We started this firm because we believed the industry had a talent distribution problem, not a talent shortage. There are exceptional operators scattered across this ecosystem — people who have built supply chains, run trade programs, scaled retail networks, and managed P&Ls through downturns. What the market lacked was a structure that let those people work where they were needed most: inside early- and mid-stage brands, at the moment the decisions actually matter.
That thesis still holds. If anything, the last eighteen months have made it more obvious.
We're writing this letter — the first in what we intend to be a biannual tradition — because we think there's value in a ground-level accounting of this industry that doesn't come from a consulting firm with a financial interest in your strategic options, or an investment bank trying to sell you on a transaction, or an industry conference that's been sponsored by the same five conglomerates for twenty years. We operate inside brands. We sit in the rooms where the hard calls get made. This is what we're seeing.
The Shelf Has Split
There's a word the industry keeps reaching for to describe what's happening to retail: polarization. It's the right word, and everyone's using it, so let us say something more specific about what it actually means.
The middle of the shelf is not struggling. The middle of the shelf is being systematically eliminated. And it's not just private label taking share — it's the collapse of a value proposition that many brands spent decades building.
Private label in the U.S. has crossed $330 billion in annual sales. Nearly 70% of consumers now say retailer-branded products are of equal quality to the national brands next to them. That's not a preference shift. That's a perception shift, and those don't reverse easily.
What caused it? Some of it was inflation — the price increases of 2022 and 2023 that pushed shoppers to try the store brand and discover it was… fine. But most of it is structural. Legacy CPG companies spent twenty years under-investing in product quality and over-investing in media budgets and trade promotion. They bought brand equity with advertising dollars when they should have been earning it with product development. Now, a shopper comparing a Walmart Great Value chip to a Lay's chip is doing so at a $1.50 price gap and arriving at a different conclusion than they would have ten years ago.
At the same time, the premium end of the shelf is thriving — but the premium that's winning is not the kind legacy players know how to build. It's specific. It's identity-forward. It knows exactly who it's for. Liquid Death selling canned water for $3 because it feels like something you'd find in a tour bus is — whether you like it or not — a more defensible brand strategy than “heritage quality since 1978.”
The brands getting squeezed are those stuck in the middle: national brand pricing, national brand marketing playbook, national brand margins, but without the scale to sustain any of it. If that sounds like your brand, we are not the first people to have told you this.
Big CPG Is Buying, Not Building
PepsiCo paid $1.95 billion for Poppi. Unilever spent close to a billion on Nutrafol. Before that: Nestle buying Vital Proteins, Kraft Heinz chasing whatever's on the better-for-you trend board this quarter.
We don't begrudge the acquisitions. But let's be honest about what they reveal.
The largest food and beverage companies in the world — with more R&D budget, more consumer data, more retail relationships than any emerging brand could dream of — have quietly concluded that they cannot out-innovate their way to the next generation of consumer trust. So they're buying it. And then, more often than not, struggling to keep it.
The integration problem is not talked about enough. Challenger brands are built on supply chains that are nimble, ingredient sourcing that is premium, positioning that is specific, and founders who answer customer DMs. None of those things survive contact with a corporate infrastructure designed to move at the volume of a billion-dollar SKU. The brands that thrive post-acquisition are the ones whose acquirers had the discipline to leave them alone. Most acquirers don't.
What this means for founders: the exit window has compressed dramatically. Big CPG is no longer waiting for you to hit $100M in retail sales before making a call. They're moving earlier — in some cases pre-profitability — because they've learned that the brands they missed at $20M are much more expensive at $200M. If you're building in the better-for-you, functional, or mission-driven space and your growth is real, you are already on someone's list. That is not a guarantee of a good outcome. It is an invitation to build with intention.
MAHA Is Real. Treat It Like Regulation.
The Make America Healthy Again movement is easy to dismiss if you're watching it from the outside. It has the aesthetic of a culture war — Robert F. Kennedy Jr., red dye bans, raw milk, seed oil conspiracies. But the underlying consumer behavior it's accelerating is not a fad, and the regulatory trajectory it's catalyzing is not optional.
The FDA has committed to phasing out Red No. 3, Yellow No. 5, Yellow No. 6, and Red No. 40 from the food supply. In 2025, 75 bills aimed at food dyes were introduced across 37 states. Walmart has already begun stripping synthetic dyes and roughly 30 other ingredients from its private label assortment. PepsiCo is reformulating Lay's and Tostitos. Steak 'n Shake switched to beef tallow. These are not ideological gestures — they are responses to measurable consumer pressure.
The mistake brands are making is treating reformulation as a compliance exercise. “What's the minimum we need to change to stay on shelf?” is the wrong question. The right question is: “What does this moment tell us about who our consumer is becoming, and are we building the product they'll want in five years?”
