The consumer goods industry is in the middle of one of the most dramatic portfolio transformations we’ve seen in decades — and it’s accelerating.
In the last 12 months alone, Kimberly-Clark announced its $48.7 billion acquisition of Kenvue, the largest consumer health deal on record. Mars closed its $36 billion acquisition of Kellanova to double down on global snacking. Kraft Heinz paused its planned company split to instead invest $600 million reformulating legacy brands with healthier options — high-protein mac & cheese, low-sugar Capri Sun — shifting from harvest mode back to growth. Unilever spun off its entire ice cream business, narrowing its focus to power brands that can drive faster growth.
These aren’t isolated moves. According to Deloitte, CPG companies are fundamentally shifting away from aisle-spanning conglomerates toward more focused, “category-killer” portfolios — divesting low-growth categories that don’t fit and doubling down on wellness, premium, and functional categories.
Last week, we brought together 50 senior executives — CEOs, GMs, Presidents, and Category Leaders — for an LS Elevate roundtable on portfolio evolution. Our panelists included Agustin Caceres (President, Genomma Lab USA), Catherine Roggero-Lovisi (former CEO of Modern Meadow and President of Revlon North America), and Pol Codina (Head of Food Ventures, PepsiCo). The conversation was candid, tactical, and grounded in real decisions these leaders are wrestling with right now.
Here’s what we learned.
The Shift: From Category Labels to Consumer Needs Spaces
The biggest strategic shift happening in CPG right now is how companies define their portfolios. Leaders are moving away from traditional category definitions and toward consumer-centric problem spaces.
“The portfolio question in 2026 is much less about category labels and much more about consumer needs spaces,” said Agustin. “We are asking ourselves very directly: where do we have a real right to win? Where is demand structurally growing and where can we scale profitably?”
At Genomma Lab, Agustin has led multiple strategic acquisitions — including Bufferin and Cheracol — to build a diversified portfolio across OTC pharmaceuticals, personal care, and wellness. But the decision framework isn’t about collecting categories. It’s about answering three questions:
Does this category solve a real and growing consumer problem?
Can we win with our brand-building and go-to-market model?
Can we scale it profitably — not just launch it?
“What makes the decision harder in 2026,” Agustin explained, “is that consumer demand is fragmenting. Growth is no longer living neatly inside category definitions. It’s moving toward benefit-led spaces like hydration, self-care, and science-backed everyday solutions. The challenge is to stay ambitious but also stay disciplined.”
This discipline means being clear about what not to pursue. “The categories I’m most bullish on are the ones where consumer demand is structural and not fashionable,” Agustin said. “I would put hydration, functional wellness, derma, digestive health, sleep, and science-backed clean beauty in that bucket. What I like about those spaces is that they sit at the intersection of three forces: consumers want more proactive self-care, they want efficacy not just marketing, and they still want value.”
Build vs. Buy: When Acquisition Makes Sense
One of the most critical decisions in portfolio strategy is whether to build organically or acquire. Pol is living this tension in real time as he leads PepsiCo’s pivot from snacks into meals.
“If you look at the top CPG companies globally, most of us are struggling to deliver top-line growth — and it’s more on the volume side of things, as pricing has been over the roof over the last three years,” Pol said. “This, combined with new consumer trends and a more complex retail landscape, is forcing us to think differently on the portfolio side of things.”
PepsiCo is pursuing three parallel strategies:
- Making the core more permissible — portion control, lower sodium, reduced fat
- Enhancing functionality — protein-rich snacks, fiber-forward products
- Tapping into meals — a massive white space, but one that requires capabilities PepsiCo doesn’t have in-house
“For us, meals is probably the biggest pivot we’re doing as a global corporation,” Pol explained. “We have a heavy supply chain — we’re experts in producing snacks, but not meal solutions. Some of these capabilities we’re building internally, some are external.”
Pol shared specific examples of how PepsiCo is rethinking its portfolio:
Alvalle (gazpacho brand in Spain): Repositioning it as a functional booster for gut wellness and a meal enhancer — “it checks all the boxes that consumers are looking for with no compromise: convenient, great taste, healthy, and anchored on real food.”
Quaker in China: Working with the Chinese government to substitute rice (high in calories, low in nutrient density) with oats in certain meals — “you can make pasta which is oat-based or replace rice with oats for certain types of dishes.”
Lay’s in Europe: Expanding from a simple potato chip into a meal solution — “we’re reimagining classic potato dishes with Lay’s, adding other ingredients that bring more nutrients. For instance, Lay’s potato omelette brings carbohydrates from potatoes but also the cleanest source of protein, which is eggs.”
Doritos: Repositioning from a triangular corn chip to a meal platform — “Doritos loaded, which can be topped with vegetables, dairy, or protein, so we can play in different spaces and make it more nutrient-dense.”
The common thread? PepsiCo isn’t just launching products. It’s building ecosystems around consumer needs — convenience, nutrition, real food — and deciding which capabilities to build versus buy.
Private Equity’s New Playbook: From Financial Engineering to Operational Value
Catherine brought a different lens to the conversation: the view from private equity and venture capital. And what she described is a fundamental shift in how PE firms evaluate and build portfolio companies.
“Five years ago, two-thirds of PE value creation came from leverage and market timing,” Catherine said. “That’s not the case anymore. Today it’s really about actual operational improvement, digital transformation, and commercial excellence. Very operationally focused.”
