10 big problems facing big consumer company stocks: Chart

Brian SozziMon, March 30, 2026 at 7:21 PM UTC

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Packaged goods companies are staring into the abyss of big challenges.

"We believe intensifying headwinds and emerging challenges have been building for some time to undermine historical assumptions underpinning the US consumer packaged goods investment case," warned Deutsche Bank analyst Steve Powers in a new note on Monday.

"Some of these dynamics may ultimately prove fleeting, temporary, or more cyclical in nature (e.g., macroeconomic or geopolitically derived factors). However, others (e.g, demographic inflections, underlying balance of power shifts in the value chain) are more likely to prove more structural or longer-lasting, in our view."

Powers said the combination of headwinds is challenging the idea that consumer packaged goods stocks are defensive plays that can be relied on for consistent financial performance and predictable growth. This will compromise the stocks' valuation premiums, while "widening the gap between the most and least advantaged."

While Powers unveiled a list of challenges for the industry (see chart below), he does have a few Buy-rated stocks on his shopping list.

He is bullish on Coca-Cola (KO), Procter & Gamble (PG), Colgate-Palmolive (CL), and Church & Dwight (CHD) for their strong operating prowess and brands.

The challenges ahead for consumer brands. (Deutsche Bank)

Coca-Cola, Colgate-Palmolive, and Church & Dwight are all up over 11% in 2026, outperforming the 1.9% gain for the S&P 500. P&G shares are up about 1.2%.

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Shares of most packaged goods companies have taken a dive in 2026 as their safe-haven business models have been met with the realities outlined by Powers.

Cereal giant General Mills (GIS) has seen its stock plunge 20% year to date, similar to the loss for Campbell's Soup (CPB). Both companies are fresh off underwhelming quarter reports in recent weeks.

Boxes of General Mills Cheerios cereal are stacked at a Costco Wholesale store on November 13, 2025, in Simi Valley, California. (Kevin Carter/Getty Images) (Kevin Carter via Getty Images)

The industry's growing challenges have spice king McCormick (MKC) reportedly exploring a merger with Unilever's (UL) food business, whose products include Hellmann's mayonnaise. The tie-up would help drive economies of scale, hypothetically.

"In various respects, these challenges have crept their way into sector-level debate for years. Moreover, some to us are more relevant and structural/systemic than others. However, cumulatively, we see their increasing convergence and intersection in today's marketplace as something different and likely lasting," Powers added.

Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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Source: “AOL Money”