FDA Deregulation Opens Doors for Food Manufacturers: Where to Invest in Dairy, Canned Goods, and Baked Products

The U.S. Food and Drug Administration's (FDA) sweeping 2025 reforms, including the revocation of outdated food standards and its push to phase out synthetic additives, are reshaping the food industry. For investors, this presents a prime opportunity to identify companies in dairy, canned goods, and baked products that can capitalize on reduced regulatory burdens and emerging trends like natural ingredients and healthier formulations. Here's how to spot the winners.

The Regulatory Shift: A Tailwind for Innovation

The FDA's decision to revoke over 50 outdated Standards of Identity (SOI) for foods like canned vegetables and dairy products has eliminated rigid recipe requirements. This freedom allows manufacturers to innovate without adhering to decades-old formulas. Additionally, the phaseout of synthetic dyes by 2026—replaced by natural alternatives like butterfly pea flower extract—creates a push for cost-effective, health-conscious product lines.

The GRAS (Generally Recognized as Safe) pathway reforms, while still in flux, could further streamline ingredient approvals, reducing the time and cost to bring new products to market. For companies with strong R&D and agility, this is a game-changer.

Dairy: Protein Innovators Lead the Charge

The dairy sector is ripe for disruption. Companies that isolate and commercialize specialty proteins like beta-lactoglobulin and alpha-lactalbumin—found in whey—could dominate the functional food market. These proteins offer high nutritional value and versatility for products like protein bars, infant formula, and plant-based alternatives.

Top Pick: Danone (BN)
Danone's R&D arm has long focused on probiotics and functional dairy. With SOI revocations, the company can now reformulate products like yogurt and cheese to emphasize protein content or introduce entirely new categories. .

Canned Goods: Embracing Natural Ingredients

Canned food producers are no longer shackled by SOI rules requiring specific “recipes.” Companies with agile supply chains can now pivot to premium, organic, or low-sodium lines while adopting FDA-approved natural colorants.

Top Pick: Hormel Foods (HRL)
Hormel's SPAM and Skippy brands have already diversified into plant-based and organic offerings. The company's investment in natural colorant R&D positions it to lead in reformulated canned goods. .

Baked Goods: Healthier, Fresher Options

The FDA's push for front-of-pack labeling and its scrutiny of ultra-processed foods (UPFs) favor companies that prioritize whole grains, reduced sugars, and clean ingredients. Baked goods firms with R&D focused on texture and taste in healthier formulations will thrive.

Top Pick: General Mills (GIS)
General Mills' portfolio, including Annie's Homegrown and Cascadian Farm, already emphasizes organic and low-sugar products. The company's investment in AI-driven formulation tools allows rapid adaptation to trends like natural coloring and reduced sodium. .

Emerging Trends to Watch

• Natural Colorants: Companies like Sensient (SXT) and Tate & Lyle (TATE.L) supply natural dyes, but food manufacturers integrating these into products will see premium pricing.
• Functional Proteins: Expect dairy and meat alternatives to incorporate isolate proteins, driving demand for firms like Solae (DuPont, DD) and Beyond Meat (BYND).

Investment Strategy

• Buy the Innovators: Companies with robust R&D pipelines and market responsiveness—like Danone, Hormel, and General Mills—are best positioned.
• Monitor Deregulation Progress: Track FDA's GRAS reforms and synthetic dye phaseouts for further catalysts.
• Avoid Laggards: Firms relying on outdated formulations or synthetic additives may struggle as consumer preferences shift.

The FDA's 2025 reforms are not just about deregulation—they're about rewriting the rules of the game. Investors who back companies capable of turning regulatory flexibility into market-winning products will profit as the food industry evolves.

Final Take: The food sector is at a crossroads. Those who innovate fastest—and most healthily—will dominate.