The Disappearing Middle in CPG

The Comfort Zone No Longer Exists

Walk down any grocery aisle today and you’ll see a striking pattern: the extremes are thriving while the middle shelf collects dust. Shoppers either splurge on premium, purpose-driven goods or hunt for bargains in value brands and private label. There’s less and less appetite for anything that sits “in the middle.” For decades the mass market was the safest place for consumer-packaged goods (CPG) companies, but that middle is collapsing fast. Founders who built businesses around being “a little better than generic but not too expensive” are discovering that the largest part of the shelf now has the smallest growth.

The reason?

The market is bifurcating and it’s not a passing fad. Inflation fatigue, shifting consumer priorities, and retailer strategies are squeezing mid-tier brands on both sides. If you’re still thinking that a reasonable price and decent quality will get you through the next five years, you may be missing the bigger picture. This blog breaks down what’s happening, why it’s structural, the mistakes founders are making, and—most importantly—how to reposition your food and beverage brand to thrive on either the premium or value side of the barbell.

What’s Actually Happening: A Structural Split

The story begins with data. In the U.S. food and beverage sector, growth is concentrated at the extremes: premium brands and private label/value offerings. Both have been gaining share year over year while mid-priced, undifferentiated brands lose relevance. Consumers aren’t just trading down because of rising prices; they’re trading up when they see genuine differentiation and trading down when they see no reason to pay more. It’s not a simple cycle; it’s a structural shift.

Think about categories like chocolate, ready meals or pantry staples. The high end is dominated by craft, organic, or functional products that command a price premium because of superior ingredients, storytelling, or performance. The low end, often represented by store brands, has improved significantly in quality and offers unbeatable value. In between lie the “middle child” brands: once loved, now overlooked. They lack the cachet of premium and the cost advantage of private label. As economic pressures intensify and shoppers become savvier, this group is being squeezed out of carts.

Why the Middle Is Disappearing

Price–Value Mismatch

Many mid-range brands are priced higher than private label but don’t offer a clear payoff. Shoppers evaluate what they’re getting for each dollar: a mass-market cereal at $5 may not feel more nourishing or enjoyable than a $3 store-brand version. If there’s no difference in taste, nutrition or ethical sourcing, why spend more? That’s the price–value mismatch. Consumers are signaling they will pay extra only when the benefits are obvious.

Lack of Clear Consumer Payoff

Beyond price, the payoff could be functional (extra protein, allergen-friendly), emotional (family heritage, community give-back) or experiential (luxurious packaging, indulgent flavors). Mid-tier brands often fail to articulate any of these. They rely on familiarity or broad appeal, but loyalty is eroding. People are increasingly mission-driven and selective; they want to support brands that either align with their values or stretch their dollars. A brand positioned squarely in the middle neither inspires nor saves.

Retail Math and Shelf Reality

Retailers are ruthlessly optimizing their assortments. Shelf space is finite, labor costs are rising, and supply chains are stressed. Every SKU needs to justify its existence through velocity or profit. A mid-market product that turns slowly is at high risk of being delisted, especially if there’s a premium brand commanding better margins or a private label delivering stronger sales. When retailers do reset their shelves, they’re more likely to give space to value lines they own or to differentiated premium offerings that attract customers.

How Retailers Accelerate the Trend

SKU Rationalization

The days of endless flavor variants are over. Grocers and club stores are cutting redundant SKUs and focusing on “good, better, best” sets: one value leader, one strong national brand, one premium standout. This curation directly hits mid-tier brands. If you’re not clearly best or cheapest, you’re out.

Private Label Growth

Store brands are no longer generic. Retailers have invested heavily in their own lines—often tiered into basic, natural, and premium. They’re capturing the value consumer with good-enough quality at a lower price and even attracting health-conscious or gourmet shoppers with upscale offerings. Since private label has better margins for retailers, they actively promote and expand these SKUs. This leaves little room for national brands that occupy the same price band.

Premium Curation

On the other end of the spectrum, retailers are curating premium experiences, from artisanal cheese counters to organic snack aisles. They want to attract higher-income shoppers with products that deliver excitement and differentiation. That means giving shelf space to brands with compelling stories, unique flavors, or functional benefits—and less to mass-market items that can be easily substituted. Premium curation isn’t just about price; it’s about delight and discovery. The more a product stands out, the more likely it is to survive a category review.

Where Founders Go Wrong

Positioning in the “Safe” Middle

It can feel tempting to straddle the space between luxury and low price, especially if you’re worried about pricing yourself out of the market or undercutting your costs. However, this “moderate” positioning is exactly where growth stalls. By trying to please everyone, you end up pleasing no one. The biggest mistake is assuming that a mediocre value proposition will still capture enough consumers to sustain a brand. The data shows it won’t.

Over-Reliance on Branding vs. Real Differentiation

Good branding is important, but it’s not a substitute for substance. Some founders invest heavily in marketing and packaging while neglecting product innovation. If your functional or emotional benefits are unclear, attractive design alone will not save you. Today’s shoppers can see through superficial claims. Authenticity, quality, and true innovation matter more than ever. Overstating or misrepresenting these can also damage trust.

