The Participants

This report represents US CPG manufacturing in 2026

Manufacturers

1,000+

CPG suppliers surveyed

Employees

140K+

people employed

Categories

500+

product categories

Revenue

$15B+

combined annually

Manufacturing Space

20M+ sq ft

of factory floor represented

10 Key Findings

01

The Private Label Boom

1 in 3 expanding into private label — 40% without new software

02

The AI Divide

AI adopters grew 20%+ at 2× the rate of non-adopters

03

Factories Running Half Empty

33% had 31%+ idle capacity in 2025

04

The Optimism Trap

23% expect 20%+ growth — only 15% achieved it in 2025

05

The Silent Margin Squeeze

63% absorbed 6%+ cost hikes with only 1–5% price rises

06

Hiring Is Still the Obvious Indicator

Plan 10%+ headcount growth → 57% expect 20%+ revenue

07

Building Automation to Win

82% of new line builders have an AI or automation plan

08

The Exit Wave

1 in 11 considering a sale — 50% are 20+ year veterans

09

Startups vs. Veterans

Under-5-year companies outgrow veterans by 3.6×

10

The $0 Software Budget

No-software manufacturers declined at a 44% higher rate

← Key Findings

1 in 3 Charging
Into Private Label

32.5% of CPG suppliers are expanding into private label in 2026. They carry more idle capacity, invest more in AI, and pursue international expansion at 1.7× the rate — but 40% are doing it without new software.

← Key Findings

Private Label Expanders vs. Non-Expanders

Key differences across all survey dimensions · PL N=258 · Non-PL N=537

Growth strategy activation: PL vs. Non-PL (% selecting each)

Winning new customers

95.7%

vs 67%

New capabilities

68.2%

vs 39%

Partnerships / referrals

71.7%

vs 45%

Trade shows

58.1%

vs 36%

Sales & marketing

65.9%

vs 48%

PL expanders are 1.6× more likely to have deployed AI and 1.7× more likely to enter new international markets. Retailer pull is global.

PL Expanders

40%

entering new
intl markets

Non-Expanders

24%

entering new
intl markets

AI adoption: PL expanders vs. non-expanders

21.0%

PL — AI Deployed

13.2%

Non-PL — AI Deployed

21.0%

PL — No AI Plans

35.0%

Non-PL — No AI Plans

2026 Certifications plans: PL needs them to qualify for retailer partnerships

38%

PL — adding certs (Yes)

30%

Non-PL — adding certs

71%

PL — yes + considering

← Key Findings

The AI Divide

Companies that have deployed AI are growing faster than those with no AI plans — and the gap doubles when looking at 2026 expectations.

← Key Findings

AI Adoption Profile: High-Growth vs. The Rest

For each AI adoption level — share of 20%+ revenue growers vs. <20% growers · 2025 actual & 2026 expected

2025 Actual: AI adoption mix — grew 20%+ vs. grew <20%

Grew 20%+

Grew <20%

19.3%

31.0%

Not
Planned

27.3%

30.2%

Planning
to

30.7%

23.4%

Piloting

22.7%

15.3%

Yes —
Deployed

Deployed & Piloting AI = over-represented in the 20%+ growth group. Not Planned = over-represented in the <20% group.

2026 Expected: AI adoption mix — expecting 20%+ vs. expecting <20%

Expecting 20%+

Expecting <20%

17.7%

33.0%

Not
Planned

26.5%

30.7%

Planning
to

29.9%

22.9%

Piloting

25.9%

13.5%

Yes —
Deployed

Deployed AI appears in the 20%+ expectation group at nearly 2× the rate vs. the <20% group (25.9% vs 13.5%).

AI-deployed manufacturers expect 20%+ revenue growth at 2.6× the rate of those with no AI plans

Deployed AI

38%

expect 20%+ revenue
growth in 2026

No AI Plans

15%

expect 20%+ revenue
growth in 2026

Current AI Adoption Status — All Respondents

Yes — Deployed

12.3%

Yes — Piloting

18.4%

Planning to

22.1%

Not Planned

21.7%

← Key Findings

1 in 3 Factories
Running Half Empty

33% of manufacturers had 31%+ unused production capacity in 2025. Over 1 in 10 were more than half empty — yet 40% expect to fill it in 2026 with no change to how they find business.

← Key Findings

Unused Production Capacity: 2025 Actual vs. 2026 Expectation

All respondents · Capacity utilization shift

40.8% plan to fill capacity in 2026 — but most have no new tools to find or manage new customers

Private label expanders carry more idle capacity

14.2% of PL expanders have 50%+ unused capacity vs. 9.3% of non-expanders. Private label is the utilisation play.

10.9%

have 50%+ idle capacity

32.6%

have 31%+ idle capacity

2025 Actual: Unused Capacity Distribution · 65% reported 16%+ unused

16.3%

0–5%

19.5%

6–15%

31.6%

16–30%

21.7%

31–50%

10.9%

50%+

2026 Expectation: Unused Capacity · 48% expect 16%+ unused (down from 65%)

21.0%

0–5%

31.4%

6–15%

27.0%

16–30%

16.5%

31–50%

4.6%

50%+

← Key Findings

The Optimism
Trap

21% of suppliers declined in 2025. Nearly 1 in 4 expect a 10%+ rebound in 2026 — yet 40% of those hopeful decliners have no technology plans and 29% aren't adding capacity.

