As with those previous two installments in this mega series, we’ll thread the story of a single company with the story of the industry that brought it to be. In the Walmart piece, that meant the rise of modern retailing… centralization, scale, store economics, and the strange, esoteric world of trade-promotion spending. In the Cargill piece, we had to lay down the geopolitical and agricultural realities that made a company like Cargill not just possible but inevitable. McDonald’s demands the same treatment because McDonald’s didn’t arise from nowhere. It emerged as the logical product of centuries of eating patterns, labor structures, and technological change... and then amplified those patterns, standardized them, and exported them around the world.

I call the subject of this essay “Public Food.” That is… food prepared, sold, and consumed outside the home, by someone other than you or someone in your household. And it’s actually one of the oldest institutions of civilization.

Interactive chart here: https://datahud.ai/foodaway

Bread and Circuses

For most of human history, eating outside the home was not really about leisure or convenience. It was more about hierarchy and control.

The earliest forms of organized foodservice didn’t emerge for ordinary everyday people but for elites, travelers, and the state apparatus. In ancient Mesopotamia and Egypt, public eating clustered around temples and palace complexes, where prepared food was distributed to priests, soldiers, and laborers as organized rations. Don’t think of these as restaurants. They were more like feeding systems.

It was actually the Roman world which produced the closest ancestor of the modern fast-food counter. This was the thermopolium. These small, street-facing shops were embedded into apartment blocks in dense cities like Pompeii and Herculaneum. Picture a masonry counter with large clay pots (dolia) set directly into the stone, keeping pre-cooked stews, legumes, and wine warm for walk-up customers. The people buying from them mostly lived in insulae, apartment buildings without kitchens. The thermopolium provided nourishment for people whose tight urban living conditions made home cooking impractical.

This was ~2,000 years before the drive-thru. The urban density plus kitchen-less households demanded a market for fast hot food at a counter somewhere.

Then alongside these sat the Roman popinae and cauponae. These were…

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A quick bit of backstory on this one. Several years ago, back when I was working in equity research at an investment bank, I wrote a primer on how the (then) roughly $1.7 trillion U.S. food and beverage ecosystem was actually put together… how and where Americans were spending their money on food (including beverage). It was pre-COVID and it did its job for a while.

It’s been on my list to revisit ever since, because so much has changed. E-commerce went from a borderline rounding error to a real channel, Walmart and Costco have accelerated to a degree that’s almost hard to believe (go pull up their stock charts), and then there’s the small matter of whatever Gen Z is doing — or not doing — at the grocery store and the bar.

So consider this the update. Same question the original asked (where does the consumption dollar actually go?) with fresh numbers and a few things I understand a lot better this second time around.

And accompanying this breakdown is a pretty cool interactive module I built…. you can find it here: www.datahud.ai/foodbev. Hover any channel for the detail, toggle the alcohol layer on and off, and filter by scope.

The ~8th biggest “economy” in the world

We all eat and drink every day (mostly). Multiply that by ~340 million people, roughly 3x a day, 365 days a year, and you get a number so big it stops really meaning anything. Here’s a look at it anyway…

$2,500,000,000,000.

$2.5 trillion. This is what Americans spent on food in 2025, according to the latest USDA Food Expenditure Series data, which is the closest thing we have to a full accounting of the national grocery bill plus the national restaurant tab. One thing to get straight up front is that when the government says “food,” it means food and non-alcoholic beverages — your coffee, soda, juice, and bottled water all live inside that $2.5 trillion. Alcohol gets its own separate ledger, and it’s not small. Alcohol adds another $300 billion or so. So we’re pushing almost $3 trillion/year. If our appetites were a country, it would rank around the 8th largest economy in the world.

So, let’s follow the money. Every one of those dollars left somebody’s wallet and landed in somebody’s register, and where it landed tells you almost everything about how the modern American food business actually works…. who’s winning, who’s quietly dying, and why the headlines about both are usually only half right.

This is a helpful primer. By the end you’ll have a map of the whole ecosystem.

The first fork in the road

Every food dollar makes one decision before any other. That is…

The government calls these food-at-home (FAH) and food-away-from-home (FAFH), and the split is the single most important fact about the industry. In 2025 it ran roughly $1.1 trillion at home, $1.4 trillion away — call it 44% / 56%.

Now here’s the first thing that often alarms folks. If you counted meals instead of dollars, that split would flip almost completely. Something like 80% of America’s eating occasions are still sourced from home. We are, by headcount, overwhelmingly a nation that eats out of its own kitchen.

So how does the smaller share of meals win the larger share of dollars?

Price.

A restaurant meal costs a multiple of the equivalent home-cooked one… you’re paying for the kitchen, the labor, the rent, the table, the convenience, and a margin on all of it. Eating out is the expensive way to eat, so it punches far above its weight in spending. The 80/20 occasions story and the 44/56 dollars story aren’t really in conflict… the gap between them is just the price premium of letting someone else cook.

And that gap has been widening for decades. And for most of the post-2020/COVID stretch, menu prices climbed faster than grocery prices, which means the same eating-out habits throw off more dollars every year.

Walking the at-home aisles

The $1.1 trillion Americans spend on food to eat at home doesn’t spread evenly. It piles up in a few places.

Grocery stores are still the giant — about $617 billion, more than half of all at-home spending. This is the traditional supermarket world. Think Kroger (around $150 billion in revenue, the biggest pure-play grocer), Albertsons (~$80 billion, the Safeway-Vons-Jewel empire), Publix (~$60 billion and beloved in the Southeast), Ahold Delhaize’s American banners (Food Lion, Stop & Shop, Giant). When you picture “the grocery store,” you’re picturing this bucket.

The warehouse clubs and supercenters are the challenger — about $289 billion, and this is where the story gets interesting. This bucket is Walmart’s Supercenters, Sam’s Club, Costco, BJ’s, and Target. And here’s a trap worth flagging in the categorization, because it trips up almost everyone… Walmart and Costco are not in the “grocery stores” line. They live here, in clubs-and-supercenters. The bucket they’re draining is the traditional-supermarket one.

How much are they draining? Walmart alone now sells something like $272 billion of “grocery” merchandise in the U.S. and holds roughly 20% of the entire American grocery market…. a bigger slice than anyone else by a wide margin. Costco’s food, sundries, and fresh categories run well over $100 billion in the U.S. The top 10 grocers, all formats combined, now control about 70% of the market.

This raises an obvious question… if Walmart and Costco have been growing food sales like crazy, why does that $289 billion bucket only grow at a mild single-digit clip?

The answer is the most useful thing in this entire primer… a good pinch back to reality if you’re inside or running a hyper-growth CPG brand…

The food-at-home pie barely grows in real terms. It’s a near-flat category — you can only eat so much. So when Walmart, Costco, Aldi, and Amazon post big gains, those gains aren’t coming from a growing pie. They’re coming out of someone else’s slice — the regional supermarket, the drugstore aisle, the weaker mass retailer. It’s redistribution, not expansion. The drama is happening inside the channel, between companies, in a way the channel’s calm topline total completely hides.

The rest of the at-home dollar scatters into smaller buckets… roughly $122 billion in “other stores” (dollar stores like Dollar General, drugstores, and the pure-play online players — Amazon, Instacart). About $39 billion in specialty and natural grocers (Whole Foods, Sprouts, the ethnic and specialty shops). $13 billion at convenience stores (7-Eleven, Casey’s, Wawa). And a small but fast-growing $13 billion in direct selling… think farmers markets, CSAs, and the brands who ship DTC.

That last bucket is tiny, but watch it. It’s grown faster than almost anything else on the at-home side, and it’s where a lot of the buzzy new stuff lands these days.

The away-from-home counter

Let’s cross over to the $1.4 trillion Americans spend eating out… the geography changes.

