CAGNY 2026 Positives: Protein, Flavors, India & AI Resilience: JBSAY, HRL, KRYAY, IFF, ULVR, MKC, Nicotine
The most positive investable themes we heard so far from CAGNY 2026 are the growth & margin outlook for protein (JBSAY, HRL), the rising importance of flavor (KRYAY, MKC), India (ULVR) and with almost all companies benefiting from AI Resilience – most notably the leaders in nicotine.
Protein. Protein is the best trend in the U.S. food sector. U.S. consumers’ interest in getting more protein has grown steadily over the past decade – epitomized by 300% growth in related Google searches noted by Hormel. More recently, the explosion in use of GLP-1 drugs to 8% of U.S. households has driven a spike in protein demand both in grocery and foodservice. We think the availability of GLP-1 drugs in oral form will accelerate adoption this year. At the same time, the decline in feed costs for all meats should help margin at the producer level, while the decline in overall pricing for chicken & pork is increasing both affordability and margin. We see a very bright outlook for JBS – the most impressive opportunity we saw at CAGNY 2026 – based on accelerating top line, margin improvement and improving shareholder dynamics (e.g. GAAP statements) as potential catalysts. We also see a bright outlook for Hormel’s – also noting signs of stabilization in retail takeaway in their center store grocery products.
Flavors. With food companies facing increased volume pressure, virtually every CAGNY presenter suggested reformulation & innovation are accelerating. This should drive increased opportunity for Kerry Group, whose confident presentation followed up on this week’s strong reported results. These trends alongside recently renewed financial discipline also suggest opportunity for IFF. McCormick’s industrial business should also benefit, mainly in foodservice. We noted that Gen Z consumers use hot sauce (led by their Frank’s brand) more than ketchup. Gen Z spending and digital attention to be a strong predictive indicator we monitor regularly of inflections across consumer (e.g. NKE). KRYAY, IFF and MKC all stand to benefit from the rising importance of flavor.
India. Unilever (~14% of sales in India) and Mondelez (~5% of sales in India) both highlighted the opportunities implicit in low per capita consumption, high market shares & rapid economic development in India. Both companies’ brands have multi-generational heritages in Indian households and enjoy relatively high gross margins, and can thus benefit from rapid operating leverage with higher sales. This is consistent with the optimistic takeaways from our China & India Economies virtual event on 12/2/2025 with Dan Markey of the Stimson Center. We think growth in India is an underappreciated factor in CPG investing – with ULVR as the biggest beneficiary.
AI Resilience (AIR). It has been the AIR CAGNY — AI Resilience is a huge net positive for the group. After the AI updates included with almost every CAGNY presentation so far, we conclude the presenters have more to gain than they have to lose from AI implementation in the years ahead. The most common impacts cited were better & faster insights, improved logistics, faster R&D and lower creative media costs. Clorox and elf also cited more practical media personalization — with CLX now targeting 50% of all media to be “feel personalized” – a concept unthinkable 5 years ago. However, best in show for AIR goes to the leaders in nicotine — it’s hard to imagine more AI resilient businesses.