Are Junk Food Stocks Ready to Collapse or Has the Market Already Priced In the Risk?

Background: The Slide Started Years Ago

The decline is not new. In 2025, the S&P 500 Packaged Foods & Meats index fell about 14% while the broader S&P 500 rose about 17%, and Kraft Heinz, Campbell’s, General Mills and Conagra each fell for a third straight year, Reuters reported.

The slide continued into 2026. General Mills closed at $32.61 on Oct. 8, about 30% below its year-end 2025 level near $46.50. Kraft Heinz booked $9.3 billion in non-cash impairment charges for 2025, triggered by its falling share price, and shelved its planned breakup in February. Conagra halved its quarterly dividend to 17.5 cents starting with its September payment, and Campbell’s cut its dividend by 36% in September.

As of the Oct. 8 close, every major name sat near the bottom of its 52-week range:

Company	Close, Oct. 8, 2026	52-week range	Forward P/E	Dividend yield
General Mills	$32.61	$31.18–$50.93	10.2	7.5%
Conagra	$13.57	$12.53–$20.32	9.4	5.2%
Kraft Heinz	$22.48	$21.04–$28.09	11.0	7.1%
Campbell’s	$18.90 (Oct. 7 close)	$18.60–$32.04	11.1	5.3%
PepsiCo	$128.34	$123.47–$171.48	14.1	4.6%

Prices and ratios from StockAnalysis.com (S&P Global Market Intelligence data); yields are the current annual dividend divided by the closing price.

The pain is concentrated, not sector-wide. The S&P 500 Consumer Staples index gained 10.7% through Aug. 24, close to the 11.9% gain for the rest of the market, according to The Motley Fool. Branded packaged food is the weak corner of an otherwise ordinary sector.

Companies have also already told investors to expect much lower profits:

Company	Base year adjusted EPS	Current guidance (adjusted EPS)	Implied change
General Mills	$4.21 (fiscal 2025)	$3.00–$3.20 (fiscal 2027, June 2026–May 2027)	about −26% at midpoint
Conagra	$2.30 (fiscal 2025)	$1.40–$1.50 (fiscal 2027, June 2026–May 2027)	about −37% at midpoint
Campbell’s	fiscal 2026	$1.65–$1.80 (fiscal 2027, Aug. 2026–July 2027)	−17% to −24%

In simple terms: these companies are not hiding the problem. They have already told shareholders that profits will be a quarter to a third lower than they were two years ago, and the stock prices reflect that.

The Three Pressures, Explained

1. GLP-1 weight-loss drugs

Use is climbing fast. Eleven percent of U.S. adults said they were currently taking a GLP-1 drug for weight loss in 2026, up from 3% in 2024, according to a July 7 Gallup poll. Fifteen percent said they had used one at some point.

Pills are widening the market. Novo Nordisk’s oral Wegovy launched in January 2026, and Eli Lilly followed with Foundayo (orforglipron); both launched at $149 a month for self-pay starting doses. Early health-record data from Truveta found 36% of initial Wegovy pill users had never taken a GLP-1 before.

The effect on shopping is measurable. A Cornell-led study of household purchase data, published in the Journal of Marketing Research, found grocery spending fell 5.3% within six months of a household member starting a GLP-1. Savory snack spending fell about 10%. A 2026 PwC survey found 61% of users buy fewer sweet treats and 56% fewer salty snacks.

2. SNAP eligibility cuts

The One Big Beautiful Bill Act, signed July 4, 2025, expanded SNAP work requirements to adults up to age 64, to parents of children 14 and older, and to veterans, homeless people and former foster youth. The Congressional Budget Office projected the law would cut federal SNAP spending by $186 billion, about 20%, over 10 years.

Enrollment has fallen by about 5.5 million people since July 2025, and 49 of 50 states had fewer participants in May 2026 than a year earlier, Newsweek reported from USDA data. The Trump administration attributes part of the drop to fraud enforcement and stronger household finances, while food-insecurity researchers attribute it to tighter access.

