Newsletter · · Ashutosh Agarwal

Food, Private Label & Grocery - Week of June 25, 2026: Legacy Food Is Dark, Cocoa Relief Is the Trade

Food, private label and grocery newsletter for the week of June 25, 2026. A trio of Evercore analysts wrote off legacy packaged food on share loss and unpassable cost inflation, named cocoa-relief beneficiaries Mondelez and Hershey as the one long, and flagged private label going mainstream and retail media heading for a cull.

Food: Brands, Private Label & Grocery

Week of June 25, 2026: Legacy Food Is Dark, Cocoa Relief Is the Trade

A trio of Evercore analysts sat down with Steve Eisman this week and summed up center-store CPG in five words: "it's all bad, basically." That's the mood. But under the gloom there's an actual trade, a private-label price war that's gone fully mainstream, and a retail-media executive calling the top on her own industry's fragmentation. Let's get into it.

TL;DR

  • Legacy packaged food is being written off: share bleeding to "little brands," ~6% all-in COGS inflation Campbell can't pass through, payout ratios near 80%. The one long: cocoa-relief names (MDLZ, HSY) into FY27.
  • Private label is no longer a recession trade, it's the structure. Clark Howard, of all people, says US shoppers now buy store brands "more like the rest of the world," and that's where Walmart/Aldi/Lidl/Costco/Kroger are fighting.
  • Retail media is consolidating into a handful of winners. Kroger's KPM says weaker networks face "elimination," not consolidation. Sam's Club Connect folds into Walmart Connect, but the shopper overlap is "smaller than you might think."

What's New

The bear case on legacy CPG got specific. On The Real Eisman Playbook (June 22), three Evercore analysts laid out the math. Campbell guided fiscal-27 inflation of "2% to 3%... before we include the energy," and once you add ~3 points of energy you're at roughly 6% all-in COGS inflation: "Good luck passing that out to the consumer." The structural problem isn't cyclical: "All my big food companies are losing share. To who? To little brands," TikTok-distributed, protein-forward, wellness-coded. Stack on SNAP cuts (a 1–1.5% consumption hit in states already cutting, more as Texas and Florida roll out) and ~50bps of GLP-1 drag, and you get the punchline: payout ratios near 80%, P/Es around 10x, and balance sheets too stretched "to do a big, bold reinvestment to try to bend the trend." KHC, CAG, CPB, GIS are the names in the crosshairs.

The one long inside the wreckage: cocoa relief. Same episode, same desk: Mondelez and Hershey are Evercore's outperforms, "because they're getting this cliff flow-through of cocoa relief into 27." This is the single cleanest setup the tape voiced all week: a margin windfall arriving precisely when every other input line is going the wrong way.

Private label went fully mainstream. On The Clark Howard Podcast (June 22), the consumer-finance pundit framed the whole grocery fight as a store-brand war: "People are buying private label in much larger numbers than they used to in the United States, now more like the rest of the world... That's where the fight is really key and central right now." Kroger is cutting prices on "thousands of items" with "special emphasis... on their private label goods." His blunt consumer line, "Buying name brands in the supermarket is usually an emotional decision," is the demand-side mirror of Evercore's share-loss thesis.

Retail media is heading for a cull. On The Big Impression (June 24), Kroger Precision Marketing's Christine Foster, an operator, was unusually direct: asked whether the ecosystem consolidates or specializes, she said "I would say elimination. Not every... the ecosystem can't fully support all of the fragmentation that we see right now." The moat is infrastructure: 95% transaction connectivity tied to loyalty cards across 60 million households, an in-house AI bidder ("Precision Bid") built with The Trade Desk, and a push to apply grocery data to CTV so brand budgets can be tied to real sales. The standalone storefront-monetizing RMN is dead money; the data-science-heavy ones take the spoils.

Sam's Club Connect folds into Walmart Connect, with a catch. At Cannes, Retail Media Breakfast Club (June 25) hosted Sam's Club ad chief Harvey Ma (operator) on the reorg that puts Sam's, Walmart Connect US and International under one roof. The useful nugget for anyone modeling Walmart's ad reach: the shopper overlap between Walmart mass and the warehouse club is "potentially smaller than you might think," warehouse shopping needs a car and bulk capacity, so the dense-urban Walmart base doesn't double-count. The "scale across both banners" pitch is real, but less additive than it sounds.

The Debate

This week the tape leaned hard to one side, the bearish, structural-reset case, so let me steel-man that and flag where the bull case only half-showed up.

The bear case (well-voiced): structural share loss to small brands, ~6% COGS inflation with no pricing power, private label permanently re-rating the category, and a squeezed low-end consumer. RiskReversal (June 22) put the grocer in the same vise, quoting Kroger's CEO directly, "our operating costs have been growing faster than our sales. This is not sustainable," with shoppers running "too many promotional trips and not enough of the full basket," against credit-card delinquencies at 13–15 year highs. Kroger printed a 52-week low while they recorded.

The bull case (only partly voiced): the cocoa-relief-into-2026/27 margin tailwind is on the tape, and it's real, but as a stock call (MDLZ/HSY longs), not as a sector-wide "volumes recover as pricing laps" thesis. Nobody this week made the durable-profitability case for online grocery or argued the de-stocking reset is ending. On commodities the read was actually non-alarmist: Saxo's Market Call (June 22) flagged a building Super El Niño as a "resilience test" but noted "we are coming into this with a good carryover from previous years." So: the optimism that exists is narrow and bottom-up, not a macro turn.

Read-throughs

  • Confectioners / cocoa supply: Trade Finance Talks' West African cocoa episode (June 18): Ivory Coast output down 15.3%, Ghana down 4.8% over four seasons, and "the bounce back hasn't occurred." Cocoa relief is a price story, not a supply-recovery story; the structural deficit is intact, which makes the FY27 hedge-roll windfall a window, not a new regime. Watch EUDR (large companies Dec 2026) as a cost overlay.
  • Protein everywhere: Marketplace (June 22): beef +13% YoY, USDA sees +10% more in 2026, herds not rebuilding. The same protein trade-up lifting grocery SKUs is showing in restaurants: The Rundown (June 25) on Darden: total comps +4.6% but Olive Garden a soft +2.4%, exactly the carb-vs-protein split Evercore called.
  • In-store automation / MFC-adjacent: Instacart's Connected Stores chief on the NVIDIA AI Podcast (June 24): Caper smart carts now in 100 US cities ("tripled year-over-year"), driving "double digit sales lifts," with a single "did you forget?" prompt worth a 1% absolute lift. The grocery edge layer is becoming an ad-and-conversion surface.
  • HSY diversification: Hershey's controller on The Pre-Read (June 22): salty snacks built "from non-existent in 2016" to "a very large player" (Skinny Pop, Dot's, Lesser Evil). The cocoa long also has a protein/wellness option attached.
  • Trade policy on grocery prices: Purdue's study on RealAgriculture (June 24): a 1% tariff cut compounds to a 2.8% consumer price reduction over a decade; USMCA unraveling could mean food prices 12%+ higher within 20 years. Keep this in the back pocket as a tail risk on the COGS line.