A Barclays study of the packaged food sector shows a clear retreat from heavy promotion strategies after an intensive period of discounting in 2025 failed to deliver commensurate returns. While margin pressure emerged over the course of the year, Barclays indicates the primary issue was not that promotions alone squeezed margins, but that the increased promotional activity did not meaningfully boost sales volumes.
That shortfall in promotional effectiveness has prompted companies to scrutinize trade spending more closely. Management teams that had leaned into elevated promotional calendars are now scaling those programs back or reallocating funds toward initiatives with stronger returns.
Mondelez International flagged the issue during its fourth-quarter 2025 earnings call in early February. The company said its aggressive promotional posture in North America did not generate adequate return on investment. Mondelez entered 2025 amplifying promotions in response to weakness in the biscuit category and losses in market share. Since then, the company has cut back on promotional activity - a move that, according to management, may have reduced volume share but improved the North America profit and loss outcome.
At the Consumer Analyst Group of New York conference, JM Smucker announced it would dial back promotional intensity in its Sweet Baked Snacks division for the remainder of its fiscal year. The company described the step as necessary to stabilize operations and to assess which promotional programs deliver acceptable returns.
Kraft Heinz also addressed the issue at the same conference, saying it is shifting spending away from programs that underperformed in 2025 and redirecting resources toward initiatives expected to offer higher return on investment.
Across the sector, firms are transitioning to a more disciplined, analytics-led approach to trade spending. Barclays notes companies are focusing on pruning unprofitable promotions and increasing reliance on analytics and artificial intelligence to enhance promotional effectiveness. The bank characterizes this change as largely reactive - driven by worsening promotional returns in 2025 - rather than the result of a proactive, long-term trade optimization strategy.
Summary
Barclays finds packaged food firms cut back on promotional spending after aggressive discounting in 2025 failed to produce sufficient volume gains or returns, prompting a shift toward data-driven trade management.