Commerce Riff with Sri & PVSB - July 21, 2026

PVSB 0:01

It's July 21st, 2026, and this is the Commerce Rift brought to you by the CPG guys. 10 minutes of the news stories that matter in commerce this week. I'm your co-host PVSB. I'm joined as always by Papa Entourage, the father of Pop Stars, co-founder of Think Blue Consulting. Shree, you're back from vacation. You adjusting to life back in the work world?

SPEAKER_01 0:23

Yeah, it's a week now from our big, big, big event with Cornell University. A first of its kind. We moved away from retail media to omnicommerce media. We're bringing something very special, which is building a live AI agent. So this is going to be epic, and we're less than five business days away.

PVSB 0:41

Hard to believe. Looking forward to it and our little sojourn up to Cooperstown to get the week kicked off. That'll be fun too. All right, four stories this week that cut right to the heart of what every CPG brand and retailer is navigating right now. A beverage exclusive built for repeat visits, a brutal verdict from Wall Street on the entire packaged food category, warehouse club doubling down on the thing that keeps members coming out, and another round of executive turnover at the world's most elite retailer. Let's get to it. Let's start with the beverage aisle because Kroger just did what Kroger does best right now, and it's a playbook every retailer should be watching. Kroger has teased a new Coca-Cola exclusive limited time offer, Sprite and Tea Peach. Caffeine-free twist on the classic lemon lime soda blended with peach tea flavor. It's launching in both regular and zero sugar versions across the entire Kroger family of chains and nowhere else. No confirmed launch date yet, but the food for less listing says July, so it should be hitting shells any day now. This is not a one-off. Kroger has been on an exclusivity tear. Seven up endless summer, strawberry watermelon last summer, a mandarin orange seven up earlier this year. Ghost Energy Drinks, Spicy Peeps, a KBBQ Red Baron Pizza, a Sprite Vanilla Frost, as a two-year running holiday exclusive. This is a deliberate strategy, not a coincidence, Tree. Here's why it matters. Kroger is not the cheapest place to shop. Consumer Reports data puts Kroger's prices about 14.8% higher than Walmart. Ouch. New CEO Greg Foran has been direct about that gap, telling advisors on the Q1 call that promotions have gotten too complicated and Kroger's price position hasn't kept pace. His stated goal isn't to win on price, it's to be, in his words, more competitive, more consistent, and easier for customers to understand. So that the more shoppers choose Kroger more often because the value and the experience are clear. What's our land? Well, when a retailer can't win the price fight, exclusivity becomes the traffic driver. Limited time, retail exclusive flavors are cheap to execute. Create urgency and give shoppers a reason to choose Kroger over Walmart or Costco that has nothing to do with unit price. For CBG and Beverage Partners, this is a growing menu of co-branded innovation and retail media opportunity. But it also means Kroger is going to keep asking for exclusivity as a condition of partnership. Brands need a point of view on which retailers earn access to their innovation pipeline first. Shri, over to you.

SPEAKER_01 3:21

Now for the story that every package food executive really needs to read, not once, but twice. Because the Wall Street Journal's hard on the street column this week delivered about as harsh a verdict on big food as Wall Street has given in years. And it's not like we've been sh shouting about it from the top of our lungs here. On the CPG guys, the headline is blunt. America's biggest food companies have tried everything, price outs, marketing pushes, protein bolted onto everything from Cheerios to Goldfish. And it hasn't really made much of a dent. Profits are falling at flagship names like General Mills and Kraft Heinz. Management keeps blaming a strained consumer and promising things will improve. The market has reached a harsher verdict though. These businesses are actually shrinking. And they don't know how to stop it. Big food stocks are now trading at their widest discount to the broad market in at least two decades. And dividend yields have climbed to unsustainable levels indeed. The journal lays out why this is structural and not cyclical. GLP ones are the most visible driver. More than one in ten American adults now take a GLP one. And that number keeps inching up, pushing consumers towards protein, fresh ingredients, cleaner labels, and away from the ultra-processed senestal staples that built these companies. Layer on the K-shaped economy of fluent sharpers are trading up to smaller BFU brands, while low-income households squeezed further by snap cuts are trading down to private label. Even U.S. population growth, historically a reliable tailwind for these companies, has slowed to a crawl as immigration enforcement tightens by the day. As one analyst put it, an advantage this group could always count on is now gone. The numbers back it up. General Mills' organic sales fell 2% in fiscal 26, and the company's guiding to another year of flat to declining sales at best. Cutting prices even when it hurts, earnings just show the bleeding. Carnegie halved its dividend last week and guided to a steeper earnings decline than Wall Street had expected. Kraftines and Campbells are under similar pressure. Carnegie now trade at about 9.8 times forward earnings, a 60% discount to the SP 500. While General Mills, Campbell's, and Kraftines sit around 11 to 12 times. Each has lost 50 to 70% of its value over the past decade while the SP more than tripled. And here's a new pressure point. The Iran conflict is pushing oil, fertilizer, packaging resident freight costs higher and higher. In 2021, food makers passed those cuts straight through to stimulus flush shoppers. This time analysts expect Walmart and Spears to refuse to accept it. I can really vouch that's going to happen through my own experiences. Because retailers now have real leverage to their own private label, which sits at roughly 24% of grocery unit share overall, and higher still at the retailers that matter most, 31% at Walmart, 34% at Costco when shoppers are stretched. Retailers push food companies harder on price, leaving them to choose between losing volume or losing margin. The CPG lens, according to us here on the CPG guys, this isn't a call to wait out a soft patch. The fixes the journal points to real brand investment like General Mills' Fresh Brew Buffalo Dog Line, bigger structural booths like McComic Star Up with Unilever's food business, or take private deals to escape public market pressure. They all take years and capital that's heavily create debts, high payout ratios. Companies don't have much room for them in the PL. If you sell into this channel, the retail media and trade spend conversation with these manufacturers on the back of there is going to be a conversation about survival economics, not growth economics. But I'll tell you something, Peter. Senior executives, you fumble the ball on retail media in the first place.

