New recipe for food brands: leaner portfolio strategies

To reshape portfolios, food and beverage companies must focus on brands with growth potential, as scale alone no longer drives success. 

In brief

• Changing consumer behavior and retailer influence are causing food and beverage companies to change, with size alone no longer seen as an advantage.
• A long-term growth strategy requires reshaping the brand portfolio to focus on growth opportunities and unlock shareholder value.
• EY-Parthenon teams see four signals as essential for helping companies decide which actions — from small steps to a major transformation — are most appropriate. 

For packaged food and beverage (F&B) companies, there was a time when bigger was simply better. Companies with broad product portfolios benefited from economies of scale, synergies across brands and sway with retailers over pricing and shelf space. 

Forces reshaping F&B portfolios 

• Premiumization, health and functionality trends, and purpose-driven brands
• Bifurcation in spending between value and premium brands
• Evolution of private label from value alternative to strategic platform
• Retailers increasingly control discovery, pricing and demand access
• Smaller brands respond faster to emerging trends
• Large portfolios dilute investment and slow decision-making
• Portfolio strategy can be dynamic, not episodic
• Early trend identification is a competitive advantage

The impact of the changes is real. Revenue growth is declining and costs are rising. Since 2022, F&B companies have underperformed the S&P 500.

Returns analysis of industry aggregates vs. index, Dec 2009–Nov 2025 (indexed to Dec 2009)

A changing view of how brand portfolios deliver value 

This shift challenges traditional thinking. The changes are forcing executives to reconsider how their organization creates value — and whether simply being larger still delivers it. 

In the past, companies could rely on cost savings and synergies, such as route-to-market efficiencies, across brands to justify large portfolios. Today, however, size and complexity often signal slow innovation and a lack of strategic focus that drag down performance. As consumer choice expands and price transparency increases, clearer consumer propositions matter more than the sheer breadth of a portfolio. 

What is emerging is a growing recognition among F&B CEOs, chief strategy officers and chief commercial officers that portfolios must be actively shaped, not reflexively accumulated. Transactions in the sector increasingly reflect this mindset. According to the EY-Parthenon Growth Survey, successful consumer companies are more likely than companies in other sectors to rely on product and market development for growth.

Leaders are seeing portfolio reconstruction as an opportunity to reclaim relevance with consumers, customers and capital markets. Where portfolio reconstruction was once a largely defensive exercise, it is becoming a core strategy, used to deepen consumer insight and strengthen competitiveness. The emphasis is especially important for high-innovation, high-volatility categories, which require strategic focus and agility. 

Consider a hypothetical F&B company with dozens of regional brands spanning center-store staples, premium snacks and beverages. Faced with slowing growth, savvy leaders pivot, divest lower-velocity legacy brands and reinvest in a smaller set of consumer-led brands with clear propositions. By simplifying the portfolio and reallocating capital to faster moving categories, the company increases innovation speed, sharpens retailer relevance and restores sustainable growth.

F&B leaders need to clarify purpose, simplify portfolios and back fewer bets, but do so boldly. Winning portfolios are increasingly those that are tightly aligned to consumer intent, supported by clear brand propositions and organized to respond quickly to market signals. This means identifying which parts of the portfolio the company should own and differentiate, and which it should streamline, outsource or exit. 

AI makes it better, but also more difficult 

AI, automation and data analytics are turning portfolio reconstruction into a dynamic capability. Technology is accelerating leaders’ ability to interpret massive volumes of data, from consumer behavior to pricing dynamics and brand performance. Leaders can use predictive analytics to quickly identify which brands deserve reinvestment, which require repositioning and which may no longer justify their place in the portfolio.

At the same time, AI raises the bar for winning. As consumers increasingly rely on digital tools to evaluate price, features and fit, portfolio decisions must be grounded in a clearer proof of value and relevance. Differentiation is easier to benchmark, faster to replicate and harder to sustain requiring brands to continually justify their role through performance, clarity of positioning and relevance. 

Changing the portfolio strategy is hard, but leaders are setting examples

The change to a new mode of portfolio reconstruction is not easy. It requires a sharp break with tradition and ingrained management habits. This is in part why there is an opportunity for those who recognize the urgency and act decisively to use strategic portfolio reshaping to improve organizational resilience and competitiveness. 

Examples across the industry illustrate this recalibration. Some companies are exploring significant portfolio separation to unlock operational efficiency, while others are shedding non-core assets to sharpen strategic focus. By reshaping portfolios, leaders stand to bring category momentum and brand equity back to relevance with consumers. 

Several F&B market leaders have recently made calculated deals targeting strategic value and growth more than market expansion. Four transaction archetypes illustrate the range of disruption and complexity. 

Taken together, these moves underscore a central theme: deals are no longer just about getting bigger — they are about coherence and aligning the portfolio around core capabilities and a disciplined understanding of how the business creates value.

Three levels of “how”

Companies can take an incremental, moderate or more transformational approach. In the least disruptive version, the company strengthens its core portfolio performance by improving operational efficiencies and reallocating resources to high-margin, high-volume categories or improving innovation to deepen consumer relevance. 

A more involved approach, entailing moderate disruption, is to reshape the portfolio systematically by building category-centric or consumer-focused brands, consolidating or acquiring to strengthen strategic position, or divesting underperforming or non-core assets. 

The most transformative approach is to reinvent the portfolio by developing new business models or revenue streams or refocusing through strategic separation. This extensive reimagining of the portfolio involves greater disruption but also greater potential impact.

Assessing four portfolio strategy signals

A portfolio assessment is a critical first step to identify the appropriate strategic path. By looking at strategic signals in four key areas, an assessment can help understand when incremental fixes are still viable versus when deeper, structural change is required. 

A new era of portfolio leadership

The new version of product portfolio transformation in F&B is about leadership in an era of complexity. The question is no longer how many brands a company owns, but how coherently those brands fit together — and whether they collectively reinforce a clear strategic ambition. 

Leaders must ask hard questions: Which categories truly have momentum? Where do we possess distinctive advantages? And which assets dilute focus rather than strengthen it?

In some categories, value is being siphoned away, making focus and differentiation critical to sustaining returns. Portfolio transformation is becoming a capability that separates F&B leaders from those left reacting to forces they no longer control. The companies that succeed will be those that are deliberate in what they own, disciplined in how they invest and agile in how they adapt.