The two giants are the restaurants. Limited-service — fast food and fast casual — is the single biggest line in the entire food economy at roughly $516 billion. This is McDonald’s (about $53 billion in U.S. system-wide sales by itself), Starbucks, Chick-fil-A (an astonishing $22.7 billion out of fewer than 3,100 stores), Taco Bell, Chipotle, and the fast-casual upstarts like Cava nipping at their heels. Full-service restaurants — the sit-down world of Olive Garden, Texas Roadhouse, your local independent — run close behind at about $488 billion, and they’ve been the faster-growing of the two lately, clawing back share they bled during the pandemic.

There’s an aspect of “away-from-home” that was always confusing to folks, which is that a huge chunk of it isn’t restaurants at all…

There’s about $145 billion in foodservice run inside traditional retail… think the grocery hot bar, the Costco food court, the made-to-order counter at Wawa. There’s another $85 billion flowing through schools and colleges, and another $69 billion in food “furnished” by institutions like hospitals, the military, nursing homes, prisons. Add hotels, stadiums and theme parks, airlines, office cafeterias, and vending, and you’ve got a few hundred billion dollars of eating-out that no one ever writes a trend piece about. Much of this world is run by three contract giants you’ve probably never thought of as food companies — Compass Group (about $29 billion in North America), Aramark, and Sodexo.

This invisible institutional half matters for a reason we’re about to get to… it’s pretty stable and unremarkable. It doesn’t open and close with the economic mood. It’s a sort of the ballast under the restaurant industry’s stormier waters.

Oh, and then there are bars… about $10 billion of food is sold in in “drinking places,” plus a grab-bag “other” category. Modest on the food side, though the alcohol they pour is tracked in a whole separate ledger, and of course it’s not small.

The restaurant paradox

Now for the part that confuses everyone…

You have read, repeatedly, that the American restaurant is in trouble. In 2024, bankruptcies wiped out something like 350 full-service chain locations…. Red Lobster, TGI Fridays, Hooters, Rubio’s, Buca di Beppo, On the Border, one beloved name after another filing for Chapter 11. Restaurant bankruptcy filings jumped nearly 50%. The trade press has been running an obituary a week.

And the pressure hasn’t let up… if anything it’s climbed the food chain. Heading into 2026, the closure list stopped being just wobbly casual-dining names and started including the giants… Wendy’s plans to shut 300 to 350 restaurants, Papa John’s around 300, Pizza Hut 250, Jack in the Box up to 100, and even Darden is retiring its Bahama Breeze chain. Black Box Intelligence pegs roughly 9% of full-service and 4% of limited-service restaurants as at risk of closing this year.

And yet, the away-from-home number we just walked through grew. Spending at restaurants went up. So which is it? Boom or bust?

It’s both.

First: the growth is price, not traffic. Menu prices are up something like 25% since 2020. Through 2024 and 2025, the number of actual visits to chain restaurants ran flat-to-negative most months, while the dollars spent ticked up low-single-digits. Put those together and you get the truth… restaurants are selling roughly the same number of meals — or fewer — for a lot more money. The spending line rises on inflation while the foot traffic stalls or shrinks. The biggest 500 chains grew sales just 3.1% in 2024, below the 4.1% menu inflation that year — which is a polite way of saying they collectively lost customers even as their revenue grew. America’s three biggest chains (McDonald’s, Starbucks, Chick-fil-A) managed a combined 1.2% growth after posting more than 11% the year before.

Second: the “bust” is a margin story, not a demand story. A restaurant can grow its sales and still go bankrupt… and many did. Labor got more expensive, food got more expensive, and interest rates made the debt that private-equity owners had loaded onto these chains suddenly unbearable. Red Lobster and TGI Fridays weren’t killed by a nation that stopped eating out; they were killed by balance sheets that couldn’t survive the cost of the eating-out they still got. And the 2026 wave is the same lesson in a different key… most of those Wendy’s and Papa John’s closures aren’t bankruptcies at all — they’re deliberate removals from the system. Papa John’s, for one, is cutting stores that are a decade old, ring up under $600,000 a year, and lose money at the four-wall level. That’s portfolio surgery to protect the rest of the system.

Third: redistribution again. Closures don’t vaporize the demand but rather reroute it, and the operators doing the cutting say so… Jack in the Box sees sales at nearby stores jump about 30% when a neighbor closes, and Noodles & Company figures it keeps roughly 30% of a shuttered location’s sales as diners simply shift to the next-closest one. The dollars migrate to the survivors and to value… Casual Dining’s value plays surged in 2025. Cava, Wingstop, and Texas Roadhouse compounded right through the gloom. And that stable institutional half (schools, hospitals, contract feeders) sits underneath, barely flinching at all.

So the aggregate looks fine but the distribution is brutal. Some chains are feasting, more are quietly starving, the average comes out positive, and a writer can honestly file either the boom story or the bust story depending on which row of the spreadsheet they’re staring at. The sophisticated read is to hold both at once… nominal dollars up, real traffic down, margins squeezed, the weak failing and the strong absorbing their traffic.

The new kids at the table

If you spend any time online, you’d think the future of food is being sold through a phone by a 24-year-old with a ring light. TikTok Shop, DTC brands, Shopify storefronts, viral snacks, “TikTok made me buy it.” So where does all of that fit on our map?

Mostly… nowhere yet.

In dollar terms, the emerging channels are still a rounding error. TikTok Shop did about $9 billion in total U.S. sales in its first full year, of which food and beverage was maybe $1.2–1.4 billion…. real money, and the fastest-growing category on the platform (up something like 220% in a year), but a speck against a $2.5 trillion pie. Direct-to-consumer (DTC) food… meal kits aside, at $10–13 billion… is a collection of coffee subscriptions, better-for-you snacks, supplements, and specialty meats. Shopify isn’t really even a channel… it’s the plumbing under thousands of these DTC brands.

Here’s the nuance that actually matters, though. These channels are reshaping discovery, not checkout. Gen Z finds the product on TikTok and then buys i… at Target, at the grocery store, through a delivery app. The “DTC darlings” you’ve heard of — Liquid Death, Olipop, Magic Spoon — now do the bulk of their volume on regular retail shelves. The screen is maybe the new billboard, but the IRL register is still the register.

Which brings us to the platforms that do move serious volume… the delivery apps. Instacart pushed about $33.5 billion of groceries through its platform in 2024. DoorDash and Uber Eats move well over $100 billion of restaurant orders between them. Those are big, real numbers.

And they are exactly where the map starts to lie. So let’s end there…

Three ways the map lies

A primer that only told you the numbers would leave you worse off than when you started, because the raw numbers in this industry are sort of booby-trapped. Here are the three traps, in order of how often smart people fall into them.

Trap 1: mistaking price for volume. We covered this with restaurants, but it’s everywhere. Nearly every “spending grew” headline in food right now is mostly inflation. The dollars are real, but they don’t mean more food was sold, more meals were eaten, or more customers showed up. Our underlying physical consumption behavior changes very slowly over time. If you want to know whether a business is actually winning, you have to find the volume (i.e. units, traffic, transactions) hiding underneath the dollar amounts. The two have been telling different stories for years.

Trap 2: mistaking the average for the experience. Again, the food & beverage economy is barely growing in real terms, which means it’s mostly a redistribution machine. Walmart gains, the regional grocer loses. Chick-fil-A feasts, Red Lobster files. The category total stays calm and uneventful while underneath it there’s a knife fight. If you only read the aggregate, you will conclude that nothing is happening… at the precise moment that everything is happening. The action is always within the bucket, between the players. Never trust a “stable” total.

