Welcome to this week’s Food Exec Brief, your strategic intelligence roundup for food and beverage manufacturing leaders. This week, we’re covering:
Capital spending is contracting again while margin recovery stays fragile.
JBS workers refuse to leave the picket line as negotiations stay frozen.
The FDA pauses two natural color approvals mid-reformulation season.
AI moves from pilot to production across food manufacturing and supply chain.
The rush to go natural is creating a food fraud problem.
McCormick makes the largest acquisition in its history.
Financial: Margins may recover, but capex is still shrinking
F&B manufacturers are heading deeper into 2026 with cautious optimism and thinning investment budgets. According to Farm Credit Canada’s latest industry outlook, gross margins are expected to improve this year, primarily from easing input costs on cattle, hogs, canola, and cocoa, not from volume growth. Capital expenditures in the sector fell 5.3% in 2025, and early indicators suggest investment may weaken further in 2026. Tariffs, supply chain disruptions, and Middle East energy risks continue to cloud the planning horizon, with FCC noting that sustained capex declines risk limiting productivity growth and slowing capacity expansion over the medium term. (Learn more)
Why it matters: Margin improvement driven by input cost relief isn’t a growth story, and manufacturers cutting capex for a second consecutive year are building the conditions for the next efficiency gap.
Regulatory: Reformulation plans disrupted, GRAS scrutiny intensifies
The FDA indefinitely paused the effective dates for beetroot red and spirulina extract on March 25, following objections from GMO/Toxin Free USA and Obelisk Tech Systems Inc. Both colors had been approved in February as part of the agency’s push to support the transition away from synthetic dyes. With no new effective date announced, manufacturers that had already incorporated these colors into reformulation roadmaps face timeline uncertainty mid-execution. The FDA stated the delay does not change its safety determination for either additive, but the procedural pause could take months to resolve. (Learn more)
The GRAS system is under its most serious scrutiny in decades. Following RFK Jr.’s “60 Minutes” criticism of FDA’s self-affirmation pathway, IFT Chief Science and Technology Officer Brendan Niemira told Quality Assurance & Food Safety that GRAS does carry meaningful oversight, but reform grounded in public data transparency is warranted. The FDA has advanced draft rulemaking on the GRAS framework and launched a post-market reassessment of food preservative BHA. Niemira urged the agency to publish review timelines and share assessment data so the food science community can respond constructively. (Learn more)
Why it matters: Between paused color approvals and an accelerating GRAS overhaul, the regulatory environment for ingredients is moving faster (and less predictably) than most reformulation project plans were built to handle.
Supply chain / tariffs: A three-week labor standoff and a data-driven response to volatility
The JBS Greeley strike entered its third week with no resolution in sight. What began March 16, the first walkout at a U.S. beef slaughterhouse in 40 years, extended indefinitely after JBS declined to return to the bargaining table. Nearly 3,800 UFCW Local 7 members remain on strike, rejecting a contract offer of less than 2% annual wage increases. JBS says it has shifted production to other facilities and maintained limited capacity; the union contends the plant is nearly idled and that the company has suffered meaningful market share losses. (Learn more)
A new RELEX Solutions report finds AI is no longer experimental in supply chain planning. It’s operational. Based on a January 2026 survey of 514 retail, manufacturing, wholesale, and supply chain leaders, 67% say their confidence in using AI for supply chain decisions has grown year over year. Nearly half (47%) are already using or planning AI-driven inventory and supply optimization, while 54% prefer AI to generate recommendations with humans making final calls. Looking ahead, 71% plan to invest in generative and agentic AI over the next three to five years. (Learn more)
Why it matters: Persistent volatility, from labor actions to geopolitical shocks, is accelerating the shift to AI-driven planning, and manufacturers still running reactive, manual processes fall further behind with each disruption cycle.
Technology: AI earns its place on the plant floor
At the Food Manufacturing Summit, Deloitte principal Drew Gaputis named computer vision, automation, and anomaly detection as the near-term AI tools most deployable at food manufacturing scale. Gaputis said these technologies let manufacturers move from reactive safety management to proactive, real-time issue containment. His co-panelist, a co-founder at a stealth AI startup, emphasized that the highest-value applications target repetitive and hazardous tasks humans are reluctant to perform, and that keeping humans in the decision loop remains the non-negotiable design standard. (Learn more)
Hormel Foods has gone live with o9’s AI-powered Digital Brain platform across more than 70 sites, completing a phased rollout with Accenture between March and December 2025. The platform replaces disconnected planning tools with a unified demand-and-supply model, enabling touchless forecasting, system-recommended inventory transfers, and optimized truckload grouping. Chief Supply Chain Officer Will Bonifant described the shift as moving Hormel from reactive problem-solving to proactive, data-driven planning across its retail, foodservice, and international segments. (Learn more)
Why it matters: Hormel’s go-live across 70+ sites is a concrete proof point that large-scale AI planning integration is operational, and companies still building the business case are watching a competitive gap widen in real time.
Consumer: The natural ingredient rush is opening a fraud window
The pressure to replace artificial dyes with natural alternatives is fueling a surge in ingredient fraud. At the Food Manufacturing Summit, FoodChain ID senior advisor Kevin Kenny said the demand shock from more than 200 state bills introduced in the last 15 months, combined with federal calls to phase out synthetic dyes by year-end, has outpaced natural color supply. Suppliers are stretching inventory by blending synthetic and natural colors, adding dyes to spices, and diluting olive oils with cheaper seed oils. Kenny warned that even when the FDA doesn’t pursue enforcement action, litigation risk from mislabeled clean-label claims remains substantial. (Learn more)
Why it matters: Manufacturers under pressure to reformulate fast now face a second-order risk, sourcing ingredients they believe are compliant and clean-label that may not be.
M&A: McCormick makes its biggest bet
McCormick agreed to combine with Unilever’s food business in a deal valued at approximately $44.8 billion, the largest transaction in McCormick’s history. The deal brings Hellmann’s, Knorr, Marmite, and other global condiment and sauce brands under McCormick’s portfolio. McCormick will pay $15.7 billion in cash, with Unilever and its shareholders retaining 65% of the combined company. The transaction is expected to close by mid-2027, pending regulatory and shareholder approvals. Unilever, which separately spun off its ice cream business in December, moves closer to becoming a focused personal care company. Shares of both companies declined on the announcement, reflecting investor caution about integration complexity at this scale. (Learn more)
Why it matters: Flavor and condiments are consolidating at scale, and the premium being paid for focused, category-leading assets is exactly the signal accelerating breakup conversations at competing CPG companies.
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