Executive Summary

November 2025 marked a pivotal month for the U.S. food and beverage industry, defined by significant regulatory action, shifting consumer dynamics, and major legislative changes that will reshape the market for years to come. Key developments included:

• Federal Hemp Overhaul: Congress passed sweeping legislation effectively banning most intoxicating hemp-derived products, threatening the $28 billion industry and 300,000 jobs.
• Food Dye Phase-Out: The FDA announced plans to eliminate six petroleum-based synthetic dyes from the food supply by end of 2027, working with industry on voluntary compliance.
• GRAS Reform Bill: Senator Marshall introduced the Better Food Disclosure Act to increase FDA oversight of Generally Recognized as Safe ingredients.
• Agricultural Tariff Exemptions: President Trump issued an Executive Order exempting hundreds of agricultural goods from reciprocal tariffs, though Italian pasta faces potential 107% combined duties.
• Consumer Pressure: Food inflation remained at 3.1% year-over-year, with 73% of consumers expecting higher grocery prices, driving continued trade-down behavior.
• M&A Softness: Deal volume remained 28.9% below prior year levels, though the market showed signs of selective activity in better-for-you and ingredients segments.

Regulatory & Policy Developments

Federal Hemp Product Ban

The most significant regulatory development of November came as Congress passed legislation to end the government shutdown that included a federal ban on most hemp products containing THC and other intoxicating cannabinoids. Signed by President Trump on November 12, 2025, the new law:

• Redefines hemp to include only products with total THC (including THCA) at or below 0.3% on a dry-weight basis
• Bans any hemp product with more than 0.4 milligrams of total THC per container
• Prohibits cannabinoids that are synthesized or manufactured outside the plant
• Takes effect in November 2026, giving the industry one year to adapt

The U.S. Hemp Roundtable estimated that 95% of products could disappear, jeopardizing more than 300,000 American jobs and $1.5 billion in state tax revenue. Senator Rand Paul opposed the measure, calling it “the most thoughtless, ignorant proposal to an industry that I’ve seen in a long, long time.”

Synthetic Food Dye Phase-Out

Earlier this year, the FDA announced a national initiative to phase out petroleum-based food dyes, and November saw continued momentum. The agency is working with industry to eliminate six remaining synthetic dyes—FD&C Green No. 3, Red No. 40, Yellow No. 5, Yellow No. 6, Blue No. 1, and Blue No. 2—from the food supply by end of 2027. The FDA is also fast-tracking approval of natural alternatives including calcium phosphate, Galdieria extract blue, gardenia blue, and butterfly pea flower extract.

GRAS Reform Legislation

On November 6, Senator Roger Marshall introduced the Better Food Disclosure Act of 2025 (Better FDA Act), which would require all GRAS substances to be notified to FDA and appear on a public list. Current substances would have to be notified within two years, and new substances within 120 days before first use. FDA would have 180 days to act on notifications.

Trade & Tariffs

On November 14, President Trump issued an Executive Order exempting hundreds of agricultural products from reciprocal tariffs. However, Italian pasta producers faced significant challenges with proposed tariffs totaling 107% (15% tariff on EU goods plus 92% antidumping duty), potentially doubling retail prices from $3.99 to $7.99 per pound. Companies have asked the Commerce Department to revise the assessment before it takes effect in January 2026.

MAHA Summit & Health Initiatives

The Make America Healthy Again (MAHA) Summit took place November 12 in Washington, D.C., featuring HHS Secretary Robert F. Kennedy Jr., Vice President JD Vance, FDA Commissioner Martin Makary, and CMS Administrator Dr. Mehmet Oz. Topics included age reversal, food as medicine, psychedelics, and GLP-1 access. The initiative continues to drive policy discussions around food additives and nutrition.

Consumer & Economic Landscape

Food Inflation Trends

Food prices in the United States rose 3.1% year-over-year in September 2025 (latest available data), with food-at-home prices up 2.7% and food-away-from-home up 3.7%. The USDA predicts overall food prices will rise 3.0% for 2025, slightly above the 20-year historical average of 2.9%.

Key price movements:

• Beef and veal: +13.9% year-over-year, with prices rising for eight consecutive months
• Orange juice: +29% from prior year
• Ground beef: +14% year-over-year
• Eggs: Prices stabilizing after earlier volatility

Consumer Sentiment & Behavior

According to Deloitte’s November 2025 consumer report, financial well-being remains down year-over-year despite recent gains. A striking 73% of respondents expect higher grocery prices next month—up 16 points since January. Spending intentions for non-discretionary categories continue rising, while discretionary spending intentions fell in November for the first time since June.

Almost half of Americans report it’s harder to afford groceries than a year ago, with about 14% of U.S. households experiencing food insecurity on average between January and October 2025. Consumers continue adapting by trading down to store brands, cutting discretionary spending, and strategically using credit cards.

Value Grocer Performance

Value grocers like Aldi and Dollar General captured approximately 30.5% of grocery visits in Q2 2025. Cross-shopping between traditional grocers (e.g., Kroger) and Dollar General increased 11% since 2019, reflecting continued consumer migration toward value-oriented retail.