Trap 3: counting the same dollar twice. This is the subtle one. When you buy Kroger groceries through Instacart, that grocery money is Kroger’s sale… it’s already counted in the grocery-store total. Instacart’s $33.5 billion isn’t new money in the system… it’s the same money, re-labeled by how it got to your door. Same with restaurant delivery… a DoorDashed burrito is already counted as a Chipotle sale. Same with the drive-thru, the curbside pickup, the “online grocery” figure. These are all cross-cuts… the same dollars sliced by fulfillment method instead of by store… and if you stack them on top of the store totals, you’ll double, triple, quadruple-count your way to a number that means nothing.

These traps have a cousin worth naming… these players don’t even report “sales” the same way. A grocer reports the money it actually books. A franchised chain reports system-wide sales… everything customers spend across all its franchisees, far more than the parent company’s own revenue. A platform like Instacart reports something called GMV (the “gross merch value” flowing through it) even though it keeps only about a 10% cut as actual revenue. Line those up in a single column without labeling them and you’re comparing three different things and double-counting the platforms against the stores they sit on top of. The genuinely new money the delivery economy adds is just the fees and tips layered on top of the food. Of course this is a real, fast-growing services business with real earnings, but it’s not food spending, and not to be blended into the food pie.

Internalize these traps and you can read any food-industry chart in the country without getting it wrong.

So, what’s actually going on

Step back from the map and a single picture emerges, and it’s not the one the topline number suggests.

The American food economy is not really growing. It’s reorganizing. The pie is roughly flat in real terms… what’s changing is who holds the knife. Retail power is concentrating into a handful of giant share-gainers — Walmart, Costco, Amazon, Aldi, Kroger — squeezing the brands that sell through them and the smaller stores that compete with them. Eating out keeps winning a bigger share of the dollar even as it wins fewer of the actual meals, because the price and demand of convenience keeps rising. The strongest restaurants are absorbing the customers of the ones going bankrupt. And a layer of digital intermediaries… delivery apps, social commerce, DTC… is wedging itself between the brand and your mouth, capturing margin and attention even where it isn’t yet capturing much volume.

That’s the bird’s-eye view… a $2.5 trillion table that looks placid from a distance and is anything but up close. The interesting questions in this business are almost never how big is it… that number barely moves in real terms. They’re who’s gaining, who’s quietly dying, and which dollar is real.

Those are the questions we’ll spend our time on.

Now you have the map. Next time someone tells you food spending is booming… or that the restaurant is dead… you’ll know which trap they fell into.

Cheers,

Kevin

It’s gotten worse…

Since We Last Wrote

The Big Food names we’ve been focused on — Campbell’s (CPB), Conagra (CAG), and General Mills (GIS) — are down roughly another 10%. Even the smaller Utz (UTZ) and B&G (BGS) are down ~10%. Although, B&G is down largely because the company finally cut its dividend in half on May 11. Things are not going well in the center of the grocery store.

The global/European names are no better. Unilever stock got beat up after the McCormick announcement and hasn’t rebounded. It’s down over 20% since its February highs. Nestle’s flat this year and down about 11% over the past 12 months.

A few names have held up though. Kraft Heinz (KHC) is up slightly. Smucker (SJM) is roughly flat — and notably, both are in some form of strategic overhaul the market seems to be giving credit for. Cahillane has paused the KHC split and committed $600 million to a turnaround. And on May 7, Axios reported that Smucker has hired Goldman Sachs to conduct a strategic review of its portfolio, under pressure from activist Elliott Investment Management, with a sale of Hostess (the Twinkies business Smucker acquired in 2023 for $5.6 billion) perhaps the most likely outcome. That’s the framework in real time — Smucker getting smaller and more focused, shedding the Hostess deal that diversified it away from its core spreads-and-coffee identity.

Meanwhile, Conagra’s dividend yield has climbed to ~10% — the classic “show me” signal from a market that doesn’t believe the payout is sustainable. With Sean Connolly out as CEO May 31 and John Brase from Smucker taking over June 1, a dividend cut is high on the list of things the new CEO has to address. The B&G playbook — cut the dividend, redirect cash to debt paydown — is exactly the template Conagra is staring at now. Two very similar businesses in their category mix historically.

That’s the food story. Six weeks, just more carnage and lack of investor faith.

But Big Food isn’t alone…

It’s Not Just Food

Let’s step back and look at the broader consumer landscape…

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Stop and think about that for a moment.

Unilever’s roots in food trace back to 1860, when one of its Dutch founding families began building a business in the butter trade. Unilever itself was created in 1929 when Margarine Unie and Lever Brothers merged in what was at the time one of the largest industrial mergers in European history. The company spent most of the last century snapping up food brands — from Marmite to Colman’s to Hellmann’s. And now it’s walking away from all of it.

This comes on top of the ice cream spin-off Unilever completed last year under Fernando Fernandez, who took the helm in March 2025 and has been more aggressive than his predecessors — two of whom were essentially shown the door by Nelson Peltz and others for not moving fast enough. After ice cream and now food, what remains is a pure-play beauty, personal care, and household products company. The 160-year-old diversified consumer goods empire is no more.

And look at the other side of the transaction. McCormick isn’t diversifying. It’s doing the opposite. It’s getting bigger within a single category lane — sauces, condiments, flavor. French’s, Frank’s Red Hot, Cholula, and now Hellmann’s and Knorr under one roof. One company is getting smaller and more focused. The other is getting bigger and more focused. Both are moving in the same direction.

This is de-conglomeration and category consolidation happening simultaneously in the same transaction.

The Framework

Over the past two years, we’ve laid out a three-part framework across several pieces.

In Expect Big Change in Big Food (July 2024), we showed how deteriorating total shareholder returns (TSRs) force boards into radical action — spin-offs, restructurings, or sales. This isn’t about management getting bored or excited. It’s about underperformance becoming intolerable.

In The Great De-Conglomeration (July 2024), we placed this moment in historical context. Big Food has been unwinding decades of conglomeration — when companies collected unrelated businesses for internal diversification reasons, encouraged by the management academia of the mid-20th century, only to realize investors could diversify more efficiently on their own. The new playbook was narrowing portfolios, carving off non-core divisions, and moving toward “bigger and fewer” category champions.

In All Quiet on the Midwestern Front (August 2024), we used Kellogg’s as a case study. Decades of underperformance and hometown ties made Kellogg’s look strategically lost, but its cereal spin had unlocked optionality. We contemplated its endgame was either rerating or being taken out as was being rumored in the press — with Mars or Hershey as the logical buyers. Mars was announced as the acquirer the next morning. That deal closed in December 2025 for $35.9 billion.

Then in August 2025 — in One Year Later: Big Food Is Breaking Apart, Just Like We Predicted — we catalogued the cascade of transactions that followed. Conagra shedding Chef Boyardee and frozen seafood brands. Kraft Heinz announcing its split. Ferrero acquiring WK Kellogg for $3.1 billion. KDP striking an $18 billion deal for JDE Peet’s while splitting itself in two. General Mills selling its US and Canadian yogurt businesses for $2.1 billion. PepsiCo acquiring Siete Foods and Poppi. Nestlé reviewing its vitamins and supplements business. Unilever spinning off ice cream. Water consolidation. Smucker reshaping around premium snacks.

That was seven months ago. What’s happened since has been even more dramatic.

The Stocks: From Bad to Catastrophic

Here’s the uncomfortable truth. Since we published our last update on August 31, 2025, the S&P 500 is roughly flat — down about 2%. Meanwhile, most of Big Food has continued to get destroyed.

Campbell’s: $32 → $22, down 31%. After a dismal Q2 FY26 showing revenue declining 4.5% with a major guidance cut, the stock hit a 23-year low. Then a PR crisis erupted late last year when a secretly recorded executive rant went viral. We flagged Campbell’s as “the next name to watch” in our August piece. We weren’t wrong.

General Mills: $49 → $37, down 24%. The stock is now at levels not seen since 2012-2013 and has declined 60% from its all-time high. The company cut its fiscal 2026 outlook, and analysts have been slashing price targets — TD Cowen took theirs down to $32.