3. SNAP purchase restrictions

Separately, states are using federal waivers to bar SNAP purchases of specific foods. Indiana, Iowa, Nebraska, Utah and West Virginia began restricting soda, candy or both on Jan. 1, 2026. Texas and Florida followed in April.

Nineteen states will have waivers in place by the end of 2026, covering roughly a third of SNAP participants, according to Numerator. By February 2027, states restricting soda are expected to hold 40% of the U.S. population.

SNAP: What the projections show for 2027

The Congressional Budget Office’s February 2026 baseline projects SNAP will keep shrinking through 2027 and 2028. Benefit spending ticks up in fiscal 2027 only because the annual cost-of-living adjustment raises the average benefit, then falls again.

Fiscal year	Average monthly participants	Benefit outlays	Average monthly benefit per person
2026	39.3 million	$88.0 billion	$186.60
2027 (Oct. 2026–Sept. 2027)	38.2 million	$89.5 billion	$195.17
2028	37.5 million	$85.1 billion	$189.06

Source: CBO February 2026 SNAP baseline. CBO projects participation falling to 33.9 million by 2036.

The administration’s own budget points the same way. USDA’s fiscal 2027 budget request shows total SNAP funding of $101.4 billion, down from an estimated $107.6 billion in fiscal 2026 and $113.0 billion in fiscal 2025.

The CBO figures may prove too high. The Center on Budget and Policy Priorities, which opposed the cuts, found that losses are running faster than CBO projected. Through May 2026, SNAP spending was already 9% below the prior year, against the 6% full-year decline CBO assumed. By NexfinityNews’s arithmetic, the roughly 5.5 million drop since July 2025 puts current enrollment near or below CBO’s 2027 projection already.

Three policy changes land in the 2027 window:

States pay more to run the program. Starting Oct. 1, 2026, states cover 75% of SNAP administrative costs, up from 50%. USDA estimates the change shifts about $16.9 billion to states from fiscal 2027 through 2031.
More states restrict soda and candy. Kansas and Wyoming waivers take effect in 2027. By February 2027, 21 states are expected to have restrictions in place, per Food Business News.
States prepare to share benefit costs. From fiscal 2028, states with payment error rates above 6% must pay 5% to 15% of benefit costs. State budget decisions for that bill will be made during 2027, and states have asked Congress to delay it to 2030.

In simple terms: GLP-1 drugs reduce how much some people want to eat, SNAP cuts reduce how much some households can spend, and purchase restrictions control what benefit dollars can buy.

Examples: What the Companies Are Reporting

PepsiCo cut prices, then started walking them back. In February, PepsiCo cut prices by up to 15% on Lay’s, Cheetos and Tostitos, a move CEO Ramon Laguarta called a “surgical investment.” In the second quarter, lower net pricing cut PepsiCo Foods North America revenue by 2 percentage points while volume held flat. The company is now raising some of those chip prices again, though it says they will stay below pre-cut levels. In its third-quarter report on Oct. 8, PepsiCo posted 3.1% organic revenue growth but lowered its full-year profit outlook, saying its North American recovery was taking longer than planned. The shares rose 3.7% to $128.34 after touching a six-year low.

General Mills is buying volume with promotions. On its July call, General Mills said shoppers were buying more on promotion and less at everyday prices, producing a less profitable mix. Its fiscal first quarter (June–August 2026) showed flat organic sales and North America Retail net sales down 7% to $2.4 billion, partly from the yogurt divestiture.

Conagra is going the other way on price. Conagra’s volume fell 2.1% in its fiscal first quarter (June–August 2026), offset by a 1% price/mix gain. Management plans further “inflation-justified” price increases starting midway through the second quarter, while raising advertising 15%.

Kraft Heinz tied part of its outlook to food stamps. Kraft Heinz guided 2026 organic sales to fall 1.5% to 3.5%, including about 100 basis points from delayed food stamp benefits. CEO Steve Cahillane said the company had moved through price points too fast and left consumers “very disappointed.”

