US food and drink growth to slow by 2027

The U.S. food and beverage retail sector is returning to a steady, pre-pandemic pace. Growth is projected to settle between 2 and 3 percent in 2027, according to new research from Circana.

In the first half of 2026, the industry expanded by 2.2 percent, aligning with the firm’s forecast of 2 to 4 percent. Volume sales held steady, while price and product mix contributed a 2.3 percent increase. Fresh food pricing fell slightly below expectations, though packaged goods met projections with a 3.7 percent rise in price and mix.

Consumers adjust spending habits

Shoppers are not just cutting back—they’re changing how they buy. Financial strain, evolving priorities, and digital tools are reshaping purchasing decisions. Many now choose smaller pack sizes, prefer private-label products, and use AI-assisted shopping to minimize waste and extend budgets.

“They are becoming more intentional and efficient,” said Sally Lyons Wyatt, global executive VP and chief advisor at Circana. “Whether through pack-size choices, private-label options, or AI tools, shoppers are finding ways to manage costs while still meeting their needs.”

Circana expects volume sales to remain flat through the end of 2026 as consumers continue to limit spending. Price and mix growth should stay consistent, with packaged goods maintaining modest gains and fresh food pricing leveling off. The firm anticipates a return to pre-pandemic patterns, though population growth remains slower than before 2020.

Global trends show variation

Outside the U.S., growth differs by region. In Europe, food and beverage sales increased 2.7 percent year-to-date through April, driven by a 1.9 percent rise in price and mix. Inflation is expected to push annual value growth to 4 percent or higher, with consumers favoring smaller, more affordable formats.

Australia and New Zealand are experiencing stronger gains, with sales growth projected to exceed 5 percent. Inflation, increased spending on premium products, and a shift from discretionary to essential purchases are contributing factors. Population growth and the expansion of private-label options are also supporting the rise.

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Between 2019 and 2024, U.S. food and beverage retail grew at nearly 7 percent annually, fueled by pandemic demand and inflation. That momentum is now slowing. The firm attributes the change to tighter consumer budgets, reduced population growth, and a move toward more calculated purchasing decisions.

The adjustment reflects more than cost-cutting—it’s about balancing priorities. Households are weighing health, wellness, and enjoyment against financial limits, a trend influenced by the popularity of GLP-1 weight-loss drugs. Meanwhile, e-commerce and AI tools simplify product comparisons and deal-finding, further shaping consumer behavior.

The outcome is a more discerning shopper who trims unnecessary spending, sizes purchases carefully, and still invests in preferred brands when they align with personal values. The report suggests this shift is permanent, establishing a new standard for how Americans buy groceries.

Circana’s data platform, built on six decades of industry knowledge, monitors these changes in real time. The firm’s projections assume no major economic disruptions, though commodity price fluctuations could still create volatility, especially in fresh food categories.

For now, the industry is finding its footing. Growth won’t match the rapid pace of the past five years, but it won’t disappear either. Stability is emerging, with efficiency—not just price—determining what makes it into shopping carts.

Retailers adapting to these shifts may find opportunities in better service models.