McCormick: $70 → $54, down 23% before the Unilever news. For McCormick, this deal is either the defining move of a generation or a massive overreach for a company with a $14 billion market cap taking on a business valued in the $30+ billion range.

Kraft Heinz: $28 → $22, down ~20%. More on this one below.

Conagra: $19 → $15-16, down ~20%. Net sales declined 6.8% in Q2 2026, and the dividend yield has spiked into the 8-9% range — a classic “show me” signal from a market that doesn’t believe the payout is sustainable. The stock now carries one of the highest dividend yields in the S&P 500.

Smucker: $110 → $95, down 14%.

Post Holdings: $113 → $97, down 14%.

Hormel: $25 → $23, down 8%.

Mondelez: $61 → $58, down 5%.

That’s since August. The longer-term picture is even grimmer. On a five-year basis, Conagra is down 58%. Campbell’s is down 55%. McCormick is down 39%. General Mills is down 39%. These are multi-year destructions of shareholder value that make the case for transformational change almost self-evident.

Now look at who’s held up.

PepsiCo: $150 → $157, up about 5%. On a five-year basis, PEP is up about 11% — modest, sure, but light years ahead of the wreckage above. PepsiCo is one of the biggest actual conglomerates in all of food and beverage, and activists like Peltz’s Trian have pushed for years to separate the beverage business from Frito-Lay. But it’s held together because — unlike most of the names above — its two businesses (instant consumable beverages and snacks) share genuine synergies in marketing, distribution, and cross-promotion at retail. It’s diversified, but within a narrow lane. That’s the difference.

Coca-Cola — arguably the purest of pure plays in the sector — is up 45% over five years. Focus works.

Unilever and Mondelez are roughly flat over five years. Unilever’s flatness despite being the quintessential diversified conglomerate is precisely what created the pressure from Peltz and others that ultimately led to today’s McCormick deal. Mondelez, spun out of the original Kraft in 2012 as a focused global snacking business, has at least avoided the carnage — but “flat” is still a far cry from the rolling triple-digit 10-year TSRs investors were accustomed to in the 2000s and early 2010s.

And then there’s the outlier.

Hershey: $184 → $212, up 15%. On a five-year basis, HSY is up about 35%, though still down 20% from its all-time high of $254 from May 2023. Its recent rally has been driven by the cocoa cycle turning. After years of surging cocoa prices that crushed margins across confectionery, the commodity has finally begun to deflate — falling over 60% from its peak. Hershey’s Q4 earnings reflected the turn, with management guiding for a 30-35% increase in adjusted EPS and 400 basis points of gross margin recovery in 2026. New CEO Kirk Tanner has been praised for rationalizing the portfolio and focusing investment on the company’s core domestic brands.

But it’s not just cocoa. What’s interesting about Hershey’s outperformance through the lens of our thesis is that Hershey is essentially the poster child for “bigger and fewer.” It has deliberately narrowed its focus — pulling back from international markets where its competitive position lagged, doubling down on US confection and salty snacks, and using acquisitions like LesserEvil (popcorn and puffs) to extend along category lines rather than diversify into unrelated businesses. It also benefits from the Hershey Trust’s ~80% voting control, which shields it from the activist pressure that has destabilized peers.

In other words, the most focused, most category-disciplined major food company is the one whose stock is going up. Coca-Cola, essentially a pure play, is up 45% over five years. PepsiCo, disciplined across two synergistic lanes, is modestly positive. And the diversified conglomerates managing dozens of disparate categories are getting crushed. If you needed a real-time controlled experiment to validate our framework, this is it.

These are supposed to be defensive consumer staples. Instead, most have been among the worst-performing stocks in the market. The TSR gap we’ve been writing about since 2024 hasn’t closed. For most of Big Food, it’s blown wider.

Our thesis in Expect Big Change in Big Food was that when TSRs deteriorate badly enough, boards are forced into transformational action. If the pressure was building at the levels we showed in mid-2024, it is now at a breaking point for several of these companies. More radical change is not just likely — for some of them, it’s now almost certain.

What’s Driving This

The causes are layering on top of each other in ways that weren’t fully in play when we started writing this series.

GLP-1 drugs are reshaping consumer demand. Over 12% of American adults are now on semaglutide or tirzepatide medications, up from under 6% in early 2024. Users are eating less, snacking less, and gravitating toward protein-forward and nutrient-dense foods. Households with a GLP-1 user reduce spending on salty snacks, cookies, and baked goods more than any other categories. Oral pill formats rolling out this year could accelerate adoption further.

MAHA and the new dietary guidelines are adding regulatory pressure. The 2025-2030 Dietary Guidelines recommend Americans consume no added sugars if possible and no more than 10 grams per meal. Health Secretary RFK declared the government is “at war with added sugar.” These guidelines influence school meals for 30 million children and SNAP — and SNAP cuts are already hitting companies like Kraft Heinz, where 13% of US retail sales come from SNAP households.

Private label keeps gaining share. Value-conscious consumers have driven store brands to record revenue levels, and cross-shopping between traditional grocers and dollar/discount chains continues to increase.

Tariffs and geopolitics — including the Iran conflict’s disruption of the Strait of Hormuz — have squeezed input costs. Over half of supply chain leaders have raised consumer prices in response, but consumers are pushing back.

And the macro consumer sentiment is simply exhausted. As Kraft Heinz’s new CEO put it:

“We busted through four or five levels of price points in a very accelerated fashion, and the consumer was left very disappointed.”

The upshot is that Big Food is simultaneously facing structural demand erosion, regulatory headwinds, cost inflation, and consumer fatigue. And it’s doing so with stock prices at or near multi-decade lows. Boards are running out of options.

The Kraft Heinz Question

Perhaps the most interesting development since our last update is Kraft Heinz — and what its reversal says about the limits of the de-conglomeration thesis.

In September 2025, Kraft Heinz announced it would split into two companies: “Global Taste Elevation” (Heinz, Philadelphia, Kraft Mac & Cheese — roughly $15.4 billion in sales) and “North American Grocery” (Oscar Mayer, Kraft Singles, Lunchables — roughly $10.4 billion). It was precisely the kind of de-conglomeration we had been predicting. We called it “the dismantling of the 3G/Berkshire experiment.”

Then in December, the company hired Steve Cahillane as CEO — the same Steve Cahillane who had steered Kellogg’s through its own breakup and then led Kellanova until its sale to Mars. A man whose entire recent career was built on executing exactly this kind of separation.

Six weeks later, he ripped up the playbook. On February 11, Cahillane announced the split was paused. His argument:

“Separations are always best done when the business is healthy, when it’s stable and when it’s growing.”

The brands, he said, had been underinvested for years. The problems were “fixable and within our control.” He pledged $600 million in marketing, R&D, and sales investment to turn the business around.

The market’s initial reaction was brutal — shares fell nearly 8%. Analysts were skeptical. Deutsche Bank’s Steve Powers said the decision “reveals deeper problems than previously acknowledged by the company.” Stifel’s Matthew Smith called it a “negative” in a single word. The pause also removes what many analysts had viewed as a valuation floor — the expectation that a pure-play condiments business would rerate higher on its own.

And yet, some voices supported the move. Barclays’ Andrew Lazar called reinvestment “the right set of first steps.” Piper Sandler acknowledged that Cahillane had reshaped KHC’s plans “much more significantly than we had expected in just six weeks.” And Berkshire’s Greg Abel — who had reportedly been privately skeptical of the split — said Berkshire has no immediate plans to alter its 27.5% stake.

So here we have the irony of ironies: the man who literally executed the Kellogg breakup is now arguing against breaking up Kraft Heinz.