Campbell’s snacks are the sharpest decline. Campbell’s Snacks organic sales fell 6% in its fiscal fourth quarter and segment operating earnings fell 34%, with salty snack retail sales down 7.8%. The CFO guided to a high-single-digit Snacks decline in the current quarter.

Not every snack maker is losing. Hershey’s North America salty snacks sales rose 28% in the fourth quarter of 2025, led by SkinnyPop and Dot’s Pretzels. J.M. Smucker’s frozen Uncrustables sandwiches have also kept growing, Barron’s noted.

Are Companies Compensating With Cheaper Ingredients or Lab-Grown Food?

Only at the edges. Ingredient swaps are real but concentrated in chocolate, lab-grown meat plays no role, and most of the cost savings companies have announced come from plants and payroll rather than recipes.

Cheaper substitutes are spreading in chocolate. Cocoa futures neared $13,000 a ton in late 2024 and were still around $5,000 to $6,000 in early 2026, far above historical levels. Ingredient suppliers responded with compound coatings that use other vegetable fats in place of cocoa butter. One supplier markets “cocoa extender” flavors that cut cocoa content by up to 30%. Reformulation has technical limits, since cocoa also supplies texture and structure in coatings and baked goods.

Cocoa-free “chocolate” has reached the big brands, but only in pilots abroad. Nestlé launched three cocoa-free Choco Crossies products in Germany in spring 2026, using ChoViva, a sunflower-seed and oat ingredient from startup Planet A Foods. Mars followed with a Balisto trail mix pilot sold only at Rewe stores in Germany from April to October 2026, disclosing the substitution in small print. Ingredient maker Döhler bought fava-bean-based cocoa-free developer Nukoko in June. Hershey and Ferrero had not announced a comparable launch, according to ConfectioneryNews.

In simple terms: the cheaper “chocolate” in these products is a plant-based imitation, not a lab-grown one, and none of it is yet on U.S. shelves under a major brand.

Fermentation-made ingredients are being tested, not deployed at scale. Mars has backed startups that use precision fermentation, in which microbes are engineered to produce specific proteins, to make dairy proteins, sweeteners and natural colors. A Mars R&D executive called the technology critical to the future of color, chocolate, sweeteners and protein. These remain accelerator bets, not cost-cutting tools on today’s production lines.

Lab-grown meat is not an option. Cultivated meat is not a factor in packaged-food cost structures, and seven states, including Florida and Texas, had banned its sale by mid-2025.

Shrinkflation is real but small. An InvestorsObserver analysis of popular grocery brands found a family of four now pays $741 more a year than in 2020, of which $41 came from smaller packages. The Government Accountability Office found downsizing added 0.06 percentage points to the 34.5% rise in consumer prices from December 2019 to December 2024.

The real savings come from operations. General Mills expects at least $750 million in cost savings in fiscal 2027 to offset input inflation. Campbell’s is cutting 13% of its salaried workforce and closing snack plants under a $500 million savings program.

Regulation is pushing the other way. The “Make America Healthy Again” push has companies removing synthetic dyes and simplifying ingredient lists, which generally raises costs rather than lowering them. Mars, for example, has struggled to reformulate some M&M’s colors without artificial dyes. A company that quietly swaps in cheaper or engineered ingredients also risks a backlash from the same health-focused shoppers it is trying to win back.

Impact: How Big Is Each Pressure?

Measured one at a time, none of the pressures is large enough to cause a collapse. Their weight comes from arriving together in an industry whose volumes were already flat to falling.

SNAP purchase restrictions: small overall, sharp in soda and candy. Numerator estimates the waivers could cost up to $830 million in 2026 sales: $430 million in soda, $300 million in candy and $100 million in energy drinks. The 112 U.S. packaged food and meat companies tracked by Simply Wall St reported about $387 billion in combined revenue. By NexfinityNews’s arithmetic, the waiver hit is about 0.2% of that. Numerator also found nearly two-thirds of SNAP households in waiver states plan to keep buying soda with their own money.

