U.S. grocery spending slows in hit to food companies

The slowdown in U.S. grocery stores is becoming increasingly difficult to ignore.

Shoppers are buying fewer items than a year ago, and grocery sales are also falling as weaker unit sales outpace rising prices. That’s according to new analysis from Bain & Company, which uses NielsenIQ market data shared exclusively with CNBC.

Grocery units, which refer to the individual product or products sold, fell 1.8% in June from a year earlier, a sharp reversal from the 0.1% annual growth recorded in June 2025. As prices continue to rise approximately 2% to 3% on an annual basis, this inflation buffer for the industry is no longer sufficient to sustain overall sales growth.

“That big grocery store trip that cost you $300 in 2019 now costs $400,” said Kurt Grichel, head of Bain’s retail practice in the Americas.

“Even the upper-income consumer, you’re talking about an absolute dollar change that’s big enough for people to start feeling a little bit of sticker shock and start shopping,” Grichel said.

Bain argues that rather than a single economic shock, multiple pressures are converging on consumers.

grocery prices roughly 33% It’s higher than in 2019, and fuel costs have increased. Many low-income households have been forced to reduce their spending as SNAP benefits have decreased and eligibility for the program has tightened.

Bain’s US Consumer Pulse Wave survey conducted in May found that 80% of Americans are still trying to spend less, while 28% are actively cutting back on grocery spending. 56% of shoppers said they were switching to cheaper brands, 49% said they were buying fewer items, and 44% said they were relying more on coupons and promotions.

These trends have ripple effects on manufacturers. PepsiCo is one of the food producers feeling the consumer change.

In the second quarter reported Thursday, the beverage and snack maker reported weaker demand in North America. North American food revenue fell 2% while volume remained flat.

“I think the consumer is doing worse than we expected, and that’s mainly due to gas prices,” PepsiCo CEO Ramon Laguarta said during the company’s conference call with investors.

Executives also pointed out that effective pricing is lower, indicating that the company has increased its promotional activities as consumers become more price sensitive.

These results are in line with a broader shift in the grocery industry that includes retailers. Walmart And Kroger We emphasized price discounts and value-oriented promotions to attract shoppers.

Walmart announced summer price reductions on beef, ice cream and other products, including products made by PepsiCo. Coca Cola and the company’s own private label, Great Value.

“Grocers are pressuring suppliers to lower prices whenever possible, and suppliers recognize the need to do so,” said Telsey Advisory Group analyst Joe Feldman.

“The entire industry is trying to get back to unit growth, not just dollar growth.”

Strategy could become increasingly important, Bain said.

“The advantage goes to grocers who charge higher prices for items that customers notice,” Grichel said. “For things like ground beef, chicken, milk, eggs — many things, they use a combination of promotions, loyalty programs, personalization and private labels to put together an overall value proposition that customers can understand and trust.”