Is he right? The honest answer is… maybe, but probably not for long. His logic — fix the brands first, then reassess — has some merit. Splitting a business while it’s in free-fall could destroy value rather than unlock it. You don’t perform surgery on a patient who’s bleeding out.

But the megatrend we’ve identified hasn’t changed.

The structural forces pushing Big Food toward simplification are only accelerating. Kraft Heinz managing 200 brands across 55 categories and 150 countries is the definition of conglomerate complexity. The question is whether Cahillane is buying time to split from a position of strength later — or whether this is a new CEO’s attempt to prove he can be more than a breakup artist, at the expense of the inevitable.

We shall see. But if the stock continues to underperform, the pressure from activists — or from Berkshire itself — will eventually force the issue regardless.

Once Upon a Farm: A Signal From the Other Direction

While Big Food stocks were collapsing, something interesting happened in early February. Once Upon a Farm — the organic children’s nutrition company co-founded by Jennifer Garner and run by John Foraker, the former CEO of Annie’s Homegrown — priced its IPO at $18 per share on the New York Stock Exchange and promptly jumped 17% on its first day of trading, eventually running up to about $24 before settling back down to around $15 today.

So the stock hasn’t exactly been a home run. But the signal matters more than the subsequent price action. The company does $200 million in annual sales across 19,000 stores and was valued at roughly $724 million at pricing. That Goldman Sachs and JP Morgan underwrote the deal, that the IPO priced in the middle of its range, and that public investors showed up on day one — all of that happened while Big Food stocks were hitting multi-year lows. The market was willing to assign a premium multiple to a small organic kids food brand at the very same moment it was punishing legacy food companies with some of the lowest valuations in 20 years.

The IPO came, as CNBC noted, “as shoppers and policymakers alike have pushed back on ultra-processed foods.” Once Upon a Farm is a direct beneficiary of the trends that are crushing Big Food — clean-label preferences, GLP-1 adoption, the MAHA agenda, and millennial and Gen Z parents making different choices than their own parents did.

There’s a deeper irony here. General Mills acquired Annie’s Homegrown in 2014 for $820 million. John Foraker — Annie’s CEO at the time — left, co-founded Once Upon a Farm, and took it public at nearly the same valuation. Meanwhile, General Mills’ own market cap has been cut in half. The talent and the innovation that Big Food needs is walking out the door and being rewarded by the public markets for doing so.

Big Food companies need to wake up. The market is telling them — loudly — that the future belongs to focused, innovative, consumer-aligned brands, not sprawling conglomerates managing dozens of tired categories from Midwestern headquarters with brass handrails.

What Comes Next

The Unilever-McCormick deal will dominate headlines today, and it should. It’s the most dramatic single validation yet of the de-conglomeration thesis we’ve been writing about. When the world’s second-largest consumer goods company exits food entirely — the category that was foundational to its very existence — the trend is no longer debatable.

But the bigger story is the compounding pressure building across the rest of Big Food. Stock prices are at or near generational lows. Consumer demand is structurally shifting. Regulatory scrutiny is intensifying. And the playbook is clear. It’s get bigger in fewer things, or get broken up by someone who will.

Campbell’s, General Mills, and Conagra sit at the bottom of the TSR charts with stock prices that have been cut by a third to more than half over the past few years. All three remain broadly diversified across categories that provide few obvious synergies. All three have the kind of underperformance that historically attracts activist investors. Campbell’s has notably strong shareholder protections that may delay but cannot indefinitely prevent the reckoning.

The conglomerates are still breaking apart. The category champions are still bulking up. And the “bigger and fewer” playbook that we described as the industry’s future is now, unmistakably, its present.

Get your popcorn ready, again.

Approaching all-time-low multiples, I would assume, at these levels. Catastrophic value destruction with seemingly no reprieve.

Yet look at the global snacking stocks…

Mondelez is the most international, so perhaps th…

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Thanks again for subscribing to Goodsletter, whether paid or free. This has always been an evolving experiment with long-form deep-dive content and a spattering of smaller takes and recaps. The ultimate goal is to product content more consistently. But alas, someone also has to run the underling businesses, which are Goods Intelligence (business intelligence, data analytics, FP&A) and Goods Advisors (M&A execution and exit planning). I hope to develop a more regular cadence over time, so stay tuned.

These past few months in particular have been quite intense and impactful. We just signed a large, well-known, high-growth beverage brand for a sophisticated data management, analytics infrastructure, and financial modeling engagement. And I recently got back from a bit of traveling to Philadelphia and then Orlando for the ICR Conference (I’ll include some ICR takeaways at the bottom).

But I also want to share a sneak preview of something I’ve been developing for internal use. Think part CRM, part company directory, part global explorer, part AI-enabled industry research platform… called goodsDEX.

I’m thinking of making it available to paid subscribers to some degree of access and capability in the near future. Here are some of the features so far. If you have feedback, please share. I’m all ears.

goodsDEX Preview

This is a company database build with a scrolling color-coded news marquee.

This is a 3D globe component that allows me to map major company locations around the world whether it be HQ, manufacturing, sales, R&D, or any other relevant location type. And I’m thinking about other overlays to this as well… so many possibilities and directions.

This is a more interactive version of this post which explains how GDP is constructed and the split and nuance between goods and services within the US economy.

And this is my “Research Sandbox” connected via API to SEC EDGAR — staffed with an “AI Assistant” layer — that allows me to build a context window (i.e. documents and data of my curation) and ask question against it.

ICR Conference takes

Got back from the 2026 ICR Consumer Conference a few weeks ago -- the “Super Bowl of consumer conferences.” (according to Jim Cramer…)

Still my favorite way to kick off the year… reconnect with old research, banking, and investor colleagues… make new friends… hear directly from the fastest-growing consumer businesses… plus samples, swag, and Orlando weather that beats Amsterdam in January.

Walmart (Daniel Danker, EVP - AI Acceleration) is going all-in on AI + personalization. Better recommendations, understanding household behavior, predictive replenishment. Already dominant... and defining the future of retail.

Mid-Day Squares is crushing it. Jake Karls’ 8am session brought infectious energy. 65M+ bars sold, in-house manufacturing built from scratch, owning the between lunch-dinner snacking occasion (~40% of the $70B NA snacking category), driving fresh snacking coolers. When cocoa prices spiked, they innovated instead of complaining (“No Bread” PB&J is amazing, I tried it). Respect.

Hint Inc. is quietly massive. ~$250MM retail sales, only ~5% HH penetration, top SKU at 49% ACV. 40% “fully loaded” gross margin. They believe flavored still water could be a $5–10B category. Previewed a bold 2026 campaign... stay tuned.

Utz Brands, Inc. is an iconic American business... these days focused on margin expansion, productivity, and reinvesting in their core brands (Utz, Boulder Canyon, Zapps, On the Border) to grow coast-to-coast. Nimble vs giant Frito-Lay, strong retailer flexibility (60% DSD + 40% warehouse), smart portfolio architecture with premium + value SKUs.

Jersey Mike's Subs presented after announcing its new UK expansion (Peter Cancro as first franchisee). Now 3,000+ stores, Blackstone-backed, elite brand. Jersey Shore powered!

Authentic Restaurant Brands (Alex Macedo) continues to impress. Strategy is to acquire and compound great regional “hometown hero” brands (Primanti Bros, Pollo Tropical, PJ Whelihan’s, etc.) by upgrading systems to accelerate growth (e.g. data analytics, AI)... not by tearing things apart or cutting. Excited for what's next for them.

Great conference. Already looking forward to 2027.

-Kevin Lehmann/GOODS

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This topic is personal for me in a couple different ways.

