The End of Easy Growth

Time of reckoning for Food, Beverages, Spirits and Wines

Introduction

For decades, large food and beverage companies operated under assumptions that were rarely questioned. Population growth, rising incomes, and expanding household consumption created a reliable growth engine. Market share could be defended with brand equity, and pricing power could be exercised with relative confidence. That implicit contract is now broken.

What we are seeing is not a temporary dip or cyclical adjustment. It is a structural shift. The demographic slowdown, changing consumer habits, economic pressure, and new health behaviours have fundamentally altered the basis on which these businesses were built.

Growth no longer comes automatically.

Volume declines are no longer an anomaly. The industry is now in a different kind of game: more competitive, less forgiving, and, for many, increasingly uncomfortable.

Growth Is No Longer a Given

The assumption that population growth would fuel steady volume increases no longer holds. Across developed markets, birth rates are falling, and total populations are stagnating or shrinking. Even in growth regions, the expansion rate is lower than it was a decade ago. This directly impacts food and beverage firms whose historical models relied on volume expansion to deliver scale efficiencies and margin improvement.

A shift in consumption patterns is layered onto this. Younger consumers are eating and drinking differently. Meal skipping, smaller portion sizes, and a growing preference for lower-calorie or lower-alcohol products are all contributing to lower per capita consumption in core categories. The rise of GLP-1 medications, which suppress appetite, introduces a further structural headwind. While still emerging, early signs suggest these drugs could reduce total caloric intake across many consumers.

Consider carbonated soft drinks. Once a predictable growth engine, the category faces long-term volume decline in mature markets. Even reformulations and packaging changes have not reversed the trend. Large-volume categories such as blended Scotch and mid-tier Californian wines face ongoing contraction in the wine and spirits sector, with younger consumers either drinking less or shifting to alternatives like craft cocktails, hard seltzers, or no-alcohol options.

In short, growth is no longer baked into the system. Volume assumptions must be challenged, and strategies based on historical expansion trends must be recalibrated. Companies that fail to adapt to this new demographic and behavioural context will continue to chase a market that no longer exists in the form they remember.

The New Value Equation

The second major shift is economic. Inflation and sustained cost-of-living pressure have reshaped consumer decision-making. Even households that previously traded on convenience or brand loyalty are now more price-sensitive. In developed countries, income and wealth polarisation put pressure on the middle class, a consumption engine for F&B and W&S.

Private label penetration is increasing across food and beverage categories, particularly in staples and historically brand-driven segments such as dairy, prepared meals, and premium spirits.

Price increases initially propped up revenue growth during the inflationary peak of 2022 and early 2023. But that window is closing. Retailers are pushing back harder on further price hikes, and consumers are trading down more consistently. The historic pricing cushion that protected brands is eroding.

The impact on US wine is visible. Sales of sub-$15 bottles have increased in volume, while many brands in the $15–25 range are losing share. The mid-tier is being squeezed: neither cheap enough to appeal to value-seekers nor distinctive sufficient to justify a premium. In spirits, the overextension of pricing in some whisky and tequila segments has led to slowing velocities, with consumers either deferring purchase or switching to cheaper substitutes.

Private label has also improved significantly. In food, many supermarket own-label products now match or exceed branded equivalents in quality perception, particularly in categories like pasta sauces, frozen ready meals, and snacks. In alcohol, exclusive retailer partnerships with contract distillers have created competitive store brands in terms of taste and presentation, eroding the brand-led premium that once felt secure.

This is not just cyclical. The consumer’s perception of value has structurally shifted. Brand alone is no longer enough to justify price. Companies that continue to treat pricing as the primary growth lever will likely face diminishing returns and growing resistance from shoppers and retail partners.

Add to this the uncertainty of tariffs, the likely loss of trade, and negative economic perspectives, which are hopefully a glitch in the system and not becoming a chronic disease.

Brand Relevance in Decline

Brand Reputation once served as a reliable buffer against competition. Familiar names with strong recall could sustain premium positioning despite thin product differentiation. That era is closing. Many long-standing brands are no longer considered relevant by today’s consumers, particularly younger cohorts. The challenge is not just about marketing execution but about deeper misalignment with changing values and priorities.

This decline is evident in legacy food categories. Breakfast cereals, canned soups, and margarine, all once staples of household consumption, are struggling to develop relevance to younger cohorts. Attempts to refresh these brands often rely on nostalgia or superficial repositioning, which do little to address the core issue: the product no longer fits contemporary tastes or lifestyles.

Similar patterns emerge in beverages. The craft revolution is how large beer brands that once dominated shelves were outflanked by craft players or bypassed by consumers seeking non-beer alternatives. In wine, heritage labels that once leaned heavily on regional prestige or traditional winemaking narratives find less traction with drinkers more interested in environmental credentials, new varietals, or packaging innovation like cans or low-waste formats.

