’s CEO, said in an interview at the Consumer Analyst Group of New York Conference. “I don’t see how anything will change until the disposable income of the consumer goes up or cost starts to go down in a big way.”

The latest company to warn of a gloomy spending environment is Cheerios maker General Mills. The company told attendees this week it expects sales for its 2026 fiscal year to drop between 1.5% and 2.5%, which, if realized, would be its third straight year of sales declines. 

Food-at-home prices are forecast to be up 1.7% in 2026, a slight improvement from 2.3% last year, according to data from the USDA’s Economic Research Service. The increase actually marks a reprieve from the COVID-19 pandemic when inflation on food prices hit a four-decade high. In 2022 alone, prices surged 11.4%, the government data showed.

With prices still rising, albeit at a slower rate, consumers are seeking out promotions, trading down to cheaper alternatives or cutting back on how much they buy altogether. That dynamic isn’t expected to change in the short-term, Van de Put predicted, with consumers facing “a very tough situation” for potentially the next three years.  

Conagra Brands CEO Sean Connolly said even though the Slim Jim and Healthy Choice manufacturer was still feeling the effects of inflation on its business 14 months ago, it decided to hold off on another wave of price increases after implementing them four years in a row.

“We said, ‘You know what? The consumer is just reaching the breaking point. So we’re going to eat that last wave of inflation, keep our price points where they were,’ ” Connolly told Food Dive. The executive noted that other companies that chose to take additional price increases in 2025 now find themselves in “corrective mode.”

“They just pushed the consumer too far,” he said.

Mondelēz’s business has been partially buffered by the fact that only 25% of its sales come from the U.S. and because consumers continue to show a penchant for snacking, engaging in the behavior more than three-and-a-half times a day. For 2026, Mondelēz expects organic net revenue growth in the range of flat to up 2%.

Van de Put noted that while more families are buying biscuits — a category that includes Mondelēz’s Oreo, Ritz and Chips Ahoy! — both the frequency and the quantity purchased are going down because of the drop in disposable income. 

“The category is healthy,” Dirk Van de Put, Mondelēz’s CEO, said in an interview, noting that U.S. biscuits make up close to two-thirds of its North American business. “It’s just going to be a question, when does the consumer feel like they can start to spend some more money?”

The many definitions of value

Late last year, Circana lowered its 2026 growth forecast for retail food and beverage sales to between 2% and 4%, down from the 3% to 5% range predicted in August. The firm noted shoppers have pulled back on spending and are seeking more value, with “intense” price competition and the use of AI-supported technology helping to keep increases “in check even as cost pressures persist.”

In response, food companies are now sharpening their value proposition.

In some cases, that means lowering prices. General Mills has responded by cutting prices on nearly two-thirds of its grocery products in North America, while PepsiCo announced plans to slash prices by up to 15% on many snack brands. PepsiCo and Uncrustables maker J.M. Smucker also have reduced the number of SKUs they offer in order to focus on products with the highest velocities and margins.

“We see a heightened focus on value, particularly for middle and lower-income consumers,” General Mills CEO Jeff Harmening told the audience at CAGNY. “Cost of living and housing pressures are reshaping spending patterns and value is a core expectation that is here to stay.” 

But value for consumers doesn’t just mean cost. Many are willing to pay more for products with protein or fiber because of their nutritional value, while others will shell out money for an unusual limited-time flavor or experience. 

Conagra has opted to prioritize growing volumes and ensuring it had the right mix of trendy products, packaging and marketing that resonated with inflation-weary consumers. The Chicago-based food manufacturer, for example, has launched new protein-loaded offerings under its Evol, Birds Eye and Frontera lines and expanded its Dolly Parton indulgent brand into Cookies ’N Custard Cups. 

Recent sales data have shown that revenue and volumes at the frozen and snack foods giant are “holding up better than most of our nearest peers,” Connolly told Food Dive. Still, Conagra is forecasting organic net sales change of between down 1% to up 1% compared to fiscal 2025.

Bob Nolan, Conagra’s senior vice president of demand science, cautioned that in today’s environment, simply reducing prices isn’t enough to appeal to consumers.

”The lower prices on yesterday’s items doesn’t move the consumer, especially the younger generations,” Nolan said. “They want the food to be exciting and interesting. Yeah, they want to create value, right, because they have a pocketbook to manage, but that alone is insufficient to get the sale.”