The KPIs PE firms now prioritize reflect this shift:
- Financial: EBITDA, revenue, gross margin, free cash flow, working capital
- Commercial: Customer lifetime value, churn rate, repeat purchase
- Operational: Cost to serve, revenue per employee, lead time, supply chain resilience
- Digital: Tech stack quality, AI integration, infrastructure flexibility and safety
- People: Not just the founder or scientist, but the full C-suite — especially the strength of the finance leader to support growth and fundraising
- Exit Strategy: Clear timeline and market signals (3, 5, 7, or 10 years depending on the thesis)
“ESG used to be something everyone wanted for personal or ethical choice,” Catherine explained. “Then it was pared down to a nice-to-have. Now it’s back to being important, but from a different angle — governance, compliance, and if you have an international brand or want to go international, ESG is a must-have.”
The implication for portfolio strategy? PE-backed companies (and the corporates competing with them for acquisitions) need to demonstrate not just brand equity, but operational rigor. “The ones that are winning are operation-led by true operators, with AI-enabled decision-making, commercial excellence, and a very clear exit narrative,” she said.
Where Growth Lives: The Categories Leaders Are Betting On
When we asked panelists which categories represent genuine growth opportunities versus harvest mode, clear patterns emerged.
Bullish categories:
- Science-led and clinically proven products: “The dollar needs to work harder,” Catherine said. “Customers want to know why they should spend the dollar and how it’s going to make them better. Clinicals and science-based is what convinces them.” She pointed to skincare M&A leading the beauty category right now.
- Functional wellness and longevity: “Last year there was a 15% increase year-on-year in wellness transactions — over 250 of them,” Catherine noted. “Longevity has expanded beyond traditional borders. One term emerging in the American customer is ‘health optimization’ — they know they can’t reverse aging, so it’s all about optimizing health.”
- GLP-1 adjacencies: “It’s expected that 30 million Americans will use GLP-1-like products by 2030. The drug market is expected to expand by $150 billion by 2035. Anything adjacent — products that cope with hair loss, skin sagging, clothes, wearables — PEs are trying to find ways to address that.”
- Hydration and performance nutrition: Agustin emphasized structural demand here. “Consumers are rewarding either strong value or strong differentiation, while the middle gets squeezed.”
- Scalp health and multicultural beauty: “Last year the supplement market grew double digits — 33%. Different ethnicities see beauty different ways and prioritize different parts of the body, but also health.”
Categories to avoid or harvest:
- Mass market personal care without differentiation
- Traditional weight loss and diet messaging
- Undifferentiating products: “If you don’t understand why you’re moving somebody out of their couch to do something — clicking on a computer or going into a store — it needs to be different, disruptive, and better. Otherwise they won’t do it,” Catherine said.
Pol summed up PepsiCo’s view:
“Growth will come from the core. There are two big ideas: affordability — we’re seeing the K economy, this polarization of disposable income — and ongoing transformation of the core through permissibility and functionality. That will move the needle. We’re looking for an extra point or two of growth to get to high single digits, and that will come from harvesting ideas.”
The Leadership Implication: What Portfolio Evolution Means for Talent
Portfolio transformation isn’t just a strategy question — it’s a people question. As companies shift from aisle-spanning conglomerates to focused, benefit-led portfolios, the leadership capabilities required are also changing.
The executives in the room debated generalist versus specialist talent, entrepreneurial mindset inside big companies, and whether to hire from heritage brands or challenger brands. The consensus? It depends on the specific capability gap and the stage of transformation.
“What I’m seeing in our search work is that companies are no longer just hiring for functional expertise,” I noted during the discussion. “They’re looking for leaders who can operate at the intersection of strategy and execution — people who understand both the legacy business model and the emerging one. The best hires we’re making right now are executives who’ve built something new inside an established company, or brought scale and discipline to a challenger brand. That blend is what’s in demand.”
But one pattern was clear: the winners will be leaders who can bridge worlds. As Pol put it, “The value in the future will lie less on deep functional expertise, but at the intersection of functions or categories where there’s a multiplier effect. People who are able to have one foot on hardcore technology and one foot on specific business need — this intersection is where the value is.”
Catherine emphasized the importance of understanding customer friction across borders: “An urban female, 35, with certain education, at a specific stage in her life, has similar friction in New York as she has in Buenos Aires. Global brands work when you understand those frictions and get the idea right. But then local execution — that’s when communication and cultural understanding kick in.”
The Bottom Line: Portfolio Strategy Is Now an Operating Discipline
What became clear over the course of the conversation is that portfolio strategy is no longer just a finance exercise conducted every few years during strategic planning cycles. It’s an ongoing operating discipline that requires:
- Consumer-centric framing: Understanding needs spaces, not just category adjacencies
- Rigorous decision-making: Answering “Can we win? Can we scale profitably?” before committing capital
- Build-vs.-buy clarity: Knowing which capabilities you can develop internally and which require external acquisition or partnership
- Operational rigor: Demonstrating not just brand equity, but commercial excellence, supply chain resilience, and digital infrastructure
- Talent agility: Building teams that can bridge legacy capabilities with entrepreneurial speed
As Agustin said in closing,
“We need to bet on categories where consumer relevance is rising and where science, trust, and brand matter. And we are looking at harvesting or simplifying the parts of the portfolio that consume energy without creating future enterprise value.”
In 2026, the CPG companies winning aren’t necessarily the biggest. They’re the most disciplined — the ones that know where they can win, and are willing to walk away from everything else.