Every PE-backed CPG, food-and-beverage, and consumer products deal I’ve seen this year has a pricing model built on last year’s sourcing costs. That’s normal. It’s also increasingly wrong, and the gap is showing up faster than most deal teams expected.
Tariff volatility in 2026 isn’t a line item anymore. It’s a structural risk that most diligence processes still treat like a footnote.
Why this cycle is different
Tariff exposure isn’t new to consumer products. What’s new is the pace of change. A sourcing model that was accurate at close can be wrong within two quarters, and the companies getting hurt aren’t the ones with bad products. They’re the ones whose operational systems were never built to absorb a cost shock that size.
Most deal models stress-test revenue scenarios. Almost none stress-test whether the operating team can actually rebuild a sourcing and pricing structure under pressure, in real time, without stalling the growth plan the deal was underwritten on.
That gap is operational, not financial. And it’s usually invisible until the first quarter it costs someone money.
What actually breaks first
The order is fairly consistent across the engagements I’ve been part of.
Landed cost moves before anyone updates the pricing model. Finance is still working off the assumptions from the deal model while procurement is already absorbing a different number. Nobody owns the reconciliation.
Order size becomes the only lever anyone knows how to pull. The instinctive response to rising costs is to increase order size to improve unit economics. That works until it collides with working capital constraints, and for a growth-stage company, it usually does.
Customer-facing pricing lags the internal cost structure by a full cycle. Retail and DTC pricing changes are slow by design. A company that doesn’t have someone actively managing the gap between what it costs to make the product and what it’s charging for it will bleed margin quietly for months before it shows up in a board deck.
Nobody owns the problem end to end. Sourcing sits with operations, pricing sits with sales or marketing, and working capital sits with finance. Each function optimizes its own piece. The company as a whole doesn’t have anyone whose job is the full picture.
Why this is a hiring problem, not just a planning problem
The instinct is to solve this with better forecasting. Better forecasting helps, but it doesn’t fix the underlying issue: most growth-stage consumer companies don’t have anyone on the team who has actually operated through a sourcing shock before.
This is where the fractional model earns its keep, specifically because of what it’s built to do that a full-time hire or a strategy consultant isn’t.
A strategy consultant will model the scenarios and hand over a recommendation. That’s useful, but recommendations don’t renegotiate supplier terms, rebuild a pricing waterfall, or sit with finance to figure out where the working capital comes from. Someone has to own that, inside the company, on a timeline measured in weeks.
A full-time hire at the level of experience this requires is usually a six-figure commitment a growth-stage company hasn’t budgeted for, on a search timeline of months the company doesn’t have.
A fractional COO who has actually operated through this before can step into the reconciliation itself: aligning sourcing, pricing, and working capital under one owner, using judgment earned from having done it at a larger scale, without the lag of a search or the limits of a deck-and-leave engagement.
What PE firms and founders should be asking before the next tariff move
A few questions surface the operational gap before it becomes a portfolio problem.
Who owns the reconciliation between landed cost and pricing today, by name, not by function. If the answer is “finance will flag it,” that’s not an owner.
How long did the last cost shock take to show up in the P&L versus how long it took to show up in decision-making. A long gap between the two is the clearest sign the company is flying on old assumptions.
Does the operating team have anyone who has rebuilt a sourcing and pricing structure under pressure before, or is this the first time. Modeling the scenario and living through it are different skills.
What’s the plan if landed costs move again before the next board meeting. If there isn’t one, the plan is to react after the fact, which is the most expensive way to manage margin.
The takeaway
Tariff volatility isn’t going to resolve into a stable baseline anytime soon. The consumer products and CPG companies that come through this cycle intact won’t be the ones with the best forecasts. They’ll be the ones with someone whose job is to own the reconciliation between cost, price, and capital before it becomes a crisis, not after.
That’s an operating gap, and it’s usually cheaper and faster to close with the right fractional executive than with another quarter of hoping the model holds.
FAQ
How does tariff volatility affect PE-backed CPG and consumer products companies?
Tariff changes raise landed costs faster than most pricing and forecasting models can adjust, which compresses margin, strains working capital, and exposes deal models that were underwritten on prior-year sourcing assumptions.
Why don’t standard due diligence processes catch this risk?
Most diligence focuses on revenue and market scenarios. Few processes stress-test whether the operating team has the experience to rebuild sourcing and pricing structures under pressure, which is an operational capability gap rather than a financial modeling gap.
Can a strategy consultant solve a tariff-driven margin problem?
A consultant can model scenarios and recommend a path, but someone inside the company still has to renegotiate terms, rebuild the pricing waterfall, and coordinate working capital in real time. That requires an operator, not just an analysis.
Why is a fractional COO a fit for this kind of problem specifically?
A fractional COO with relevant experience can take direct ownership of the reconciliation between sourcing, pricing, and working capital immediately, without the months-long search timeline of a full-time hire or the limits of a consulting engagement that ends at the recommendation.
What should founders or PE firms do before the next cost shock hits?
Identify who owns the reconciliation between landed cost and pricing by name, evaluate how quickly the last shock reached decision-makers, and confirm someone on the team has actually managed this kind of disruption before, not just modeled it.
Marc Drucker is a Fractional COO/CMO who has helped founders, CEOs, and PE firms scale consumer, food and beverage, and home appliance brands, generating more than $4.5B in new revenue across his career. He is the author of “How Leaders Fuck Up Innovation.” More at marc-drucker.com.