Misreading Price Sensitivity

Many founders fear raising prices because they believe consumers won’t pay more. This concern is valid in the value segment but misguided in premium. Premium shoppers will pay a higher price for what they perceive as better quality or alignment with their lifestyle. Conversely, value shoppers will not pay even a small premium unless it delivers a tangible benefit. The trap is pricing a mid-tier product slightly above private label—expensive enough to deter bargain hunters but not differentiated enough to attract premium buyers. Understanding your consumer’s willingness to pay is critical.

What Winning Brands Do Differently

Premium Brands: Earning the Right to Charge More

Premium brands justify their price by delivering clear, meaningful advantages:

• Superior Quality or Function: They use better ingredients or proprietary processes that genuinely improve taste or performance. Think of a plant-based milk that froths perfectly or a protein bar with a science-backed amino acid profile.
• Credible Claims and Certifications: They back up their differentiation with certifications like organic, fair trade, or clinically proven benefits. Labels are proof points, not fluff.
• Compelling Storytelling and Authenticity: Premium brands share their mission—whether it’s regenerative farming, women’s empowerment, or preserving culinary heritage. Shoppers want to belong to a story, not just buy a product.
• Innovation and Novelty: They lead trends rather than follow them, launching new formats, flavors, or technologies. The first cauliflower crust, adaptogenic beverage or zero-sugar confection was not cheap, but it commanded attention and a higher price.
• Enhanced Experience: Premium packaging, unboxing rituals, community engagement, and personalized touches create an immersive experience that makes customers feel special.

The result? Consumers feel the product is worth paying more for, and retailers are happy because higher price points boost margins and create category excitement.

Value Brands: Clarity and Efficiency

On the flip side, value brands win by delivering simplicity and savings:

• Relentless Cost Discipline: They optimize every aspect of the supply chain to keep costs down. Bulk purchasing, standardized ingredients, efficient manufacturing, and minimal marketing mean they can undercut others without sacrificing acceptable quality.
• Good-Enough Quality: Modern private label and value brands aren’t the mushy peas of yesteryear. They match or closely approximate the quality of mainstream brands. Blind taste tests often reveal little difference.
• Simplified Choice: They reduce decision fatigue by offering one or two clear options instead of a dozen. Shoppers who want to get in and out appreciate this.
• Trust in Retailer: Many consumers now trust their favorite grocer’s own brand as much as or more than national brands. Return policies and consistent quality build loyalty.

The core promise is simple: “This product does the job for less.” No frills, no confusion. For value buyers, that clarity is powerful.

Strategic Takeaways for Founders

Pick a Lane—And Commit

The middle is disappearing. The worst thing you can do is float there hoping for the best. Decide whether you’re going to create a premium product with true differentiation and a story worth telling or compete on cost in the value segment. Both strategies require discipline, but each rewards focus. Trying to be both leads to being neither.

Design Your Product for the Position You Choose

If you’re leaning premium, invest in ingredients, R&D, certifications, and packaging that elevate the product. Make sure your price supports a healthy margin given the lower volumes. If you’re aiming for value, engineer your formulation and packaging to minimize costs without crossing below the quality threshold consumers will accept. Pack sizes, materials, and sourcing decisions should all align with your chosen lane.

Choose the Right Channels

Premium products should be where premium shoppers browse: natural grocery chains, specialty stores, curated online platforms, or branded e-commerce. Value products belong in discount grocers, dollar stores, club stores, and mainstream supermarkets that attract cost-conscious consumers. Your channel strategy should reinforce your positioning, not confuse it.

Align Marketing and Storytelling

Premium brands need to tell a rich story that connects with consumers’ values—this might involve founder narratives, supply chain transparency, or lifestyle content. Value brands can keep messaging straightforward: communicate savings, reliability, and honesty. Promotions and packaging should reflect who you are speaking to.

Continually Earn Your Place on the Shelf

Both premium and value brands must prove their worth to retailers. Premium brands should show strong margins and the ability to draw shoppers, while value brands need to deliver volume and consistent turn. Track your velocity closely, adapt your assortment based on what moves, and be ready to fight for shelf space with data.

Never Rest on “Okay”

Even if you find success, remember that consumer expectations are always evolving. Premium today may be mainstream tomorrow, and value today might be undercut by a new entrant. Continuous improvement, innovation, and listening to your audience will keep you relevant.

Closing: Seeing the Collapse as Opportunity

It’s easy to view the disappearance of the middle as a threat, but it’s also an invitation. The CPG world is not becoming barren; it’s becoming more intentional. Consumers are telling us loud and clear what they want: either extraordinary products that enrich their lives or practical products that respect their wallets. There’s little patience for “meh.”

Founders with conviction and clarity can thrive in this new landscape. If your brand truly offers something unique, embrace the premium tier and tell your story boldly. If your genius lies in efficiency and operational excellence, own the value space unapologetically. The next wave of iconic CPG brands won’t come from the squishy middle; they’ll come from founders who understood that mediocrity is the riskiest position of all.

By recognizing the disappearing middle not as a collapse but as a doorway—one that leads either to excellence or efficiency—you can step through with intention. The barbell market rewards those who pick a side and play to win. Which side will you choose?