Executive Summary

December 2025 marked a transformative month for the food and beverage industry, featuring landmark M&A closings, significant regulatory developments, and strategic leadership transitions that will shape the sector heading into 2026.

Key Highlights

• Mars-Kellanova Deal Closes: The $36 billion acquisition completed December 11, creating a snacking powerhouse with nine billion-dollar brands including Pringles, Cheez-It, M&M’s, and Snickers.
• Cannabis Rescheduling: President Trump signed an executive order on December 18 directing expedited rescheduling of marijuana from Schedule I to Schedule III, opening new opportunities for THC-infused beverages.
• Texas Label Law Challenged: Major food industry associations filed a federal lawsuit December 5 challenging Texas SB 25’s warning label requirements for 44 food additives.
• Coca-Cola CEO Transition: COO Henrique Braun named to succeed James Quincey as CEO effective March 31, 2026, following a nine-year transformative tenure.
• Food Inflation Eases: November CPI data showed food prices up 2.6% YoY, down from 3.1% in September, signaling continued moderation.
• FDA DSHEA Relief: FDA issued enforcement discretion guidance December 11 on dietary supplement disclaimer placement, reducing compliance burden for manufacturers.

Regulatory & Policy Developments

Cannabis Rescheduling Executive Order

On December 18, 2025, President Trump signed Executive Order “Increasing Medical Marijuana and Cannabidiol Research,” directing Attorney General Pam Bondi to expedite the rescheduling of marijuana from Schedule I to Schedule III under the Controlled Substances Act. This represents one of the most significant shifts in federal cannabis policy in over 50 years.

Key Implications:

• Reduced research barriers will enable FDA to study medical applications more readily
• Cannabis businesses may access standard federal tax deductions previously barred under IRC Section 280E
• THC-infused beverage industry positioned for expansion as regulatory environment stabilizes
• Does not legalize recreational marijuana; remains subject to state laws
• Medicare coverage for qualifying CBD products up to $500 annually expected by April 2026

Texas SB 25 Warning Label Lawsuit

On December 5, 2025, four major food industry associations—the American Beverage Association, Consumer Brands Association, National Confectioners Association, and FMI—filed a federal lawsuit challenging Section 9 of Texas Senate Bill 25, which requires warning labels on foods containing any of 44 specified ingredients.

The law, inspired by the Make America Healthy Again (MAHA) movement, mandates the following label text for products containing covered ingredients: “WARNING: This product contains an ingredient that is not recommended for human consumption by the appropriate authority in Australia, Canada, the European Union, or the United Kingdom.”

Targeted Ingredients Include: Red 40, Blue 1, Blue 2, Green 3, Yellow 5, Yellow 6, BHA, BHT, titanium dioxide, bleached flour, bromated flour, DATEM, propylparaben, among others.

Legal Arguments:

• First Amendment violation: Compels “false and misleading” speech
• Federal preemption: Conflicts with FDA labeling regulations and FDCA
• Commerce Clause: Burdens interstate commerce by requiring state-specific packaging

Compliance deadline is January 1, 2027, with violations carrying penalties up to $50,000 per day per product.

FDA DSHEA Disclaimer Guidance

On December 11, 2025, FDA Deputy Commissioner Kyle Diamantas issued a letter to the dietary supplement industry signaling intent to amend 21 CFR 101.93(d), which currently requires the DSHEA disclaimer to appear on every panel where structure/function claims appear.

• FDA will exercise enforcement discretion on multi-panel disclaimer requirements
• Agency acknowledged it has “rarely, if ever, enforced” the every-panel requirement
• Change will reduce label clutter and compliance costs while maintaining consumer protection
• Industry associations (CRN, NPA, AHPA) praised the decision as reducing opportunistic litigation

Canadian-U.S. Alcohol Trade Developments

Following provincial boycotts of U.S. alcohol in response to tariff disputes, several Canadian provinces resumed sales of American liquor products in December:

• Manitoba: Sales of U.S. stockpile through December 24, 2025
• Nova Scotia: Resumed sales December 1, donating net profits to community food groups
• Prince Edward Island and Newfoundland & Labrador: Resumed sales with profits to food banks
• Quebec: Direct donation of near-expiration U.S. RTDs and beers to charitable organizations

2025-2030 Dietary Guidelines Status

USDA and HHS remain committed to releasing the 2025-2030 Dietary Guidelines for Americans ahead of the statutory deadline of December 31, 2025. The agencies are conducting a “line-by-line review” of the Scientific Report released by the previous administration. Key anticipated changes include prioritization of plant-based proteins, emphasis on beans/peas/lentils as protein sources, and recommendation of water as primary beverage. The Guidelines inform federal nutrition programs and represent an early opportunity for the Trump administration to impact food policy.

