Insights · Food Regulation & Commercial Strategy

The US Is Forcing CPG to Reformulate. The Problem Is There's No Standard to Reformulate Against.

CFOs are staring at 5% to 25% cost inflation with no rule, no anchor, and no way to price the exposure.

Atsuko Boyd · Principal, GreenfieldTable F&B Strategy · Product Development · Go-to-Market Strategy August 2026

From the GreenfieldTable insights desk · No domestic rule, no international one, real cost inflation now.

A new audit of toddler food sold in Austin, Texas found that nearly half of the products tested fail at least one World Health Organization nutrient threshold. The US left the WHO in January and still has not produced a domestic standard of its own. For operators and CFOs, the failure rate is not the headline. The absence of a rule is.

Researchers catalogued 2,783 products across 21 grocery stores and tested each label against a WHO nutrient standard built specifically for children ages 6 to 36 months. 81% qualified as ultra-processed under the NOVA classification system. 49% failed at least one threshold, most often sodium, followed by sugar, energy density, and fat. Fruit pouches and oat bars ran high in sugar. Mac and cheese cups and turkey sticks ran high in sodium and fat. Cheese puffs ran high in calories.

What toddlers eat shapes taste and dietary habits that persist into adulthood. Today's shelf becomes tomorrow's health bill and eventually tomorrow's customer base. That is the long arc. The short arc is simpler: these products are national brands sold identically everywhere, a reason to take the Austin finding seriously well beyond the city, even though the study itself proves nothing about whether the number holds nationally.

The work is preliminary. It is a conference abstract presented at NUTRITION 2026, not yet peer reviewed. But preliminary does not mean irrelevant. It means early. And early is exactly when markets should pay attention.

The Standard Behind the Audit No Longer Applies to the US

The nutrient thresholds used in the audit belong to the World Health Organization. The US is no longer a WHO member. Trump signed the withdrawal order on January 20, 2025. The WHO charter requires one year's notice before an exit takes effect. The withdrawal became final on January 22, 2026. HHS Secretary Robert F. Kennedy Jr. co-signed the announcement with the Secretary of State.

Kennedy is also the official who said a federal definition of ultra-processed food would exist by April. It does not. The FDA's mandatory GRAS notification rule has been delayed again, to December 2026. The UPF definition itself, when it arrives, is expected to take the form of a research tool rather than a binding regulation. A research tool carries no enforcement mechanism.

The result is a regulatory vacuum with direct financial implications. Companies selling food to children have no domestic standard to reformulate against and no international standard the US still recognizes. They are operating without a rule because none has been supplied.

This is not a theoretical gap. It is a practical one. Reformulation is already underway. The question is: reformulating against what, exactly?

Somewhere, This Exact Problem Has Already Been Solved

To understand the scale of the gap, it helps to look at a system where the sequence runs in the correct direction.

Japan operates a positive-list system for food additives. A company files a dossier of safety, efficacy, and stability data with the Consumer Affairs Agency. The Food Safety Commission of Japan conducts an independent risk assessment against the Codex Alimentarius framework. Only then is the ingredient authorized. A clean filing takes about a year. The additive guidelines include a distinct chapter for substances used in breast milk substitutes for infants under four months old, on the basis that infants absorb, metabolize, and excrete chemicals differently than adults. Infant formula is regulated as its own category, Foods for Special Dietary Uses, revised as recently as this year.

Japan's system is not a moral contrast. It is a sequencing contrast. The review happens before a product builds a following, not after a decade of shelf space and an audit have already measured the damage in public. The US has now run the sequence backward twice in the same year, once by exiting the body that wrote an external standard and once by failing to finish its own.

This is the exact gap American companies are standing in right now: reformulation without a rule, cost inflation without a target, and litigation without a standard to defend against.

Companies Are Already Paying the Price

Manufacturers are not waiting for either government to finish. Nestle has removed every certified artificial color from its US portfolio. Kraft Heinz reports that 90% of its net-sales portfolio is free of synthetic dyes. Hershey, Kellogg, Conagra, General Mills, and Smucker have made comparable commitments, most targeting 2026 or 2027.

Kraft Heinz is also a named defendant in the first municipal lawsuit filed over ultra-processed food, brought by the San Francisco City Attorney in December 2025. There is no verdict. Legal costs are already accruing.

BCG estimates that up to $100 billion in US ultra-processed food revenue, the broader category, not toddler food alone, is exposed to disruption from shifting consumer purchasing, tightening SNAP eligibility rules, and changing procurement standards. Manufacturer costs are projected to rise 5% to 25%, driven by reformulation R&D, higher-cost clean-label ingredients, and legal and compliance spending. CPG R&D spending grew 1.2% annually over the last two decades, while advertising and promotion grew 2.6% annually. The current reformulation bill reflects two decades of underinvestment in product development relative to marketing.

None of this exposure is limited to the largest manufacturers. Private-label and mid-size producers supplying the same fruit pouch, mac and cheese, and cheese puff categories face the identical regulatory vacuum, with less capital to absorb a reformulation cycle or a legal defense than Nestle or Kraft Heinz can.

The Valuation Question Markets Cannot Ignore

For valuation, the question is not whether Austin's failure rate is representative. The question is how markets should price a category with no domestic standard, no international standard, and active litigation.

This is not a case of the market getting the price wrong. It is a case of there being no anchor to price against at all. The failure rate is now known. The rule that would let anyone price the exposure against it still does not exist. Until Washington supplies that rule, every valuation in this category is an assumption, not a number.

Austin supplied the failure rate. Washington has not supplied the rule. The distance between those two is the exposure, and right now, it is unpriced.