From 2016 to 2020, I served on the board of the Sons of the Revolution in New York and remain a member of the organization today. We own Fraunces Tavern — the oldest restaurant in New York City and, depending on how you define it, the oldest surviving structure in Manhattan…

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In Expect Big Change in Big Food (July 8, 2024), we showed how underwhelming total shareholder returns (TSRs) eventually force boards into radical action. Spin-offs, restructurings, or sales don’t happen just because management think they’d be interesting or exciting. They happen when stock perfor…

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Now, let’s turn to the company itself.

Catching up on 160 years of history

Cargill was founded in 1865 when William Wallace Cargill purchased a grain warehouse in Conover, Iowa. Over the following decades, the Cargill family expanded along railroad networks, acquiring grain elevators, warehouses, and other storage assets across the Midwest. In essence, Cargill began by providing a critical service to the nation’s farmers — connecting them to domestic and world markets. As we explained in Part 1, individual farms lack the capital, infrastructure, and scale to handle their own distribution, so companies like Cargill step in to buy crops locally, store them, and move them efficiently to transport or export hubs where they can be sold elsewhere or abroad.

In 1904, William’s son-in-law, John MacMillan, joined the business. This marked the beginning of the Cargill–MacMillan family partnership, which endures to this day. Both families remain the principal shareholders, making Cargill one of the largest privately owned companies in the world. (There’s no public float — ownership is split among dozens of heirs, many of whom are billionaires on paper.) Over the next century, Cargill expanded far beyond grain storage and transport, acquiring companies and assets that added new services and business lines — from meatpacking and animal nutrition to cocoa processing, ocean freight, and even financial services and commodity risk management. The logic was straightforward — by building out capabilities across every stage of the agricultural supply chain, Cargill could both capture more margin and reduce its dependence on any single commodity, region, or market cycle.

But for most of its existence, Cargill has operated largely outside public view — a deliberate strategy made easier by its private status. But that changed somewhat in 1972 during the so-called “Great Grain Robbery” when the Soviet Union, suffering a poor harvest, quietly purchased millions of roughly 10 million tons of US grain at relatively low prices. Cargill, like other major American grain traders, sold large volumes to the Soviet grain-buying agency Exportkhleb — unaware that the Soviets were making similar deals with multiple other firms at the same time. This fragmented buying concealed the total size of the purchases from the market, US officials, and the traders themselves until the deals were complete. When the cumulative purchases came to light, domestic grain reserves had already been depleted, and prices spiked for US businesses and consumers. Worse, US taxpayers ended up effectively subsidizing Soviet purchases through existing export credit programs. The controversy marked the first time many Americans had ever even heard Cargill’s name… and the first time the company’s global role came under any real public scrutiny or political pressure.

The public backlash — especially amid rising food prices at home — led Congress and the USDA to overhaul agricultural export reporting. The most notable resulting change was the creation of the USDA’s Export Sales Reporting Program in 1973. This policy required US exporters to promptly report large foreign sales of major commodities to the USDA, which would then publish the data on a weekly basis. The goal was to give both the government and the market visibility into large export deals to avoid being blindsided again. This reporting requirement still exists today and is considered one of the more lasting regulatory changes in global grain trade transparency.

Food industry classic Merchants of Grain, written in 1979 by Dan Morgan, was the first major book to dive head first into Cargill’s world — and the Russian grain “robbery” is prominently featured (there was a book called The Great Grain Robbery written in 1975 by James Trager that went into even more detail). Morgan goes on to reveal how Cargill was (and remains) part of a small, secretive group of global grain traders (often referred to as the “ABCD” firms — ADM, Bunge, Cargill, Louis Dreyfus). Morgan explained how Cargill’s reach extended from US farms to ports, to international shipping lanes, to foreign mills and buyers… showing how a handful of companies quietly mediated global food flows far beyond day-to-day scrutiny let alone awareness. More recently, The World for Sale written in 2021 by Javier Blas and Jack Farchy revisited Cargill in the broader context of global commodity trading (i.e. not just food) — still largely private, still low-profile, but wielding enormous influence over supply chains that governments and populations depend on.

Today, Cargill is more likely to appear in investigative or activist journalism than in mainstream business headlines — and often in a negative light. The company has been criticized for its role in Amazon deforestation linked to soy and beef supply chains, child labor concerns in West African cocoa sourcing, and environmental damage from palm oil operations in Southeast Asia. Whether these issues stem from direct operations or from suppliers, they’ve put Cargill at the center of debates over environmental responsibility in the global food system. And this criticism is also inevitable given the unprecedented size of the company and its sprawling everywhere-at-once operations around the world.

The Business(es)

Cargill announced late last year that it would restructure its operations after falling short of its own profit targets — which were largely driven by the normalization of grain prices (which compresses margins) in recent years following the rapid demand (e.g. animal feed for higher meat demand) and supply chain-driven (e.g. labor shortages, Brazil drought) price spikes during the COVID years. The company said it would streamline its business segmentation from five units to just three. But let’s take a look at its pre-2025 organization (thanks to a 2023 bond prospectus we dug up) to get the best understanding of the business.

Let’s go…

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In early 2024, B&G Foods stood at a major strategic crossroads. As we explored in The Not So Green Giant last year, after a decade of strategic drift and mounting financial strain, B&G made a bold decision to return to its core identity… a cash-generating steward of shelf- (and working capital-) stable, low-maintenance (i.e. low capex) “center of the store” food brands. This strategic reversion began with a series of painful but necessary decisions — a 60% dividend cut, the sale of its Green Giant canned vegetable business in the US (but not the Canadian business), and a formal review of its remaining frozen vegetable portfolio — namely Green Giant frozen veggies.

The market responded with brutal skepticism with shares dropping ~30% in just two trading days following the Q1 2024 earnings call. The new narrative was pretty clear — investors saw management panic, not discipline. But for those who understood the company’s original playbook — including this author — the moves marked a calculated and long-overdue return to the capital-light, stable-margin model that had made B&G successful in the first place — stable revenues, growing dividends, and a premium P/E that helped it rinse and repeat successful center-store tuck-in M&A.

But if a turnaround is actually going to happen, then B&G is giving a masterclass in how sometimes things need to “get a lot worse before getting better.”

The stock is sitting around $4 — down almost 60% since our piece last year.

Let’s break down why…

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But there’s another corner of the global consumer world that operates largely behind closed doors — the world of agribusiness, commodity traders, and middlemen who move the raw ingredients, set the prices, and, in many ways, decide who eats and who profits. The biggest of them all is Cargill: the most powerful food company on Earth — and one that prefers we don’t talk about it.

In the world of food and agriculture, some companies define the way we eat without us ever realizing it. If Walmart is the king of retail, Cargill is the emperor of supply chains — controlling the flow of food (and the commodities needed to make or process food) from farm to factory to fork. It’s one of the largest, most influential, and yet least understood corporations on the planet. And that’s largely by design. It’s also the largest privately held company in the United States — and among the largest companies in the world in general.

Cargill is the largest of the so-called “ABCD” companies — ADM, Bunge, Cargill, and Louis Dreyfus — which collectively control 50–60% of all global trade in the major commodity crops like corn, wheat, and soybeans. If you’ve eaten today, you’ve interacted with one of them.

Geopolitics and Natural Emergence

As with everything, context is important. Before we can understand Cargill, we need to understand why an entity like Cargill had to emerge in the first place. Let's take a detour through agricultural history, natural geography, and statecraft…

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A lot’s happened since.

There is a trade and tariff war going on that I don’t need to summarize here. But, notably this morning, reports suggest China is considering lifting its retaliatory tariffs on US ethane imports. This has now been confirmed, with ethane exempted from the 125% tariffs, though propane and butane (LPG) remain subject to these levies, likely because China can more readily source LPG from other countries like the Middle East. This is a major development for reasons too deep and esoteric for mainstream commentary — especially since the negative real GDP headline dominated talking head discussions instead. We’ll get into why this is important in a minute.