← Key Findings

The Optimism Gap: 2026 Expectations vs. 2025 Reality

How much higher (or lower) respondents expect 2026 growth vs. what they actually achieved in 2025

2025 result → where each group expects to be in 2026

Decliners are making the biggest leap in expectations — with the least operational change to justify it

2025 ACTUAL

2026 EXPECTED

Declined

→

6–10% growth

1–5% growth

→

6–10% growth

→

6–10% growth

11–20% growth

→

11–20% growth

20%+ growth

→

11–20% growth

Note: Decliners expect the biggest leap — yet 40% have no technology plans and 29% aren't adding capacity

Overall expectation vs. reality gap

15%

Actually grew
20%+ in 12

23%

Expect 20%+
growth in 12

1.4× more companies expect 20%+ than achieved it last year

The worse 2025 was, the more optimistic the 2026 forecast — without the operational changes to back it up

Decliners expecting a 10%+ rebound in 2026: what are they actually doing?

Adding new production lines 45.2%

Entering new international markets 38.7%

AI deployed or piloting 30.0%

No AI plans at all 40.0%

2026 revenue expectations (all respondents)

3%

Decline

24%

1–5%

30%

6–10%

19%

11–20%

23%

20%+

← Key Findings

The Silent
Margin Squeeze

63% of manufacturers absorbed 6%+ input cost increases with only 1–5% price rises. 15% are already operating on margins below 10% — yet 32% expect margin improvement in 2026.

← Key Findings

Pricing Power Lagging Cost Inflation

Input cost reality vs. pricing response — and the margin expectation gap

Input cost inflation — 2025 actual & 2026 expected

2025 Actual: 91% faced higher input costs · 47.6% saw 6%+ increases

Decreased

8%

Inc. 1–5%

44%

Inc. 6–10%

34%

Inc. 10%+

13%

2026 Expected: 89% expecting continued increases

Decreased

10%

Inc. 1–5%

63%

Inc. 6–10%

22%

Inc. 10%+

5%

15% of suppliers are already operating at below 10% gross margin. Yet 32% expect margins to improve in 2026 — without meaningful price increases planned.

Pricing response — 2025 actual vs. 2026 plan

2025 Actual: Only 24% raised prices 6%+

Decreased

12%

Inc. 1–5%

65%

Inc. 6–10%

17%

Inc. 10%+

7%

2026 Plan: Only 13% plan to raise prices 6%+

Decrease

13%

Inc. 1–5%

74%

Inc. 6–10%

10%

Inc. 10%+

3%

Of the manufacturers hit with 6%+ cost increases, 63% plan only a 1–5% price rise in 2026. The math doesn't close without operational efficiency tools.

← Key Findings

Hiring Is Still the Obvious Indicator

Companies that grew headcount 10%+ in 2025 saw revenue grow 20%+ at 4× the rate of those cutting staff. And in 2026, those planning 10%+ headcount growth expect breakout revenue at 57%.

← Key Findings

Staff Change vs. Revenue Performance

2025 actual headcount change correlated with 2025 revenue · 2026 headcount plans vs. 2026 revenue expectations

2025: % of each staff-change group that grew revenue 20%+

7.9%

Decreased
10%+

5.1%

Decreased
1–10%

16.0%

Increased
1–10%

40.0%

Increased
10%+

2025: % of each staff-change group that DECLINED revenue

44.7%

Decreased
10%+

36.0%

Decreased
1–10%

13.0%

Increased
1–10%

10.7%

Increased
10%+

Companies planning 10%+ headcount growth in 2026: 57% expect 20%+ revenue. The "double-win" group from 2025 — 93% expect it again.

2026: % expecting 20%+ revenue by planned headcount change

18.2%

Decrease
10%+

14.3%

Decrease
1–10%

20.0%

Increase
1–10%

56.9%

Increase
10%+

Hired 10%+ in 2025

40%

grew revenue 20%+

Cut staff in 2025

45%

saw revenue decline

← Key Findings

Building
Automation
to Win

82% of manufacturers adding new production lines have an AI or automation plan. Companies investing $250k–$5M in capex expect 20%+ growth at 2× the rate of those spending nothing — the industry is building smarter.

← Key Findings

Capital Investment vs. Growth Expectations

Production line plans, capex distribution, and the AI gap among builders

Revenue growth expectations by production line plans

Yellow = expecting 20%+ · Red = expecting decline or <10%

No new lines

13.4%

expect 20%+ growth

31%

expect decline / <10%

Considering new lines

19.5%

expect 20%+ growth

24%

expect decline / <10%

Yes — adding new lines

28.6%

expect 20%+ growth

16%

expect decline / <10%

Adding new lines → 2.1× more likely to expect 20%+ · half as likely to expect decline

Expected CapEx investment in 2026

$0

6%

<$250k

41%

$250k–$1M

29%

$1M–$5M

14%

$5M+

8%

82% of manufacturers adding new production lines have an AI or automation plan — the industry is becoming more sophisticated. But the 18% without one are building blind.

