Big Food’s Q2 results analysed:
- Kraft Heinz, Mondelēz and PepsiCo all posted North American declines or below-par growth in Q2 2026, while their emerging-market businesses grew between 4.4% and 8.5% organically.
- Tariffs, rising GLP-1 use, record private-label share and a genuinely squeezed US shopper are all contributing, though tariffs cut both ways rather than acting as a one-sided domestic drag.
- India, Brazil and wider Latin America are supplying most of the growth, while Europe – not North America – was actually the weakest region for both Mondelēz and Kraft Heinz this quarter.
International sales used to be the supporting act to a strong US business. That balance, however, is now tilting the other way, at least for some of the country’s biggest snack and packaged food makers.
Second-quarter 2026 results from Mondelēz, Kraft Heinz, Hershey and PepsiCo all point to the same widening gap: a cautious, price-sensitive shopper at home and a faster-growing customer base in Latin America, India and Southeast Asia. The pattern isn’t confined to snacking – a Wall Street Journal report published in early August found a similar divergence in chicken, soap and household products – but it’s showing up with particular clarity across bakery and snacks, where four of the biggest US names have reported some version of the same split within weeks of each other.
The scale of the gap is what makes this earnings season different. Companies have talked about international growth outpacing domestic sales before, but rarely has the contrast been this stark, this consistent across the sector, or this closely tied to specific, nameable causes rather than vague references to emerging-market potential.
What’s less straightforward is why, and the answer runs through tariffs, GLP-1 drugs, private label and a genuinely squeezed US shopper, all of which are doing some of the work.
How the numbers stack up
Kraft Heinz posted a 2.7% organic sales decline in North America in the second quarter, with net sales in the region falling to $4.63bn. International split cleanly in two directions: developed markets, largely Europe, fell 0.7% organically, while emerging markets grew 8.5% organically, with net sales up 10.4% to $771m. The company’s Heinz brand grew 3% worldwide year-to-date but 12% in emerging markets alone, roughly the scale of the gap the wider business is now navigating.
Mondelēz grew North America net revenue 3.4% in the quarter. Internationally, the same developed-versus-emerging split held: Europe’s organic revenue fell 3.5%, while emerging markets grew 4.4% organically, led by an 8.4% gain in Latin America and 7.1% in the Asia, Middle East and Africa region. The company added roughly 100,000 stores in India and reached one million stores in Brazil during the quarter, part of a deliberate distribution push into markets with room to grow.
PepsiCo’s Frito-Lay and Quaker business, PepsiCo Foods North America, saw net revenue decline 2% in the quarter, with first-half organic sales down 0.5%. International organic revenue rose 7% over the same period, with Europe, the Middle East and Africa up 6% and Latin America up 4%; Asia Pacific Foods revenue climbed 12%. PepsiCo has leaned on affordability moves and reformulated ‘permissible’ versions of Lay’s, Doritos and Tostitos to stabilise domestic demand, while its international business has now delivered close to five years of consistent mid-single-digit growth or better.
Hershey doesn’t break out the same regional detail, but its own diagnosis of the problem points the same way: rising use of GLP-1 weight-loss medications, which the company says is reshaping demand for indulgent, impulse-driven snacking in the US. That’s a fair reflection of where uptake actually sits – roughly 11%-12% of US adults now use a GLP-1 for weight loss, against closer to 7% in the UK and a lower base still across much of continental Europe, while cost keeps adoption limited in Mexico and Brazil for now. Hershey’s growth strategy leans on expansion into those markets anyway, alongside a push into salty snacks and better-for-you formats to offset pressure on its core confectionery business at home.
Meanwhile, McDonald’s US comparable sales grew 0.8% in the quarter versus 1.5% and 1.9% growth across its two international divisions, while Starbucks’ international revenue climbed 10% to about $2.1bn (the company continues to close underperforming US cafes) – a reminder that the domestic slowdown is a broad consumer-goods phenomenon rather than one confined to snacks.
The regions doing the heavy lifting are consistent across these companies.
India has been named repeatedly by Mondelēz and PepsiCo as a priority growth market, with the 100,000-store expansion showing how aggressively companies are building out distribution rather than waiting for demand to arrive on its own.
Brazil and wider Latin America are another standout, with Mondelēz’s million-store milestone and Kraft Heinz’s emerging-markets growth both concentrated there, although Mexico – flagged by Hershey and PepsiCo as a growth priority – carries its own tariff exposure, given its trading relationship with the US.
China offers a more complicated picture: overall consumer spending there has been sluggish, but multinational brands with strong equity have kept outperforming the wider market, a ‘K-shaped’ pattern that may or may not hold for specific US snack brands, too.
Europe, meanwhile, is the exception to the overseas-boom framing: both Mondelēz and Kraft Heinz named it as their weakest region in the second quarter.
What’s driving the shift
US snack and packaged food categories are simply more mature, which has long been PepsiCo’s own rationale for its international push: high household penetration at home leaves less room for volume growth than markets still building out modern retail and category reach.
American shoppers are also under real, acknowledged pressure. Kraft Heinz chief executive Steve Cahillane told analysts earlier this year that the consumer can only absorb so much price, after years of inflation-driven increases across the industry, while Mondelēz chief executive Dirk Van de Put said US consumer confidence remains low and that shoppers are concerned about affordability, the economic outlook and job security even as purchasing power improves.
Tariffs are a more contested part of the story than a simple ‘US costs up, overseas costs flat’ reading would suggest, and the evidence cuts both ways. Kraft Heinz’s finance chief, Andre Maciel, told analysts that once cost and tariff-related inflation are stripped out, the underlying US food industry is still soft – tariffs, in other words, are compounding an existing domestic slowdown rather than causing it outright. PepsiCo, meanwhile, expects tariff refunds to add roughly a percentage point to earnings growth this year, and Mondelēz has said its 2026 outlook doesn’t fully account for further changes, given how unsettled trade policy remains. Even Mexico, one of the faster-growing markets above, carries meaningful exposure of its own.
The GLP-1 effect noted above is largely absent, for now, from the emerging-market growth story, which makes it a genuinely snack-specific domestic headwind rather than a general consumer one.
Private label is also taking share at home faster than it is globally – US store-brand unit share hit a record high in the first half of 2026, according to the Private Label Manufacturers Association, while national-brand units declined slightly, squeezing exactly the mainstream branded snacks that Kraft Heinz and PepsiCo depend on domestically. Penetration is already far higher in parts of Europe, so this isn’t a uniquely American problem, but the pace of the recent US shift stands out.
The risk of chasing growth abroad
International expansion isn’t without its own complications. Currency swings can distort reported results, and companies operating in emerging markets face political and regulatory volatility that mature Western markets mostly avoid.
Consumer preferences also vary enormously by country, meaning products that work in the US often need real reformulation, from flavours and package sizes to price points. Emerging-market consumers can be more exposed to local inflation and currency depreciation, too, both of which can reverse gains just as quickly as they appeared.
The working assumption in American consumer goods has long been that international operations backed up a dominant domestic franchise. This earnings season suggests that relationship may be inverting for at least some of the biggest names in snacking, with North America still profitable and still commanding investment, but no longer the source of growth it once was.
If that pattern holds through the second half of 2026, expect more snack and bakery majors to talk about India, Brazil and Southeast Asia not as expansion opportunities on the margin, but as the primary engine of growth.