The other thing is that I spent some time with Chinese import/exporters in Germany a couple of weeks ago. I was at a paper product trade show, and it was right in the middle of the tariff headlines. Trump announces this, China retaliates with that. In between meeting clients and prospects walking the expo floor, folks seemed glued to their phones looking for updates (and exemption hints) about whatever latest tariff was announced. Then, over schnitzel and beer, I got quite an education on how complex this global supply chain is for paper, let alone the bit more complicated world of plastics.

So, Part 2 is timely, but it’s an interlude of sorts. We need to contextualize what’s going on before diving into more company and product specifics. China and the US are at the heart of it.

Plastic Geopolitics —

There is so much talk of “rare earth” materials now, how China extracts over 50% of global supply and handles over 80% of global processing. It’s believed that 45% of global supply — the vast majority of what China controls — is actually extracted from a single mine — the Bayan Obo mine in Inner Mongolia. Rare earths are unique elements with fascinating properties that make them critical in the highest-value manufacturing processes and products in the world — like smartphones, electric vehicles, and wind turbines — because of their exceptional magnetic, conductive, and luminescence properties. In the economy of the future, they’re literally irreplaceable, so it makes sense why the US and other countries would want to reduce their heavy reliance on one country, let alone a single location like the Bayan Obo mine.

But plastics are the essential materials of today. The entire world depends on them in ways perhaps not even fully realized. They’re in packaging, medical devices, automotive parts, consumer electronics — everywhere. Of course, and it’s not like extracting rare earth elements from ores and processing them is easy — there’s an entire dirty and complicated process of doing this — but plastics aren’t elements. They’re derived from elements — carbon and hydrogen mainly, hence hydrocarbons — and rely on a global supply chain beginning with raw gas extraction, to cracking, to polymerization as discussed in depth in Part 1.

Plastics are perhaps a bit less sexy than the more exotic and mysterious “rare earths.” But consider the following:

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This morning, Hershey (I own the stock) delivered massive 102% YOY Q4 profit growth, blowing past sell-side analyst estimates. But investors care less about what happened in the past and more about what will happen in the future. To that end, the real focus was on Hershey’s 2025 guidance. Turns out, it’s not looking great.

Hershey anticipates 2025 adjusted EPS to fall to between $6.00 and $6.18, well below sell-side forecasts in the low $7 range, and a ~30% drop from 2024. The reason? Cocoa prices. Have you seen them? Take a look. This is largely why Hershey’s stock is down 25% in the past 6 months and almost 45% since its May 2023 peak.

So then why is the stock up 5% today, despite guiding for 2025 earnings ~20% below Wall Street forecasts?

The Whispers

The answer lies in the difference between sell-side vs. buy-side expectations. The so-called “whisper number” (i.e. what the buy-side is thinking) was probably already in that $6.00 - $6.18 range, if not lower.

For context:

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The US and Canada are on the brink of a trade conflict that could either fizzle out as a negotiating tactic or escalate into a prolonged dispute. Trump and Trudeau are apparently scheduled to speak this morning, but tensions are high and the media is playing into it. Mexico and China are in the fray too, but we’ll focus on our no…

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I was Christmas shopping last month for my two boys and stopped at a massive toy store the likes of which I hadn’t seen since Toys "R" Us. It brought back memories. As I walked through the aisles, I couldn’t help but notice the complexity of modern toys—all sorts of plastic parts in different shapes, colors, and textures. And I just stood there for a moment in awe, thinking: Who makes all of this? How is it made? Where is it made? For a thing so ubiquitous and essential to everyday life — plastic — why do so few know or think about it? I needed to know more — and now I do — so let’s dive right in and explore this colorful yet simultaneously opaque world of plastics. By the way, here’s what I was just standing there staring at…

Isolating the building blocks of plastic from oil and gas

Virtually all of the world’s plastic is derived from certain chemicals or "feedstocks" which are extracted from crude oil and natural gas—like ethane (which is "cracked" to become ethylene, which is "polymerized" to become polyethylene) or propane (→ propylene → polypropylene). Polyethylene (PE) and polypropylene (PP) make up about half of the world’s plastic products, but the remaining half is made up of dozens of other types of plastics of various chemical compositions. But in almost all cases, plastics are derived from chemicals pulled from under the ground. Those that aren’t are derived from renewable sources like corn, sugarcane, or cellulose, but these bioplastics only make up about 1% of global plastic production and are much more expensive to manufacture than those derived from oil or gas.

I’d imagine for many people, the mention of “crude oil” or “natural gas” elicits images of some black sludgy liquid or brown gas —dirty pipes, dangerous wells, offshore rigs— and thoughts of dead dinosaurs or ancient plants compressed over millions of years that we just pump out of the ground—hence “fossil fuels.” If they took chemistry in high school and were paying attention, then maybe they know they contain “hydrocarbons”—links of chemically bonded hydrogen and carbon atoms like in methane (CH₄) - lightest molecular weight, ethane (C₂H₆) - heavier, propane (C₃H₈) - even heavier, butane (C₄H₁₀) - heavier still. Then there’s pentane (C₅H₁₂) and hexane (C₆H₁₄) and several others which are heavier. These “-anes” are called alkanes.

Natural gas is just a blend of the lightest hydrocarbons, beginning with methane (pure natural gas) which is primarily used as a fuel source because it can’t be cracked and polymerized into plastics — processes we’ll dive into shortly. The next heaviest — ethane, propane, and butane — are actually called natural gas liquids (NGLs) because they’re in liquid form until extracted to the surface. (e.g. think of how how soda is liquid under pressure but releases some gas when you open the bottle).

Crude oil is similarly a complicated mixture, but it contains a wide range of hydrocarbons. One of its distilled fractions, naphtha, consists of lighter alkanes (like hexane and heptane), cycloalkanes (like cyclohexane and cyclopentane), and aromatics (like benzene and toluene)— we’ll discuss naphtha shortly. Crude can can appear as a dark, viscous oil but can also be a light white or yellowish fluid. It all depends on its chemical composition, density, and sulfur content—which in turn is influenced by the pressure and temperatures the geological formation was exposed to, the duration of that exposure, and whether bacterial activity played a role in breaking down hydrocarbons.

Oil and, to a lesser extent, NGLs can also contain small amounts of impurities such as salts, water, nitrogen, sulfur, and metals that need to be extracted before processing or refining. If not removed, these impurities can damage processing equipment or lead to the production of unwanted byproducts. The level of impurities vary depending on the geographical source of the oil or gas. For example, heavy crude oils found in regions like Venezuela’s Orinoco Belt (one of the largest oil deposits in the world) and Canada’s oil sands often contain more sulfur and metals due to lower geological pressure and temperature during formation — meaning these chemicals have been slow break down. In contrast, ultra-light crudes and natural gas liquids (NGLs) found in the Middle East and the United States (especially from shale formations like the Permian Basin, Eagle Ford, and Bakken Shale) are generally lower in density and contain fewer impurities because they were exposed to higher temperatures and pressures over time — breaking them down faster. The point is that refining these resources involves an unbelievably complex series of steps, which is precisely what occurs at oil refineries and natural gas processing plants—those labyrinthian networks of pipes and towers you see while driving down the New Jersey Turnpike, near Houston, Texas, or in the refinery hubs of Louisiana and California — like these…

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“Top-X” lists usually start from the bottom up, moving gradually from the most obscure to the most recognizable. Not this one. We’d rather inch our way towards much lesser-known players over time. Still, while beginning with the biggest and most influential companies in the industry, we’ll explore a few lesser-known facts with fresh, perhaps alternative perspectives.

