If 2025 taught Australian brands anything, it’s that many growth pockets exist throughout an Australian FMCG industry exhibiting patchy performance. Circana insights director Australia, Daniel Bone, discusses what trends the market research company is seeing, and how food and drink brands can come out on top in 2026.
Circana’s State of the Industry insights show an FMCG retail marketplace defined by variability. Consumer sentiment has oscillated between optimism and caution, retail sales have swung month to month, and category performance has fragmented sharply.
In this environment, food and drink businesses face a uniquely difficult strategic tension heading into 2026: move fast enough to capture emerging trends, but not so fast that you erode the value equation shoppers are using to judge every purchase.
A clearer FMCG temperature check
Australia’s FMCG sector now exceeds $175 billion in annual spend, but the headline number masks uneven performance between channels, categories and missions.
In the half-year to 5 October, edibles spend grew nearly 7 per cent, outpacing overall grocery performance of sub-4 per cent. Yet growth is far from universal. Non-food has been comparatively subdued in recent years, but it’s encouraging that the gap is converging, especially in the latest half-year. Variable growth reflects the inflection point we are at as households view of their finances fluctuates and channel preferences shift.
Promotions have reached an inflection point too. A record share of units are now sold on promotion in the grocery market. Three-quarters of shoppers make unplanned purchases after seeing a promotion, and almost half (45 per cent) actively seek them out – up 16 points since 2022. But promotion-heavy shoppers also spend less overall on FMCG and migrate more strongly to private label. In other words, discounts still attract, but they don’t guarantee loyalty, conversion, or margin resilience.
Circana’s shopper panel surveys show Australians define value increasingly through quality and benefits – not just price – and that’s consistent across income levels. Cost-of-living pressure is still a top societal concern and remains at more than double 2021 levels. Despite this, shoppers are showing more willingness to trade up selectively when the functional or emotional benefit is clear, especially around celebrations and the rise of “treat yourself” culture.
Deep diving into the trends that matter
Many of 2025’s strongest-performing trends have one thing in common: they balance function, emotion, and value simultaneously. Trend-led innovation only works when it maps cleanly against durable consumer needs.
Non-alcoholic and alcoholic beverages
Non-alcoholic beverages continue to outperform, lifting 19.4 per cent in value and 9.4 per cent in units over two years. Growth is driven not just by abstainers but by consumers seeking functional boosts, elevated sensory experiences, and permissible indulgence.
By contrast, alcohol value growth is slowing and volumes are declining, pressured by excise increases, moderation mindsets, and household budgeting. Almost 30 per cent of drinkers reported buying less or stopping liquor in 2025. This isn’t a blip; it’s a structural shift, rewarding innovation in mid-strength, low-carb and non-alcohol offers that make moderation aspirational rather than restrictive.
Protein
Protein-led products have become a growth engine as they hit the sweet spot between function and indulgence. The strongest performers such as Pauls Plus Protein and Rokeby offer clear and credible protein credentials, plus genuinely enjoyable flavours and textures, rather than functional compromise.
Hydration and permissible indulgence
Functional hydration continues to thrive, especially where a wellness payoff (electrolytes, energy, immunity) meets an unexpected sensory twist, which is then amplified through social sharing. The same logic is driving “permissible indulgence”: better-for-you confectionery and snacks that combine health cues with playful formats, bolder packaging, and limited-editions.
GLP-1’s quiet but powerful ripple effect
Circana data shows 12 per cent of Australian households now include a GLP-1 user. Academic research also indicates prescription volumes have surged to over six million units in the 12 months to April – around ten times the volume of five years ago.
The ripple effects are clear and GLP-1 users exhibit consistent behavioural patterns: they are satisfied with less; they’re less responsive to impulse triggers; they’re more interested in protein, fibre, satiety and smaller pack sizes; and they show declining consumption of sugars, carbs, salt and alcohol.
This is no longer niche behaviour. Brands proactively designing pipelines around satiety, portion control, nutrient density and functional performance will be better aligned with mainstream shifts in 2026 and beyond.
Agentic AI and the rise of the algorithmic shopper
E-commerce is already contributing 45 per cent of total Australian retail growth, with rapid-delivery missions surging. The next disruption point is agentic AI – systems that don’t just recommend but act for the shopper.
Large international retailers are already training consumers to use AI-driven on-site shopping assistants, and early evidence shows materially higher conversion when AI participates in discovery. Partnerships between retail platforms and conversational AI models are accelerating a future where search becomes a dialogue, and checkout becomes embedded within the interaction.
For food and beverage brands, the implication is significant. Your next “customer” may not be human at all, but an algorithm deciding what represents “best value” for a shopper’s mission. Digital shelf optimisation and agentic search optimisation become focal areas alongside the ongoing to need to optimise physical shelf visibility.
Heading into 2026, the playbook is clear:
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Treat value as a benefits equation, not a price war
Elevate claims, benefits, and quality signals to justify selective trade-ups. -
Chase trends only when they map to durable needs
Functional, emotional and lifestyle relevance matter more than novelty. -
Design innovation platforms that scale under constraint
Build fewer, bigger, bolder platforms that can flex across pack sizes, channels and missions. -
Prepare for GLP-1 and agentic AI to reshape both consumption and commerce
This is not speculation – behaviour is already shifting.
Deep dive into Circana’s State of the Industry to explore the insights that reveal the data behind Australia’s most influential retail and consumer trends.