M&A Activity

Mars Completes Kellanova Acquisition

Mars, Incorporated completed its $36 billion acquisition of Kellanova on December 11, 2025, following unconditional approval from the European Commission on December 8. This represents one of the largest food industry deals since the Kraft Heinz combination in 2015.

Transaction Details	Value
Total Transaction Value	~$36 billion
Share Price	$83.50 per share
Combined Annual Revenue	~$36 billion
Billion-Dollar Brands	9 brands
Global Associates	50,000+
Manufacturing Facilities	80 global facilities
Markets Served	145+ countries
Snacking HQ Location	Chicago, Illinois

Combined Brand Portfolio:

• From Mars: M&M’s, Snickers, Twix, Skittles, Extra, Kind
• From Kellanova: Pringles, Cheez-It, Pop-Tarts, Rice Krispies Treats, RXBAR, Eggo, Kellogg’s international cereals

Keurig Dr Pepper / JDE Peet’s Update

The $18 billion acquisition announced in August 2025 continues to progress toward H1 2026 closing. KDP secured $7 billion in financing from KKR and Apollo in October. The deal will create the world’s largest pure-play coffee company with $16 billion in annual sales, serving 100+ countries. Post-closing, KDP will separate into two publicly-traded companies: a North American beverages company headquartered in Frisco, Texas, and a global coffee company based in Burlington, Massachusetts.

2025 M&A Year in Review

Despite softening deal volume (down 27% YoY through H1), 2025 saw several transformational transactions:

• PepsiCo / Poppi: $2 billion for the prebiotic soda brand
• Celsius / Alani Nu: $1.8 billion for female-focused energy brand
• Ferrero / WK Kellogg: Entry into U.S. cereal market
• Hershey / LesserEvil: Better-for-you popcorn and snacks
• Carlsberg / Britvic: £3.3 billion soft drinks portfolio addition
• Arla / DMK: European dairy merger creating €19 billion combined entity

Key themes included health and wellness positioning, better-for-you snacking, functional beverages, and strategic portfolio rationalization through divestitures and spinoffs.

Consumer & Economic Indicators

Food Inflation Update

November 2025 CPI data (released December 18) showed continued moderation in food price inflation:

Metric	November 2025
All Food (YoY)	2.6%
All Items CPI (YoY)	2.7%
Energy (YoY)	4.2%
Food + Energy (Sept-Nov change)	0.1%

Note: October 2025 data was unavailable due to the federal government shutdown and lapse in appropriations.

USDA 2025 Full-Year Forecasts:

• All food: 3.0% (prediction interval 2.6%-3.4%)
• Food-at-home: 2.4% (prediction interval 1.8%-2.9%)
• Food-away-from-home: 3.9% (prediction interval 3.6%-4.1%)

Consumer Trends: 2025 Year-End Analysis

Several major consumer trend “battles” played out in 2025, with clear winners emerging:

• Weight Loss vs. Body Positivity: GLP-1 drugs have reshaping eating habits, with major manufacturers (Conagra, General Mills, Nestlé) launching products specifically for users of weight-loss medications
• Luxury vs. Rustic: Premiumization continues to win, with consumers seeking gourmet, artisanal, and rare ingredients
• Animal-Based vs. Plant-Based: Animal proteins have regained dominance as plant-based growth slows and investment retreats
• Nostalgia vs. Limited-Edition: Familiar, comforting flavors outperforming novelty and hype-driven releases

Restaurant & Foodservice Industry

2025 Industry Performance

The restaurant industry generated projected sales of $1.5 trillion in 2025, adding approximately 200,000 jobs for total employment of 15.9 million. However, the year was marked by intense value competition and continued consumer pressure:

• Value Wars: 30% of all restaurant orders featured some form of discount; ~50% of delivery orders included deals
• Winners: Chili’s (six-quarter streak of 14.8%+ same-store sales), Taco Bell, drive-thru beverage concepts
• Challenges: Fast-casual segment struggled after strong 2024; Chipotle sales softened
• Major Closures/Restructurings: Hooters bankruptcy (March), continued pressure on casual dining

Beverage-Led Innovation

2025 was the “year of the cold colorful drink” with explosive growth in drive-thru beverage concepts:

• Dutch Bros, 7 Brew, Scooter’s, and Swig leading rapid expansion
• “Dirty sodas” and customizable cold beverages driving Gen Z traffic
• McDonald’s preparing expanded beverage lineup; Taco Bell expanding Live Mas Café concept
• Non-alcoholic cocktail sales up 350% YoY

2026 Outlook

Key trends expected to shape the restaurant industry in 2026:

• Value offerings expected to remain critical; 47% of operators plan new discounts/deals
• On-premises dining rebuild prioritized (87-90% of operators)
• Technology investment continuing; 73% increased tech spending in 2024
• Experience increasingly valued over price for many consumers

Product Innovation & 2026 Trend Forecasts

Innova Market Insights: Top 2026 Trends

• Protein Powerhouse: Protein continues dominating wellness conversations; over half of global consumers actively boost intake
• Gut Health Gateway: Microbiome support viewed as foundation for holistic wellness; digestive health claims up 8% in launches
• Layers of Delight: Indulgence evolving into multi-sensory experience beyond taste; mystery flavors trending
• Occasion-Based Innovation: Format diversity for different consumption occasions
• Value and Affordability: Economic pressures driving demand for accessible, simple products

Notable December Product Launches

• Keurig Coffee Collective: Premium K-Cup pods with 30% more coffee using Refined Grind technique
• C4 Energy Shots: First format innovation since launch; Frozen Bombsicle, Hawaiian Punch Fruit, Popsicle Grape flavors
• Spraga Kombucha: Ukrainian brand entering UK market with four functional flavors
• Hoist Military Hydration: Watermelon and Tropical Orange powder sticks for IV-level hydration
• Holiday Launches: Reese’s Mini Trees, KIT KAT Peppermint Sticks, Hershey’s Kisses Snickerdoodle Cookie Candy

GLP-1 Influenced Product Development

Major manufacturers accelerating development of products for weight-loss drug users:

• Nestlé: Launched Vital Pursuit, first new brand in nearly 30 years, specifically for GLP-1 eating patterns
• Conagra: “On Track” GLP-1-friendly badge across select Healthy Choice meals; smaller-portion frozen items
• General Mills: High-protein Progresso soups targeting GLP-1 users
• Daily Harvest: High-protein, long-satiety breakfast options

Leadership & Corporate Developments

Coca-Cola CEO Succession

On December 10, 2025, The Coca-Cola Company announced that COO Henrique Braun will succeed James Quincey as CEO effective March 31, 2026. Quincey will transition to Executive Chairman after a nine-year tenure that transformed Coca-Cola into a total beverage company.

Quincey’s Legacy:

• Added 10+ billion-dollar brands including BodyArmor, Topo Chico, and Fairlife
• Led refranchising of bottling system
• Drove digital transformation and modernized marketing
• Expanded into alcoholic beverages (Topo Chico Hard Seltzer)
• Stock appreciated 60%+ during tenure

Braun’s Background: 30-year Coca-Cola veteran; roles in North America, Europe, Latin America, and Asia; overseen Brazil, Latin America, Greater China/South Korea operations; EVP and COO since January 2025.

Other Leadership Changes

• PepsiCo: Steven Williams appointed EVP, Vice Chairman, Global Chief Commercial Officer
• Mark Anthony Brands: Founder Anthony von Mandl stepping down as CEO; Phil Rosse named successor
• Diageo: Dave Lewis joining as company works to reverse sales slowdown
• Ascent Hospitality (Perkins, Huddle House): Jon Gordon named Chief Creative Officer; Jenifer Perrett as VP Marketing for Huddle House

Outlook & Watch Items for January 2026

Regulatory & Policy

• 2025-2030 Dietary Guidelines: Release expected by December 31, 2025; watch for plant-based protein emphasis and potential ultra-processed food guidance
• Cannabis Rescheduling: DEA rulemaking process to advance; subject to judicial review period
• Texas SB 25 Litigation: Preliminary injunction motion filed December 12; court proceedings to unfold
• Synthetic Food Dye Phase-Out: FDA timeline to eliminate six petroleum-based dyes by end of 2027 continues
• Federal Hemp Ban: Industry adapting to November 2025 legislation with 0.4mg THC limit; takes effect November 2026

M&A Pipeline

• KDP/JDE Peet’s: Expected to close H1 2026
• Greencore/Bakkavor: UK CMA review of potential £4 billion ready-meals merger
• Treehouse Foods: Investindustrial acquisition expected Q1 2026
• Continued bolt-on activity expected in health/wellness, functional beverages, and better-for-you snacking

Market Dynamics

• Tariff Uncertainty: Potential new tariffs on Canada, Mexico, and China could pressure food prices
• Cocoa Prices: Remain elevated at ~$6,000/MT (December 2025) vs. $2,200/MT in January 2023
• GLP-1 Impact: Continued disruption to snacking and portion sizes; more product launches expected
• Clean Label Momentum: Accelerated reformulation ahead of synthetic dye phase-out
• Value Competition: Restaurant promotions and grocery private label emphasis to continue