We begin with Walmart, #1.
No company casts a shadow over the world of food and consumer goods quite as large. What began in 1962 as a single location in Rogers, Arkansas, has since become the largest company in the world by revenue (over $600 billion in 2023) and the world’s largest private employer (2.3 million+ employees). It’s said to be the world’s largest seller of everything from organic milk and cotton products to bananas to sporting goods. In the US alone, it operates 4,606 Walmart locations and 600 Sam’s Clubs, plus another 5,454 stores globally — a combined 1 billion+ square feet of retail space across a total of 10,660 retail units. It also operates dozens of the most sophisticated distribution centers in the world, many of which boast over 1 million square feet. Today, 90% of the US population lives within 10 miles of a Walmart or Sam's Club. And it’s estimated to have an almost 25% share of all US grocery spending — equal to its next biggest competitors Kroger (10%), Costco (9%), and Albertson’s (6%) combined.

And it’s getting bigger. Last quarter, Walmart’s revenue increased 5%+ to over $169 billion. International sales surged 12% (FX-neutral) driven by growth in India (Flipkart), Mexico (Walmex), and China (Walmart + Sam’s). E-commerce is a major growth driver too with sales up 22% in the US, fueled by store-fulfilled pickup and delivery (+50% YOY), third-party marketplace (+42% YOY), and its new Walmart Connect advertising platform (+26% YOY) which we’ll discuss later. Walmart is flexing its ability to adapt and thrive in an increasingly omnichannel retail environment, especially as it emerges from the chaos (and investment opportunities) presented by COVID. Yet in recent years, even before COVID, Walmart has been quietly transforming into something else entirely — beyond a mere merchant of goods. We’ll explore this in more detail, but first, how Walmart came to be…

Made in America.
In so many ways, Walmart’s rise to unparalleled size and influence mirrors that of the country that made it possible. Walmart is a proxy for the United States itself — entrepreneurially (the inspiring story of Sam Walton), economically (clear leader in global consumer goods), technologically (pioneered UPC, RFID, and data communications technology in retail and is now the #1 US online grocery player), and geopolitically (leveraged its central US geography as a launchpad to national distribution dominance and then global retail hegemony). There’s a reason Sam Walton titled his autobiography “Made in America.”

Walmart’s official founding year is 1962, but the story actually begins 20 years earlier. After graduating University of Missouri in 1940 at 22, Sam Walton landed at J.C. Penney as a management trainee before leaving for the Army Intelligence Corp during WW2. When the war ended in 1945, Walton became a franchisee of Butler Brothers — at the time one of the largest wholesalers in the US — by acquiring a single Ben Franklin “five and dime” store in Arkansas. At the time there were thousands of Ben Franklin variety stores around the country, so Walton wasn’t on many radars. By 1949, Walton’s store was the #1 location in Arkansas generating ~$250,000 in revenue or about $3.3 million in 2024 dollars. Yet, come 1950, Walton is kicked out by his landlord. He and his wife Helen have four young kids at this point. Talk about stress! So after driving around Arkansas searching for a new home, Walton met Luther Harrison, a variety store owner in Bentonville. Walton bought the store, expanded it, and renamed it “Walton’s 5&10” — but still operated within the Ben Franklin franchise system. By 1960, Walton owned eight stores generating $1.4 million in sales (~$15 million in 2024) across Arkansas and Missouri.

These early years were a testing ground for Walton’s pioneering “low-cost” retailing strategies, which beget scale which begets more efficiencies and so on. Walton would install random-colored mismatched floor tiles because they were cheaper and made no apparent difference to his customers. In 1962, Walton and his brother Bud went fully independent and opened the first “Walmart” with over 15,000 square feet compared to their much smaller Walton’s 5&10 stores. But it’s important to understand — much like any other company or idea and very much like the United States — Sam and Bud’s ideas weren’t entirely novel. They took the best existing ideas and innovations and improved upon them to build something large and powerful.

Walmart was inspired, in part, by an existing “big-box” chain called Anne & Hope in New England. Anne & Hope was founded 10 years earlier and was one of the first department stores to pioneer self-service (i.e. no sales personnel guiding you around the store, hence more efficient and low-cost). It was also one of the first to offer shopping carts to customers. Now consider the name “Walmart.” This was inspired by another retailer — also founded about a decade earlier — called FedMart. A bit like GEICO, Fedmart started out only serving government employees and operated membership-based discount department stores. The founder of Fedmart was a man named Sol Price, today considered the founding father of warehouse retailing. Price later founded Price Club in the 1970s which then merged with Costco in the 1990s. Costco co-founder and former CEO James Sinegal started his career as a bagger at Fedmart and was later mentored by Price. In fact, Price is also said to have convinced Arthur Blank to start a retail business of his own after Blank was fired from his job at a hardware chain. That retail business that he went on to co-found is called Home Depot. All of these men — Walton, Sinegal, and Blank — were inspired and guided by what and who came before.

Most everything I've done I've copied from somebody else. - Sam Walton

I learned a lot from Sol Price, a great operator who had started FedMart out in San Diego in 1955. I guess I’ve stolen… I actually prefer the word ’borrowed’ as many ideas from Sol Price as from anybody else in the business. I really liked Sol’s FedMart name so I latched right on to Walmart. - Sam Walton

Two years later — in 1964 — Walton unveiled the first official Walmart logo — with “frontier” style font. It was not only an homage to its rural American roots, but also in retrospect, symbolic of the uncharted unknowns into which the Waltons were venturing — unknowns they would themselves grow to define and ultimately dominate on a global scale. While Sam and Bud Walton have since passed, the Walton family remains 51% owner of the company. This makes them the wealthiest family on Earth with a combined net worth of at least ~$350 billion.

Rapid fire record setting. Walmart goes public in 1970. It has 38 stores across 5 states generating just $44 million in revenue. Throughout the late 60’s, 70’s, and 80’s it pioneers the use of computing in retailing, from daily point-of-sale (POS) reporting and UPC scanning to inventory tracking to employee payroll processing. In 1972, it began building its now-ubiquitous network of distribution centers. It also introduces its famous EDLP program — “Every Day Low Prices”. In 1974 it opens its 100th store — in Bentonville of all places. In 1975 Walmart is named the #1 largest general merchandise retailer in the US and now has 125 stores generating $340 million. Pharmacies and auto centers were introduced in 1978. The following year Walmart exceeds $1.2 billion in sales across 276 locations. Sales then double in just two years to $2.4 billion with 491 stores in 14 states. Sales hit $3.4 billion in 1983, the same year the first Sam’s Club opens in Oklahoma. By 1985, Sam Walton is American’s richest man. His 882 stores generate $8.4 billion. The business will only be 25 years old two years later in 1987, at which time it will generate almost $16 billion — a 40%+ revenue CAGR since going public which is largely unprecedented in physical retail.

Walmart reinvents itself in 1988. Two things happen in 1988 that had never happened before. Walmart launches its own satellite communication network linking all of its locations with HQ. And then it creates the “Supercenter” and opens the first one in Missouri. The Supercenter changed everything and altered the future of global retailing forever. It redefined convenience, pricing, and product assortment by combining its existing general merchandising business with a large-format grocery store under the same roof. No retailer in the world had done this at this scale, and only Walmart was capable of executing on such ambition. By 1990, Walmart is the #1 retailer in America overall with over $32 billion in sales.

Goes vertical in grocery. The company’s foray into grocery increased its supply chain complexity dramatically. It needed to strengthen its distribution network for greater resiliency to handle faster-moving and shorter-lived consumables like food and beverage. So in 1990 Walmart acquired McLane, one

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When I wrote Expect Big Change in Big Food in July, what I didn’t have in mind was Robert F. Kennedy Jr. taking on (or taking over) the FDA or HHS. In August, RFK Jr. dropped out of the presidential race and backed Donald Trump. And a few days ago, as we all know, the Trump ticket won resounding electoral and popular contests in what the talking heads are calling a “mandate.” No doubt this emboldens Trump and those in his inner circle, including RFK Jr., to pursue their campaign pledges with great gusto.

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