The consumer packaged goods (CPG) sector has been in a bear market for nearly three years. While many of the challenges that drove the downturn remain in place, a combination of historically low valuations, improving catalysts, and lessons from past market cycles suggests the sector may be approaching a turning point.
According to our analysis, food, household, and personal products subsectors are trading at or near 20-year valuation lows. Several factors contributed to the decline: COVID-19 compressed years of volume growth into a single year, supply chain disruptions and commodity inflation drove sharp price increases, consumer confidence weakened, and higher rates reduced the sector’s appeal as a “bond proxy.”
At the same time, institutional capital rotated heavily into themes like AI, data centers, and electrification. The so-called "Magnificent Seven" stocks drove 63%, 54%, and 43% of total S&P 500 returns in 2023, 2024, and 2025, respectively, leaving little room for CPG players.
History suggests prolonged weakness can create opportunities. Our analysis of 29 sector bear markets over the past two decades found an average decline of 38% and an average duration of 1.3 years, followed by strong rebounds. Now in its third year, this CPG bear market may be overdue for a turnaround.
We believe a strategic, chess-like approach by companies is essential for driving recovery, emphasizing proactive, calculated moves over reactive, short-term tactics.
- Material count: Companies should acquire quality assets through disciplined M&A.
- Piece activity: Activating idle assets can reignite growth. Reducing prices on key products or launching healthier product lines can drive volume growth.
- Pawn structure: Aligning product development, branding, packaging, and retail strategies can support more balanced growth.
- Space: Strong innovation platforms and deeper consumer engagement can create sustainable competitive advantages.
- King safety: Companies must protect their core businesses. Divesting non-core units allows a sharper focus, restoring predictability and financial flexibility.
Several external catalysts could also support a sector rebound. Companies across the industry are implementing restructuring programs to improve profitability, activist investors are pushing for strategic changes, and public market interest is beginning to return, highlighted by growth-oriented IPO activity in the consumer staples space.
These forces are also sharpening the opportunity set for investors. “Fallen angel” names offer growth potential and M&A opportunities at compressed valuations, while “back-to-basics” names present opportunities for improvement. By contrast, legacy CPG names may require more patience as portfolio and operational restructurings take time to deliver results.
With earnings expectations and valuations near cycle lows, we believe the risk-reward profile for CPG stocks hasn’t looked this promising in years. The bear market will eventually come to an end. The real question for investors is whether they’ll act before or after the inflection point.
For more information on related investment opportunities and insights, read Industry Insights: Time for Chess, Not Checkers, published on April 29, 2026, by Jon Andersen, CFA, partner, and equity research analyst for the consumer sector.