SPEAKER_00 7:09

An overall omnicommerce, you own this.

PVSB 7:13

Sri, in as many as two weeks, I've seen the emergence of two new conferences targeting CPG companies focused around GLP1 strategy. This is a big deal. Everyone is scrambling to figure out what to do. We saw the canary in a coal mine a couple of years ago when our friend Bob Nolan first came to us at Cagney. He did it again this year. He was ahead of the curve. Everyone else is playing catch up. All right, let's shift to Costco because the retailer is doing something that it has never done before, building gas stations that aren't attached to a warehouse club at all. For the Wall Street Journal, Costco opened its first standalone gas station last month in Southern California, a mile or two from the nearest warehouse, with the second plan for Honolulu. CFO Gary Millerchip was candid about why. Members want faster checkouts and bigger parking lots, and the gas stations attached to warehouses are getting too congested. Imagine that in this very high gas price era. In some cases, the easiest real estate fix isn't more pumps on site. It's a standalone station nearby that still carries the same member-only discount pricing. And the demand is real. Costco gas sales are higher than they've ever been. The five weeks ending in mid-May were the highest gas sales weeks in company history. And CEO Ron Vacras says the high price sensitivity driving those volumes brought many members to a Costco gas station for the very first time. That matters beyond fuel margin because Millerchip and Vacras both note that members who fill up at Costco tend to spend more overall. Gas is a proven traffic and basket driver, not a side business. It's part of a broader real estate rethink at Costco, which has struggled to find land for new full-size warehouses. Vertical stores built alongside housing developments are another experiment, but gas is the one of the clearest read-through. Last week, Costco's stock dip slightly after July net sales growth of 10.6% came in below the 13.7% posted in the prior period, a deceleration executives attributed partly to using gas prices back to the crisis in the Gulf. Understanding just how much fuel is now woven into Costco's growth strategy. Our lands, well, Costco is trading gas as its own strategic lever for membership value and traffic independent of the core warehouse footprint. And it's willing to break from its own playbook to protect it. That's a signal of how aggressively Costco intends to defend share and wallet and renewal rates as the K-shaped consumer story plays out. For CPG suppliers, it's also a reminder that Costco's traffic engine keeps getting more resilient, which is exactly why in-club media and treasure hunt placement there remain some of the highest value real estate in retail. Shri, close this out, would you?

SPEAKER_01 10:16

All right. We've got news from more executive shuffles at none other than Walmart. That's what we'll close the week on this week, because the leadership churn at the top of the world's largest retailer doesn't seem to be slowing down a lick. The Wall Street Journal reports that Kieran Shanahan, Chief Operating Officer for Walmart US, is leaving the role this week, according to an internal memo. He will be succeeded by Kyle Kinnard, currently COO of Walmart International, with Juan Galaraga picking up part of Kinnard's international responsibilities. Shanahan will stay on as an advisor throughout the end of Walmart's fiscal year, 2027, January. But this is not an isolated move. If you've been following us, you've heard all the recent executive changes in the last three, four months. It follows Tom Ward's departure as CEO of Sam's Club, Cedric Clark's exit and may as head of U.S. Store Ops, a position that, by the way, still hasn't been filled. All of this comes after John Furner took over as Walmart's company-wide CEO earlier this year and installed the new CEO across all three major business units US, International, and Sam's Club. The bench continues to look like it's being reshuffled months later. And then on top of that, the timing is what makes this a big CPG story and not just an arg chart shuffled story. The shuffle is landing right as investors are bracing for a grocery pricing warrior. Walmart said earlier this month it would lower prices on thousands of items. And Kroger, as we just discussed, has been highlighting its own price cuts. New leadership of the operating home of Walmart US arrived exactly when the pricing playbook for the back half of the year is actually currently being written, and I would say for fiscal 27. The CPG guy's point of view is pretty straightforward. Every CPG brand category team with a Walmart desk should expect their day-to-day relationships to keep shifting through the rest of the year. That turnover is landing in the exact moment, cost and margin conversations are intensifying. Those price cuts are coming to CPG vendors now or very shortly in the fall. And if you're thinking JBP, JVC, joint value creation is the only way to go. New CEOs typically mean fresh scrutiny on vendor scorecards, trade terms, category resets. This is the moment to make sure your Walmart account team has indeed had a direct line into where the new leadership priorities are heading, not just where the org chart used to point, and make sure you learn and follow.

PVSB 12:44

Look for the CPG guys to make their next appearance in Northwest Arkansas the 16th and 17th of September during the Walmart Data Ventures Inspire event. That's a wrap on this week's Commerce Riff. A quick reminder to catch up on our recent episodes. We've had a couple of great conversations you don't want to miss Walmart Plus's Deepak Mani and our eMarketer panel from Cannes, featuring our friend Sarah Marzano from eMarketer, Liz Roche from Albertson's Media Collective, Flywheels Claudia Johnson, Shweta Bardwaj from Bain Company, and Goodway Group's Angela Myers. Both of these are essential listening for anyone thinking about how commerce, media, and technology are converging. Links in the show notes. If anything we covered today sparks a thought, drop it in the comments. We read them all. And if you're not following us on LinkedIn, Instagram, TikTok, Facebook, and YouTube, but not MySpace, well, now's the time. We'll see you next week.