The Consumer Staples Reset
October 2026, Equity
- Overview
-
Changing consumer habits and rising costs have created a more challenging backdrop for consumer staples. Investment Analyst, Steven Strycula explains how disciplined research is helping identify opportunities across a changing sector.
The Consumer Staples Reset
For consumer staples, my primary coverage, if you go through the arc of time, you will see that this sector was relatively insulated in a high moat from a lot of external factors. That has broken down and weakened and introduced a lot of volatility over the last 5 to 6 years. It started with Covid. We saw volumes elevated, and when we came out of Covid, you saw a big air pocket. We've had a volumetric recession, if you will, in the sector, and that was temporarily mapped over by having higher pricing on the heels of inflation. Since then, we've seen two things happen that aggravated the stocks set up for staples. One, you saw relative earnings momentum break against them, led by huge new bull markets such as AI. The second piece of that I would say, is pressure in the middle of the P&L. That's really been the source of the introduction of tariffs and more recently, the Iran war.”
In the context of a tougher staples backdrop, I've really focused and prioritized my research process and framework to picking winners for clients. In that, I focus primarily on asset quality, idiosyncratic revenue drivers, positive earnings revision and capital allocation
In my role as a global team lead, I spend a lot of time with the rest of my team on a weekly and daily basis, conversing about the key investment debates impacting the stocks and subsectors within the global consumer industry subset. As part of this, you get pattern recognition from across the Atlantic and the Pacific to really hone in on what the most dislocated ideas are.
A few weeks ago, I published a deep dive on the energy drink sector. Periodically, I find it helpful for a senior investor to re-underwrite their existing views on a key topic for their sector. For energy drinks specifically, the category is now mainstreaming. This is really a function of two dynamics. Number one, there's a higher heightened need for caffeine and consumers are also looking for newer products with different nutritional profiles and low sugar content. Energy drinks is meeting that needs state. If you look abroad and index the energy drink categories household penetration to that of other nations, you can see that it's still in its nascency outside of the US. And within the US, the runway is also very great when you benchmark energy drinks relative to more mature beverage categories such as coffee, soda or juices. For these reasons, I maintain a positive view for the energy drink sector over the long term.
Steven Strycula
Investment Analyst
- Jul 2026
- Equity
- Article
Energy investing insights: Opportunities beyond oil prices
Additional Disclosure
For U.S. investors, visit troweprice.com/glossary for definitions of financial terms.
The specific securities identified and described are of informational purposes only and do not represent recommendations.
Important Information
Outside of the United States, this is intended for investment professional use only. Not for further distribution.
This material is being furnished for informational and/or marketing purposes only and does not constitute an offer, recommendation, advice, or solicitation to sell or buy any security. Prospective investors should seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a guarantee or a reliable indicator of future results. All investments involve risk, including possible loss of principal. Information presented has been obtained from sources believed to be reliable, however, we cannot guarantee the accuracy or completeness. The views contained herein are those of the author(s), are as of September 2026, are subject to change, and may differ from the views of other T. Rowe Price Group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price. The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.
Australia—Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. For Wholesale Clients only.
Canada—Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc.’s investment management services are only available to non-individual Accredited Investors and non-individual Permitted Clients as defined under National Instrument 45-106 and National Instrument 31-103, respectively. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services.
EEA—Issued and approved by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier. For Professional Clients only.
Hong Kong—Issued in Hong Kong by T. Rowe Price Hong Kong Limited, 6/F, Chater House, 8 Connaught Road Central, Hong Kong. T. Rowe Price Hong Kong Limited is licensed and regulated by the Securities & Futures Commission. For Professional Investors only.
New Zealand—Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. No Interests are offered to the public. Accordingly, the Interests may not, directly or indirectly, be offered, sold or delivered in New Zealand, nor may any offering document or advertisement in relation to any offer of the Interests be distributed in New Zealand, other than in circumstances where there is no contravention of the Financial Markets Conduct Act 2013.
Singapore—Issued by T. Rowe Price Singapore Private Ltd. (UEN: 201021137E), 501 Orchard Rd, #10-02 Wheelock Place, Singapore 238880. T. Rowe Price Singapore Private Ltd. is licensed and regulated by the Monetary Authority of Singapore. For Institutional and Accredited Investors only.
Switzerland—Issued in Switzerland by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.
UK—This material is issued and approved by T. Rowe Price International Ltd, Warwick Court, 5 Paternoster Square, London EC4M 7DX which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.
USA—Issued in the USA by T. Rowe Price Investment Services, Inc., distributor and T. Rowe Price Associates, Inc., investment adviser, 1307 Point Street, Baltimore, MD 21231, which are regulated by the Financial Industry Regulatory Authority and the U.S. Securities and Exchange Commission, respectively.
© 2026 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, the Bighorn Sheep design and related indicators (see troweprice.com/ip) are trademarks of T. Rowe Price Group, Inc. All other trademarks are the property of their respective owners. Use does not imply endorsement, sponsorship, or affiliation of T. Rowe Price with any of the trademark owners.
- 202610-6027863