Above all, the digital revolution in marketing has enabled short-termism. Many companies have pursued margin protection and volume retention by focusing on promotional spending or launching minor packaging updates. These tactics may slow the erosion, but rarely reverse it. What’s needed is a more profound rethink of what the brand stands for and whether it meets the consumer’s evolving definition of relevance.

This decline in relevance has broader strategic implications. When entire categories face declining engagement, brand-level innovation is not enough. Companies must assess whether the consumer still sees the category as meaningful. If not, no amount of advertising will restore growth. The cost of delay is high, and the signs are already visible. Ignoring them could leave brands stranded in a market that has quietly moved on.

(Fake-)Innovation Isn’t Working

The scale, resources, and margins large food and beverage companies enjoy should, in theory, position them as innovation leaders. Yet the reality is often the opposite. Smaller players with fewer resources are setting the pace, introducing new formats, flavours, occasions and functional benefits that resonate more closely with shifting consumer preferences. Meanwhile, large incumbents rely on cautious line extensions that rarely change category dynamics.

The typical response to slowing growth has been to launch variants (aka new flavours, packaging sizes, or “better-for-you” reformulations). But these efforts tend to be incremental. They may help maintain shelf space, but do little to generate excitement or win new users. Consumers notice. The trade notices, too, often view such launches as space-fillers rather than category drivers.

These innovations often require support at launch and attract resources from better-performing lines in the product portfolio. They become a black hole for the organisation, and frequently, beyond the launch novelty, they cannot drive significant turnover growth.

Another key reason innovation efforts so often fall short is the financial model used to evaluate them. Large firms still expect innovation to deliver short-term ROI under the exact cost and margin expectations as core products. This sets a high bar and filters out riskier but potentially more rewarding ideas. It also skews product development toward ideas that are easy to launch but lack consumer appeal.

Consider the non-alcoholic spirits and low-alcohol wine segments. Growth in these areas has come mainly from newer entrants like Seedlip or brands built around wellness propositions. Big spirits players have responded, but often by repackaging existing products or launching under their mainstream banners, approaches that fail to connect with consumers looking for something distinct. Similarly, in snacks and functional foods, start-ups continue to lead in innovation, with large firms often trailing in response or acquiring rather than creating.

Corporate culture is part of the problem. Many internal innovation teams operate under tight constraints, risk-averse governance, and conservative forecasts. As a result, launches are safe rather than bold. When the benchmark for success is the latest yoghurt variant or seasonal flavoured vodka, it is clear that the innovation engine is misfiring.

To change this, leadership must adjust how innovation is funded, evaluated, and protected within the organisation. Without a shift in internal incentives and risk tolerance, the cycle of incrementalism will continue, and so will the loss of consumer attention.

A More Competitive, Less Comfortable Market

The final shift is structural and systemic. The market is no longer one of passive growth, where demographic trends and rising affluence could mask weak execution. Instead, it has become more competitive at every level. More brands are fighting for a share of a slower-growing or even shrinking pie. The pressure is intensifying, and the old playbook is under strain.

Population-driven growth is over. The implications are clear. Winning now requires taking share, not just riding the wave of rising demand. This puts greater pressure on execution, differentiation, and relevance. It also means that strategic missteps are more costly. There is less room for error, and less margin for complacency.

In practice, this is evident in both food and beverages. Consider tequila. Once a niche category, it has grown rapidly, but now faces a saturated premium segment, with dozens of entrants competing on brand story, celebrity endorsement, and design. The winners will be those who can combine real distinctiveness with operational discipline. Simply having a good liquid and a marketing budget is no longer enough. Plant-based meat is another cautionary example in food. After rapid initial growth, the category has slowed, and many legacy players are scaling back. Here, competitive intensity, shifting consumer expectations, and a lack of sustained innovation have created a challenging environment. Without clear value propositions, even well-funded brands struggle to retain relevance.

What makes this environment particularly difficult is that many organisations were not built for it. They were designed for stability, not volatility; for defending share, not creating new categories. In such a context, comfortable hierarchies and established processes can become liabilities. Agility, sharper listening, and faster decision-making are becoming critical, not optional.

For senior leaders, the key question is whether they truly understand the discomfort building within their teams. If the internal culture suppresses dissent or discourages unfiltered feedback, it risks being shielded from the signals that should drive change. The market is already speaking. The question is whether leadership is listening.

Conclusion

The trends reshaping the food, wine, and spirits industries are not theoretical. They are already visible in the numbers, on the shelves, and in consumer behaviour. Slowing population growth, shifting value perceptions, eroding brand relevance, and an anaemic innovation pipeline are not isolated issues.

They are interlinked symptoms of a structural transformation. The growth assumptions that once underpinned category leadership are no longer valid.

If you are a leader in food or beverage, the first step is not a new campaign or a product launch. It is a conversation. Can your teams tell you the truth about what they’re seeing? Or have you unintentionally made it easier for them to say what’s safe?