M&A Activity

Market Overview

M&A activity in the food sector remained below prior-year levels, with total deal volume declining 28.9% year-over-year to 135 transactions announced or completed in 2025 YTD. Strategic buyers showed particular caution, with public buyers reducing activity by 45.8% and private buyers by 26.1%. Despite this, private equity continued to make selective moves in high-quality, growth-focused assets.

Notable Transactions

• Capol/Blue Pacific Flavors: Germany-based Capol acquired California’s Blue Pacific Flavors to expand in health, wellness, and indulgence categories
• Apheon/Cain Food Industries: PE firm Apheon acquired clean-label bakery ingredients manufacturer and merged it with portfolio company Millbio
• Jungbunzlauer/IFF Thomson: Global ingredient producer completed acquisition of IFF’s Illinois production site, its first U.S. manufacturing facility
• Harvey & Brockless/Julienne Bruno: Subsidiary of The Compleat Food Group acquired plant-based cheese brand out of administration

Sector Focus Areas

Investor appetite persisted for high-quality assets in defensible segments including bakery, food ingredients, dairy alternatives, and premium goods. The better-for-you snacking category remained attractive as consumer health focus continues. Plant-based meat alternatives showed consolidation potential due to smaller brand proliferation and slower category growth.

Product Innovation & Industry Trends

Key 2026 Trend Forecasts

November saw the release of major trend reports from Datassential, Innova, and the National Restaurant Association, pointing to several emerging themes:

• Fiber Over Protein: Fiber is emerging as the next major health trend, overtaking protein, with particular focus on gut health and natural GLP-1 benefits
• Retail as Trend Incubator: 69% of consumers discover new food trends through packaged retail products, surpassing restaurant discovery
• Low/No Alcohol Evolution: 49% of Gen Z prioritize reducing alcohol consumption; tea-based mocktails gaining traction
• Animal Meat Comeback: Traditional proteins rebounding as plant-based meat alternatives face challenges
• Comfort & Nostalgia: Menus emphasizing mood-lifting comfort foods with global personality

Notable Product Launches

• Nirvana RTD Coconut Cocktails: First-to-market sparkling coconut water cocktails at 5% ABV
• Naked Smoothies Protein/Fiber Lines: 20g plant-based protein smoothies and 9g fiber options with reduced sugar
• Smiling Wolf RTD Mocktails: Premium non-alcoholic G&T, Aperitivo Spritz, Mojito, and Negroni
• Kellanova Eggo Stranger Things: Limited-edition strawberry red waffles with natural colors
• Monster FLRT: Female-focused energy drink with collagen and botanicals (launching early 2026)
• Danone Too Good & Co Creamers: Dairy brand expansion into refrigerated coffee creamers

Restaurant Industry Dynamics

The National Restaurant Association projects industry sales reaching $1.5 trillion in 2025. Key trends include smaller, digital-forward restaurant models (Dunkin’, Potbelly, Panera reducing dining room space), increased automation in back-of-house operations, and continued strength in off-premises dining and catering channels.

Technology & Investment

AI in Food & Beverage

The global AI in food & beverage market is projected to grow from $10.8 billion in 2024 to $50.6 billion by 2030, a CAGR of 29.6%. Applications include ML-driven food sorting, AI-powered quality control, robotics-based automation, and predictive analytics. Approximately 15-20% of food and beverage companies have already integrated AI into operations.

Notable Funding Rounds

• BioFiltro: $35M for regenerative wastewater treatment technology
• GoodLeaf Farms: CAD $52M ($37M) for Canada’s largest vertical farming operation
• Lucky Energy: $25M Series B for clean energy drink brand
• AKA Foods: $17.2M for AI platform reducing food product development time
• Biocentis: $19M for genetically engineered insect pest control

European Regulatory Watch

The European Commission opened an antitrust investigation into Red Bull to assess whether the energy drinks company has illegally restricted competition. Additionally, a Lancet-backed review linked ultra-processed foods to harm across major organ systems and called for stricter labeling, taxation, and advertising restrictions.

Outlook & Key Themes to Watch

Near-Term Industry Priorities

• Hemp Industry Transition: Companies have one year to adapt to federal hemp restrictions. Expect significant industry restructuring, litigation, and advocacy for alternative regulatory frameworks.
• Clean Label Reformulation: Manufacturers accelerating removal of synthetic dyes and transitioning to natural alternatives ahead of 2027 deadlines.
• Value-Driven Innovation: Balancing consumer demand for quality with affordability pressures; expect continued emphasis on private label and promotional strategies.
• Functional Food Growth: Fiber, gut health, and protein fortification driving product development across categories.
• Trade Policy Uncertainty: Monitoring tariff implementations and agricultural exemptions; supply chain strategies under review.

December 2025 Watch Items

• Release of 2025-2030 Dietary Guidelines for Americans (delayed from October)
• Canadian supplemented food compliance deadline (December 31)
• Italian pasta tariff implementation timeline (January 2026)
• Continued MAHA initiative policy developments
• Holiday season consumer spending patterns and retail performance