% expecting 20%+ revenue growth by CapEx level

16.7%

$0

19.1%

<$250k

26.6%

$250k–$1M

27.5%

$1M–$5M

22.9%

$5M+

$250k–$5M capex = 2× higher chance of 20%+ growth vs. $0 capex

52%

adding new prod lines in 2026

25%

opening new facilities

18%

building lines with no AI plan

← Key Findings

The Great CPG
Shakeout

1 in 11 manufacturers is planning or considering a sale in 2026. 50% are 20+ year veterans. 52% have no AI plans. The market is bifurcating: capitalised acquirers on one side, legacy operators heading for the exit on the other.

← Key Findings

Sellers vs. Acquirers — Two Sides of the CPG Shakeout

Profile of companies planning/considering a sale (N=48) vs. those considering acquisitions (N=71) · 2026

Company size: Sellers vs. Acquirers

← SELLERS

ACQUIRERS →

54.2%

<25

35%

27.1%

25–99

40%

10%

100–249

18%

4%

500+

7%

Company age: Sellers vs. Acquirers

← SELLERS

ACQUIRERS →

50.0%

20+ yrs

45%

27.3%

11–20 yrs

32%

15.9%

5–10 yrs

18%

7%

<5 yrs

5%

Acquirers' 2025 revenue performance

8%

Declined

17%

1–5%

19%

6–10%

15%

11–20%

41%

20%+

36% of acquirers are raising capital in 2026. The market is bifurcating fast — tech-enabled consolidators on one side, legacy operators heading for the exit on the other.

AI adoption: Sellers vs. Acquirers

SELLERS

48%

have an AI/automation plan

ACQUIRERS

82%

have an AI/automation plan

29%

revenue declined 2025

41%

grew 20%+ in 2025

Sellers' 2025 revenue performance

29.2%

Declined

33.3%

1–5%

14.6%

6–10%

8.3%

11–20%

14.6%

20%+

← Key Findings

Startups Are Eating
Veterans' Lunch

Companies operating less than 5 years grew 20%+ revenue at 3.6× the rate of 20+ year businesses. Legacy operators decline at nearly twice the rate. Age is no longer a moat — operational agility is.

← Key Findings

Revenue Performance by Company Age — 2025

The correlation between business age, growth outcomes, and technology adoption

% that grew revenue 20%+ in 2025 by company age

29.9%

< 5
years

25.0%

5–10
years

15.4%

11–20
years

8.4%

20+
years

% that declined revenue in 2025 by company age

15.6%

< 5
years

12.0%

5–10
years

21.1%

11–20
years

24.5%

20+
years

Companies under 5 years old outperform 20+ year veterans on high growth by 3.6×. The advantage isn't experience — it's operational agility and modern tooling.

Double-distress vs. all others: who they are

Double
Distress

All
Others

Are 20+ year veterans

66.7%

28%

Have no AI plans

38.4%

24%

Expect further decline in 2026

11.8%

2.1%

Total in this group

10.2%

89.8%

<5 year companies

30%

grew 20%+ in 2025

20+ year companies

8%

grew 20%+ in 2025

← Key Findings

The $0 Software
Budget Is the
Costliest Decision

Manufacturers using no operational software declined revenue at a 44% higher rate than those with at least one tool. The gap is measurable, documented, and widening every quarter.

← Key Findings

Software Adoption vs. Revenue Outcomes

The performance gap between manufacturers using operational software and those that aren't

No-software manufacturers declined revenue at 30.4% vs. 21.1% for those with at least one tool — a 44% higher decline rate

2026 Software Purchase Intent

Yes 25%

Considering 34%

No 41%

Using Software

21%

revenue declined
in 2025

No Software

30%

revenue declined
in 2025

Top reasons for software purchase — all respondents vs. PL expanders

All Respondents

70%

Reducing Errors

53%

Cost Reduction

46%

Compliance Needs

Private Label Respondents

72%

Reducing Errors

64%

Cost Reduction

55%

Compliance Needs

The bottom line

The manufacturers winning in 2026 share one thing beyond AI, capex, or category: operational software that connects their capacity to buyers, manages complexity at scale, and turns data into decisions. The question is no longer whether to invest. It's how much the delay has already cost.

Data Sources

This report is based on research conducted by The Keychain Research Team. We collected responses from over 1000 CPG Suppliers in Q1 2026.

Sales/Marketing 36%Respondents: 289

Owner/Founder 33%Respondents: 259

Executive 20%Respondents: 157

Operations 9%Respondents: 68

Other 3% · Respondents: 22

Company Age

20+ yrs
53%

11–20
19%

5–10
17%

<5
11%

Company Size

25–99
33%

<25
32%

100–249
15%

500+
11%

250–499
9%

Industries

Food

53%

Ingredients

21%

Packaging

19%

Beverage

17%

Supplements

17%

Personal Care

11%

CPG Intelligence · powered by keychain

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