The Pricing Cycle Has Turned, but the Ground Is Not Stable
For three years, CPG top lines ran on price increases. That engine is now slowing. Danone's FY 2025 results confirmed full-year sales of €27.3 billion, up 4.5% on a like-for-like basis. The composition is the signal: volume and mix contributed 2.7 percentage points while pricing contributed only 1.8. That is the first time since 2022 that volume has outpaced price in Danone's results. When the pricing engine slows from inflation-cycle peaks of 6 to 8 percent to under 2 percent, mix has to carry the load or the top line stalls.
That shift is not unique to Danone. It represents the broader trajectory for Western European grocery. Shoppers absorbed price increases for two years, then started trading down, buying less, or switching to private label. Now brands face a different brief: hold margin while recovering volume on a base where every incremental unit requires a genuine reason to buy.
Mondelez put the consumer mood on record during its Q1 2026 earnings call. CEO Dirk Van de Put described European consumer confidence as "stable but fragile", and US consumer confidence as "quite low" with further deterioration expected. Mondelez's developed markets posted only 0.8% organic growth in Q1 2026, with a 1.2% volume decline despite a 6.3% group headline. When your most profitable markets are shrinking in units, pricing is masking a volume problem, not solving one.
Retailers Are Already Moving on Price
The most concrete sign that the value shift is real is retailer behaviour. Sprouts Farmers Market reported first-quarter net sales growth of 4% to $2.3 billion, but comparable-store sales fell 1.7%. CEO Jack Sinclair and CFO Curtis Valentine told investors the company has begun making "selective price adjustments" on its most relevant items, starting with coffee and other essential goods. Sprouts is also streamlining its promotional strategy to sharpen value perception rather than spreading discounts broadly.
That move matters beyond Sprouts itself. A specialty grocer cutting prices on essentials is a sign that affordability pressure has reached the part of the market that historically competed on quality and range rather than price. When the premium end of the grocery spectrum starts adjusting its pricing posture, the implied pressure on mainstream and value-positioned retailers is sharper still.
The O2 opinion brief from this publication described the hi-lo to EDLP migration as "a surgery, not a price cut." Sprouts is not running a full EDLP reset. It is doing something more targeted: picking the highest-frequency essentials, adjusting those, and using a loyalty programme launched in October to make the value story visible to repeat shoppers. That is a defensible approach. Broad promotional depth without loyalty data behind it destroys margin without building attachment.
A Fresh Inflation Wave Is Already Forming in Europe
The pricing picture is made more complicated by what is happening on the cost side. Five major European trade associations, including FoodDrinkEurope, Copa-Cogeca, and EuroCommerce, issued a joint warning calling for urgent EU and member-state action to prevent a food inflation crisis. The trigger is Middle East supply disruption. The Strait of Hormuz shipping channel is already pushing input costs higher across fertilisers, energy, packaging materials, logistics, and agricultural raw materials.
Just-Food's Simon Harvey framed the probability calculation clearly: the question for commercial teams is no longer "if" but "when". Bakery, snacks, dairy, and cleaning products each carry different input-cost exposure profiles. Categories that absorbed the 2022 inflation cycle relatively well may face fresh pressure in a different shape this time, particularly those reliant on Middle East shipping lanes or oil-price-sensitive logistics.
For commercial leaders, this creates a timing problem. You are being asked to cut prices or hold them flat to recover volume, while your cost base may be about to move against you again. The brands that navigate this best will be those with tight price-pack architecture: formats and sizes that let you hold per-unit margin even when the shelf price stays flat or falls. Shrinking the pack quietly is not the answer, particularly in EU markets where regulatory risk on shrinkflation is real. But redesigning pack architecture openly, with clear value communication, is a different move entirely.
Your Pricing and Promotional Plan This Week
Three things are worth acting on now.
First, audit your volume line by market. Mondelez's developed-market volume decline of 1.2% in Q1 2026 is not a Mondelez-specific problem. It is a category signal. If your pricing has held but your units are falling, you are likely funding short-term margin at the cost of long-term repeat rate. That trade looks worse the longer it runs.
Second, stress-test your promotional strategy against your loyalty data. Sprouts' shift to targeted promotions tied to its loyalty programme is the right model. Broad hi-lo depth without personalisation leaks margin to shoppers who would have bought anyway. If you cannot tell which promotional events are driving new trips versus pulling forward existing ones, your promotional spend is not working hard enough.
Third, scenario-plan your pack architecture against two cost paths: one where input costs stay roughly flat through 2026, and one where the European trade body warning proves correct and energy, packaging, and logistics costs spike in H2. The right pack and pricing response looks different in each scenario. Building that flexibility into your range now, before the cost signal arrives, is cheaper than reacting after the fact. And in EU markets, any pack-size change needs regulatory counsel before it reaches shelf, not after.
The pricing window that opened during the 2022 inflation cycle is closing. Volume has to do the work now. The retailers and brands that built genuine value perception during the price-rise years are in a stronger position. Those that relied on price alone to carry the top line are facing a harder reset.