Brands that get ahead of this — that reformulate proactively, communicate transparently, and treat ingredient quality as a brand pillar rather than a cost center — will look prescient in three years. Brands that drag their feet will be doing damage control.
We are not nutritionists. We are not here to validate every claim in the wellness ecosystem. But we are operators, and we can tell you: when consumer perception shifts at this scale, and when regulatory momentum moves in the same direction, the brands that win are the ones that stopped arguing about whether the shift was rational and started adapting.
The Capital Environment Has Changed the Rules
For most of the 2010s, the CPG funding environment rewarded one thing: growth. Unit velocity, door count, revenue trajectory. Profitability was a story you told later. The money was cheap, the exits were plentiful, and the implicit assumption was that operational discipline could always be bolted on after the fact.
That era is over.
The cost of capital is higher. The venture funds that underwrote “growth at all costs” in consumer have quietly reoriented toward SaaS and AI, where the multiples are more forgiving. The strategic acquirers who used to pay 4–6x revenue for a brand with good vibes and middling margins are now asking harder questions. And the brands that raised $30M on a story are now confronting the operational reality of what it actually takes to run a CPG business at scale.
What we're seeing, from inside the companies we work with, is a flight to operational competence. Not operational perfection — the brands that obsess over perfect systems at the expense of moving are dying a different death. But operational competence: do you know your unit economics? Can you model the impact of a 3-point trade spend reduction? Is your co-man relationship actually managed, or are you hoping they care about your business as much as you do?
The brands that survive this environment will not be the ones with the best product or the most Instagram followers. They'll be the ones that figured out, sooner than everyone else, that the business under the brand actually has to work.
What We're Watching for H2
A few specific things we're tracking going into the back half of the year:
Tariff fallout hitting smaller brands harder than the headlines suggest. The coverage focuses on the macro numbers. What's getting less attention is the operational complexity tariffs are creating for mid-market brands: sourcing pivots that disrupt formulations, ingredient substitutions that require reformulation and restesting, cost increases that can't be passed through without losing distribution. Large brands have procurement teams and hedging strategies. Most emerging brands have a spreadsheet and a prayer.
The DTC correction continues. The window for building a real business purely on DTC economics has closed for most categories. Brands that chased DTC as a margin play and are now trying to enter retail are discovering that the operational requirements are different in ways they weren't prepared for. We expect more brands to fail in the transition, and more founders to call consultants 12 months later than they should have.
AI adoption diverging between operators who understand it and those performing it. Seventy-one percent of CPG executives say they've integrated AI into at least one business function. What's not in that statistic is how many of those integrations are meaningfully improving decisions versus how many are PowerPoint slides. The brands that will matter in this category are using AI for demand forecasting, deduction management, and trade optimization — not for generating product descriptions.
The quiet comeback of independent retail. Specialty and natural grocery is regaining relevance as mass channels get flooded with product. Brands that wrote off the independents to chase the Walmart deal are starting to remember why Whole Foods and Natural Grocers matter for consumer education and brand building. The unit economics are different. The relationship is different. But the consumer who finds your product at a specialty retailer converts differently than the one who finds it on an endcap next to paper towels.
What Needs to Happen
We'll close where Buffett always closes: with what we actually believe.
This industry needs more operators and fewer storytellers. Not because story doesn't matter — it does, enormously — but because the ratio has been badly off for a decade. There are thousands of CPG brands that have raised real money, built real distribution, and acquired real consumers, but that cannot explain their cost to serve, do not know what their trade spend is actually buying them, and have never seriously pressure-tested their supply chain. That is not a marketing problem. It is a structural one.
A $40M brand with 20% EBITDA and a founder who controls her own trajectory is a better business than a $120M brand burning cash to hold shelf space it can't afford.
The fractional and embedded operator model — which is obviously the model we practice — exists precisely to address this. Not because founders aren't capable, but because the operational depth required to run a CPG business at scale is genuinely different from the skill set required to start one. The best founders we've worked with are the ones who recognize that gap early and close it aggressively, not the ones who hire cheap generalists and hope for the best.
The industry also needs more honesty about what “success” looks like now. The billion-dollar brand exit is not impossible, but it is not the only version of winning. The metrics that impressed investors in 2019 are not the metrics that will sustain businesses through 2029.
Finally: the consolidation happening in this industry — big brands absorbing challengers, retailers expanding private label, the middle of the market contracting — is not inherently bad for well-run small brands. Disruption clears space. It creates retailer relationships that need filling, consumer curiosity that needs satisfying, and category vacuums that need occupying. The brands that will win the next five years are being built right now, by people who understand the environment they're operating in rather than the one they wish they were.
We intend to help as many of them as we can.
Socratic CPG is a fractional C-suite and operations firm. We work inside consumer brands at the moments that matter most — scaling operations, navigating retail, building the teams and systems that let founders stop being the bottleneck. If this letter resonated, we'd welcome a conversation.