SNAP enrollment cuts: a shift to cheaper food more than less food. People who lose benefits still eat. Asked how they would respond to further cuts, SNAP households told Numerator they would shop sales (54%), buy private-label and cheaper brands (37%) and use dollar stores (30%). That pattern hurts brand owners’ pricing more than total food volume. Kraft Heinz is the one large company that has put a number on it: about one percentage point of 2026 sales.

GLP-1 drugs: the slowest-moving but most durable pressure. Mondelez CEO Dirk Van de Put told analysts GLP-1s could reduce the company’s volumes by 0.5% to 1.5% over 10 years, assuming 10% to 20% U.S. adoption. The Cornell study adds a limit: about a third of users stopped taking the drugs, and their food spending returned to pre-drug levels.

In simple terms: if roughly one adult in nine cuts snack spending by about a tenth, the snack category loses about 1% of sales. That is a simplified illustration, not a forecast, since users skew higher-income and spending patterns vary by household.

Price cuts: the pressure companies impose on themselves. Cutting prices can hold volume, but it lowers revenue per unit. PepsiCo’s February cuts kept North America foods volume flat in the second quarter while taking 2 points off revenue. Within seven months, the company began reversing part of them.

Analysis: Priced In, or Not Yet?

The case that the risk is already priced in

Valuations are low. As of Oct. 8, Conagra traded at 9.4 times expected earnings, General Mills at 10.2, Kraft Heinz at 11.0 and Campbell’s at 11.1, per StockAnalysis.com. Even PepsiCo, the strongest of the group, traded at 14.1 times. J.M. Smucker sat near 12, per Barron’s.
Private buyers are paying large premiums. Germany’s Intersnack agreed in July to take Utz Brands private at $14.25 a share, about a 91% premium to the prior close. TD Cowen called it the fourth time in two years an unexpected private buyer had acquired a public food company, Reuters reported. Mars bought Kellanova for $36 billion in 2025.
Lowered targets are being beaten. General Mills earned an adjusted $0.75 a share in its latest quarter against a $0.72 consensus. Conagra’s adjusted $0.41 beat estimates too, yet its stock fell from $14.13 before the report to $13.57 by Oct. 8.

In simple terms: when a stock trades at about 11 times earnings and a buyer will pay nearly double the market price for a similar company, the market has already assumed a lot of bad news.

The case that it is not fully priced in

The pressures are still growing. GLP-1 use nearly quadrupled in two years, and $149 pills lower the barrier further. SNAP restrictions will cover states holding 40% of the population by February 2027. CBO projects SNAP participation falling to 38.2 million in fiscal 2027 and 37.5 million in 2028, and losses are running ahead of that forecast. Starting in fiscal 2028, states must also pay a share of SNAP benefit costs, worth about $35 billion through 2034.
Dividends are the weak point. BofA Securities placed Kraft Heinz, Conagra, General Mills and Campbell’s in a higher-risk group for dividend cuts this spring. Two of the four have since cut: Conagra by half and Campbell’s by 36%. General Mills and Kraft Heinz now yield 7.5% and 7.1%, levels that often signal investors doubt a payout will hold.
Debt limits room to maneuver. Conagra ended its first quarter with $7.4 billion in net debt and net leverage near 4.0 times earnings before interest, taxes, depreciation and amortization.
The price-cut strategy is being reversed. PepsiCo is raising some chip prices it cut in February, and Conagra plans increases of its own. If shoppers keep trading down, higher shelf prices risk further volume losses.

What if they miss the lowered forecasts?

The “priced in” case assumes companies hit guidance they have already cut. A miss would test that in three ways.

