Podcast Summary: The CPG Guys – “2025 Review and 2026 Preview with RBC Capital’s Nik Modi”

Hosts: Peter V.S. Bond (PVSB) & Sri Rajagopalan
Guest: Nik Modi, Managing Director and Head of Consumer Team, RBC Capital Markets
Date: December 30, 2025
Link: cpgguys.com

Episode Overview

This special year-end episode brings back industry analyst Nik Modi to reflect on major trends, disruptions, and lessons in the CPG sector from 2025—and sets the stage for what brands, retailers, and investors should expect in 2026. The conversation pulls no punches on tough realities facing CPG organizations, celebrates bold strategic shifts, and dives deep into portfolio management, innovation, AI-driven transformation, and the cultural relevance of brands.

Key Discussion Points & Insights

1. 2025 in Review: “It Was a Tough Year”

• Toughest market seen in 25 years. Nik opens with straight talk: “I am excellent. It was a tough year ... 2026 is going to be equally as tough. But I think there’s a lot going on, so a lot to talk about.” (05:34)
• 40% of Nik’s coverage universe was down over 30% in stock price: “I call it the 30% club… I’ve never seen it this bad.” (19:02)

2. Necessary Resets: Price, Innovation, and Portfolio Strategy

• Companies that took tough medicine (e.g., General Mills)—reducing earnings, cutting price, reinvesting in value—began to recover in volume and relevance.
  • Notable example: “What did they do? They got the price points right, improved the product quality and efficacy... and they turned the Pillsbury Doughboy into an influencer. That’s the trifecta.” (08:47–09:53)
• Still, most of the industry responded too slowly: “I think it took 12 months longer than it should have … Numbers have come down pretty broadly. I don’t think they’ve come down enough for certain companies.” (10:26)

3. Market Bi-Polarization and the Danger of One-Size-Fits-All Strategies

• CPG is living in a “bifurcated, K-shaped world,” with wealthier consumers driving general economic growth while the bulk of CPG products serve more price-sensitive, lower/middle-income households. (10:26–11:58)
• Modi urges portfolio bifurcation: “The rich are getting richer, the poor are getting poorer … You need really premium stuff ... and at the very low end, your bare basic stuff ... because you don’t want to lose household penetration.” (12:13)

4. Value Creation Comes from Consistency, Not Just Growth

• Investors look not for massive growth but “consistency, insurance, solid dividend growth, and not have to worry—they can go to bed at night knowing grandma’s money is safe.” (14:16)

5. M&A, Portfolio Simplification, and Strategic Realignments

• Discussion of recent “hookups and breakups”:
  • Kellogg’s split and subsequent acquisitions (Mars/Kellanova, Ferrero/W.K. Kellogg).
  • Kraft Heinz’s on-again, off-again partnership.
  • Kimberly-Clark’s planned acquisition of Kenvue: “I got to give Mike Sue credit... The population is aging. We’re all looking to be more proactive. … They are creating a consumer health platform of the future. … If you can take science and turn a tampon into a uterine diagnostic device ... this is game-changing.” (15:43–17:14)

6. Call for Courageous Structural Change & Future-Fit Organizations

• “This industry needs to change … Stop chasing the numbers until you are future fit. … They’re hamsters on a wheel … trying to hit these quarterly numbers, and issues they’re presented with they can’t address in a structural, sustainable way.” (19:39)
  • Supply chains, AI, and agentic AI (digital butlers) discussed as areas of urgent transformation.
  • “If I can see it, of course the companies I follow are much smarter than me. … But that’s not what’s happening. And this problem … didn’t start this year; it started 10 years ago.” (19:39–21:27)

7. The Growing Importance of E-commerce, Authenticity, and Cultural Relevance

• Product efficacy and user-generated content as key to digital success:
  • “If you have the product that tastes better, smells better, makes you feel better, works better, then you are going to get recommended online and that’s going to drive a lot of these engines.” (22:42)
  • “User-generated content ... there’s a lot of trust ... 10,000 reviews ... that gets you to say 'I’m good with that.'” (23:09)
• But brick & mortar will remain vital:
  As synthetic AI, synthetic marketers, and synthetic products grow, “brick and mortar ... becomes more important because it’s the only place you can find authenticity and real.” (24:53)

8. The “Imagine” Framework for Future-Proofing CPG

• “Imagine” is RBC’s cross-sector, six-month look at what 2030 will require:
  • “A holistic framework to understand what the world is going to basically look like in the year 2030 and what kind of capabilities and core competencies companies need.” (25:21–26:22)

