RBC Capital Markets Managing Director Nik Modi recently returned to The Food Institute Podcast to break down what has — and hasn’t — changed in the food and beverage industry since mid-2025. His assessment was sobering: despite hopes for improvement, consumer pressure remains entrenched as the industry enters 2026.
According to Modi, the U.S. consumer environment continues to follow a K-shaped trajectory, with higher-income households driving the majority of spending while middle- and lower-income consumers face mounting financial strain.
He pointed to a convergence of headwinds affecting those groups, including changes to SNAP benefits, elevated interest rates on debt, rising loan delinquencies, and the renewed impact of student loan repayments. These pressures, Modi said, are reinforcing a long-term shift toward value-seeking behavior rather than signaling a temporary downturn.
“The theme of value and value-seeking is still very front and center,” Modi noted, adding that this dynamic is likely to persist through at least the first half of the year.
Price Cuts Signal an Industry Reset
While consumer conditions remain challenging, Modi emphasized that industry behavior has begun to change. Unlike last year, when many manufacturers were slow to respond, companies are now adjusting pricing and promotional strategies to protect volume.
Recent price cuts and promotional increases from major food manufacturers suggest that affordability is once again taking priority. Modi argued that pricing – not GLP-1 adoption – has been the most significant factor behind recent volume softness.
“I think the industry went a little too far,” he said, referring to cumulative price increases over the past several years.
He also cautioned that failing to address affordability carries real risk, particularly when volume declines can lead to lost shelf space – a challenge that’s difficult to reverse.
GLP-1s Reshape Consumption
GLP-1 weight-loss drugs remain one of the most discussed topics in food and beverage, but Modi urged companies to move beyond fear-based narratives. As access improves and drug prices fall, adoption is likely to increase, yet consumption patterns are shifting rather than disappearing.
Drawing on personal experience, Modi explained that GLP-1 users still seek indulgence – just in smaller quantities.
“I still want to have those indulgences,” he said. “I just can’t have as much as I was having before.”
That shift creates opportunities for manufacturers to innovate around portion control, smaller pack sizes, and higher price-per-ounce formats, particularly in categories like snacks, candy, and beverages.
Fiber-Maxing and the Next Phase of Protein
Modi also highlighted evolving nutrition trends that are shaping product development. One of the fastest-growing themes is fiber-maxing, driven by consumer interest in blood sugar management and metabolic health.
“People are not just focused on calories anymore,” Modi noted. “They’re trying to understand how foods impact their blood sugar levels.”
At the same time, the protein conversation is becoming more fragmented. Rather than a single, catch-all claim, protein is increasingly tied to specific need states – such as muscle building, healthy aging, or weight management – and delivered through a wider range of sources and formats.
Agentic Commerce and the Rise of the Synthetic Shopper
Looking ahead, Modi identified agentic commerce – AI-powered shopping agents acting on consumers’ behalf – as a potentially transformative force for retailers and manufacturers.
The key uncertainty, he said, lies in how these agents will make decisions: product ratings, ingredient lists, clinical evidence, or consumer reviews could all play a role. That shift may ultimately change how companies balance spending between marketing and R&D.
“If your product is superior, people will talk about it,” Modi said, suggesting that product efficacy may become even more critical in an AI-driven shopping environment.
What Winning Companies Will Do Differently
To close, Modi outlined the traits he believes will define successful food and beverage companies in 2026 and beyond: portfolios that address both ends of the income spectrum, sustained investment in product quality, digitally fluent marketing strategies, and a deeper focus on the aging population.
“The barriers are actually going up,” he said. “Not everyone is going to be able to compete.”
For food and beverage leaders, the message is clear: value, innovation, and adaptability – not complacency – will determine who thrives in the next phase of the consumer economy.
City National Bank is an affiliate of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC, and an indirect wholly-owned subsidiary of the Royal Bank of Canada.
