Dairy, Egg, Meat Declines Hit Retailer Comp Outlook. FMCG Value Chain Input Costs Up 0.8% w/w, -1.9% y/y. Friday Cost Factor

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on December 5, 2025 PDF

HSY, MDLZ lead beneficiaries of cost relief on cocoa. FMCG spot input costs down -1.9% y/y overall, -2.4% y/y for food producers. Energy and freight (nat gas +4.5% w/w, +16.3% m/m) remain offsetting headwinds (e.g. factories, packaging) to most.

Eggs, chicken, pork & dairy are broadly deflationary – challenging headline sales for all food retailers (KR, ACI, SFM, etc). On its 12/4 EPS Call, KR interim CEO Ronald Sargent called out “lapping egg inflation last year that we won’t see this year.”

Optimal Cost Factor +0.8% w/w, -1.9% y/y (vs. prior week +1.9% w/w & -2.2% y/y). We note sustained y/y commodity headwinds from energy/freight & beef with y/y declines in almost everything else. We note slight easing in that trend this week with 24/30 companies and 6/6 food service categories in our coverage with an increase w/w in their weighted cost exposure. See Fig 1-7.

Cost index tailwinds to watch: HSY (-22.9% y/y), BRBR (-1.3% w/w, -10.7% y/y), Dairy (-5.8 w/w, -12.3% y/y), Wing Restaurants (-8.5%)

Cost index headwinds to watch: EPC (+8.4% y/y), THS (+8.2% y/y), Energy/Freight (+2.6% w/w, +12.0% y/y)

Input commodity tailwinds to watch: Dairy (-5.8% w/w, -12.3% y/y), Cheese (-5.1% w/w, -17.9% y/y), Milk (-6.5% w/w, -14.8% y/y)

Input commodity headwinds to watch: Natural Gas (+4.5% w/w, +64.8% y/y)

In this weekly note, we identify spot input costs’ putative impact on the U.S. fast moving consumer goods (FMCG) value chain, most measurably impacting staples, staples retailers, restaurants & food service. Optimal’s proprietary cost factor weights ticker & sector specific cost trends using a proprietary formula based on 32 trackable spot cost inputs – 23 of which are updated as of last night, the other 9 are latest available.

Figure 1: Weekly Cost Factor Summary

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 2: Weekly Cost Factor Margin Context

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 3: Weekly Input Commodity Performance by Group

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 4: Biggest Input Cost Movers y/y

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 5: Food Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 6: Beverage Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 7: HPC Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 8: Restaurant Level Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 9: Restaurant Employment Cost Index

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 10: Staples Sector Theme Box

Figure 11: Market Sector Performance

Sources: Optimal Advisory Proprietary Analysis, Bloomberg

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