The share price reaction. This year’s record shows how the market responds. When General Mills cut its outlook in February, its stock fell about 8%, and Campbell’s, Conagra and Kraft Heinz fell 5% to 7% the same day. Campbell’s dropped 7% on Sept. 3 after missing estimates by a penny and cutting its dividend. By contrast, PepsiCo rose 3.7% on Oct. 8 even after lowering its profit outlook, suggesting investors had already expected worse.

The dividend. A miss matters most where payouts already consume much of earnings. The table below uses each company’s current annual dividend against the low end of its own guidance.

Company	Low end of fiscal 2027 adjusted EPS guidance	Price ÷ low-end EPS	Dividend as share of low-end EPS	Dividend share if EPS lands 10% below low end
General Mills	$3.00	10.9	81%	90%
Campbell’s	$1.65	11.5	61%	67%
Conagra	$1.40	9.7	50%	56%

NexfinityNews calculations from company guidance and Oct. 8 prices (Campbell’s Oct. 7). Conagra’s and Campbell’s ratios are lower because both have already cut their dividends.

In simple terms: General Mills would be paying out roughly nine of every ten dollars it earns if profits fell 10% short of its lowest target. That is the kind of squeeze that preceded this year’s cuts at Conagra and Campbell’s.

The balance sheet. Conagra already carries net leverage near 4.0 times EBITDA. Lower earnings push that ratio up without any new borrowing, which can raise borrowing costs and limit buybacks. Further shortfalls could also trigger more write-downs like Kraft Heinz’s $9.3 billion impairment for 2025.

Upcoming tests. Kraft Heinz is expected to report third-quarter results around Oct. 28 and will hold an investor day on Nov. 12, its first full strategy update under CEO Steve Cahillane.

Conclusion

The evidence does not show a collapse waiting to happen. It shows one that has largely happened already, spread over three-plus years of falling share prices, cut guidance, impairments and two dividend reductions.

What remains open is the slope from here. GLP-1 adoption, SNAP restrictions and state cost-sharing all keep expanding through 2027 and 2028. Companies with heavy debt, high dividend payouts and snack-heavy portfolios carry the most exposure to further disappointment.

The market appears to have priced in a slow decline for branded junk food, not a sudden one. Whether that assumption holds depends on how fast the pills spread, how far states push SNAP rules, and whether price cuts bring back enough buyers to protect margins.

This article is for informational purposes only and is not investment advice. NexfinityNews does not recommend buying or selling any security.

Key Takeaways

Packaged-food stocks fell for several straight years; the S&P 500 Packaged Foods & Meats index lost about 14% in 2025 alone.
As of Oct. 8, 2026, General Mills ($32.61), Conagra ($13.57), Kraft Heinz ($22.48) and Campbell’s ($18.90) all traded near 52-week lows at 9 to 11 times expected earnings.
General Mills and Conagra now guide to adjusted earnings roughly 26% and 37% below fiscal 2025 levels.
GLP-1 use for weight loss reached 11% of U.S. adults in 2026, up from 3% in 2024; $149 pills may widen it further.
SNAP enrollment has fallen about 5.5 million since July 2025, and soda/candy restrictions will cover states with 40% of the population by February 2027.
CBO projects SNAP at 38.2 million average monthly participants and $89.5 billion in benefits in fiscal 2027, falling to 37.5 million and $85.1 billion in 2028; actual losses are running ahead of that forecast.
PepsiCo cut its full-year profit outlook on Oct. 8 and is reversing part of its February price cuts.
Cheaper-ingredient swaps are limited mainly to chocolate; cocoa-free products from Nestlé and Mars are pilots in Germany, lab-grown meat plays no role, and most savings come from plant closures and layoffs.
Low valuations and take-private premiums, such as Utz’s roughly 91%, suggest much of the risk is already reflected in prices.
The least-priced risks are further dividend cuts and heavy debt loads; Conagra and Campbell’s have already cut.

Sources

Primary filings and company releases

Reporting and data

Market data (as of Oct. 8, 2026)

SNAP projections

Ingredients and reformulation