9. Misaligned Incentives and the Need for Cultural Reinvention

• Bonus structures are misaligned:
  • “There’s some lack of harmony in the incentive structures across ... the organizational structure ... also agency partners, retailers … there’s probably some innovation that can be done.”
• On modern marketing:
  • “Brand equity is literally getting redefined ... Cultural relevance is now probably the single biggest thing for brand equity.” (27:45)
  • Suggests organizations may need to place much younger marketers/deputy CMOs in the C-suite for real-time cultural understanding. (29:47)

10. What Should Companies Present at CAGNY in 2026?

• NO: Don’t try to sugarcoat tough realities: “Don’t get up there and try to put on a good show like everything is great, because we know it’s not right now.” (34:02)
• YES: Be candid about change, focus on consistency, share specific case studies, acknowledge challenges, and explicitly connect disruptive innovation, price/portfolio changes, and value proposition.
• In AI: Show how it’s embedded in R&D, consumer engagement, and operations, not just a buzzword.

11. What Excites & Concerns Nik Modi for 2026+

• Excites:
  • “I just think there’s so much upside … Think about the new business models, revenue opportunities… Science and technology, wearables … We’re going to be able to live better lives, and we’re willing to pay up for it.” (41:14)
  • Categories you never expected to grow are growing—Pillsbury baking cited as the formula for revival: price, quality, and cultural marketing perfectly aligned. (43:00–43:13)
• Concerns:
  • “The income bifurcation … rich getting richer, poor getting poorer. … Society starts becoming unsafe. … I worry about that for my kids.” (44:16)

Notable Quotes & Memorable Moments

• On Structural Change:
  “Stop chasing the numbers until you are future fit. That’s the issue here … Hamster on a wheel ... trying to hit these quarterly numbers ... can’t address in a structural, sustainable way.” —Nik Modi, (19:39)

• On Brand Renaissance:
  “They turned the Pillsbury Doughboy into an influencer. That’s the trifecta.” —Nik Modi, (09:53)

• On Value Creation:
  “Value creation is built off consistency, not the magnitude of growth ... Investors can go to bed at night knowing grandma’s money is safe.” —Nik Modi, (14:16)

• On Cultural Relevance:
  “Brand equity is literally getting redefined ... cultural relevance is now probably the single biggest thing.” —Nik Modi, (27:45)

• On AI Buzzwords at Conferences:
  “Don’t try to get up there and put on a good show like everything is great, because we know it’s not ... Provide specific case studies.” —Nik Modi, (34:02, 38:29)

Timestamps for Major Segments

• Opening and Setting the Scene: 00:59–05:55
• 2025 Industry Health Check & Reset Discussion: 06:02–14:37
• Portfolio Moves & Category Leadership: 14:43–18:47
• Industry Pain Points & Need for Structural Change: 18:54–21:27
• E-commerce & Authenticity vs. Synthetic Commerce: 22:42–25:17
• “Imagine” Initiative Overview: 25:21–26:22
• Alignment of Incentives & Modern Brand Equity: 26:22–30:28
• Cultural Centricity & CPG HR Structure: 31:00–33:25
• Advice for CAGNY Presenters (2026): 33:25–39:27
• Looking Ahead: 2026+ Risks & Opportunities: 40:46–44:11
• Societal Risks & Economic Bifurcation: 44:16–45:17
• Outro & Final Reflections: 45:17–47:35

Style & Energy

The episode is candid, insightful, energetic, and conversational—with a mix of hard truths, analyst perspective, and practical advice. Nik’s frankness and willingness to share actionable frameworks and memorable metaphors (hamsters, K-shaped worlds, the Pillsbury Doughboy as influencer) make the session not only informative but compelling for CPG leaders and practitioners.

For Listeners: Key Takeaways

• Courageous, consumer-driven reset is essential for future relevance.
• Consistency beats flash-in-the-pan growth for long-term value creation.
• Digital and physical commerce will coexist—but authenticity, cultural fluency, and product efficacy are the new differentiators.
• Boards and executives need to break legacy incentive schemes and confront uncomfortable truths.
• 2026 presents massive upside, but only for future-fit organizations willing to invest in real transformation.
• Societal income gaps pose a growing challenge to CPG’s stability and purpose.

Listen to Nik's advice, and you’ll know exactly what CPG’s leadership should be focused on—as well as what to avoid—in the year ahead.