A University of Chicago model estimates that a federal ultra-processed food (UPF) label would cost $14.2 billion each year, with two-thirds of that amount tied to optional, self-directed reformulation expenses. The break-even analysis shows a $1.2 million reformulation for an average-selling SKU never pays off, because it would require the product to lose 115% of its sales to justify the investment. These numbers illustrate the massive financial hurdle that a mandatory label could create for manufacturers.
The analysis applied the May 2026 Healthy Eating Research (HER) definition to gauge the cost of a labeling mandate, since the HHS and FDA definition remains under review. According to the model, 72% of in-scope packaged foods in the USDA’s branded food database would be classified as ultra-processed, representing roughly half of total household grocery spending. This proportion shows how pervasive such products already are in the market.
Breakdown of Costs
The $14.2 billion total separates into three distinct components: 26% for reworking affected formulas, substitute ingredients accounting for 4% of sales, and the remaining share covering classification, relabeling, and federal administration.
The model assigns its steepest sales losses to the roughly 15% of affected spending in categories consumers see as healthy, including bread, cereal, yogurt, and bars. For the 45% in categories shoppers already treat as indulgent, like candy, soda, snacks, and desserts, it assumes almost no response. Blended, the model projects about a 9% sales loss on flagged products under a warning-style label.
A rules-based screen or an artificial-intelligence tool can rapidly generate a first-pass SKU list by comparing ingredient statements against the marker list. Companies may then sort flagged SKUs into reformulate, relabel, or retire groups, using revenue, margin, and cost per formula as decision criteria. The study estimates that a coordinated relabel costs about $326 per UPC each year, whereas a change made outside the design calendar can range from $6,000 to $8,000 per UPC.
Planning and Preparation
Firms can begin screening and sorting now by leveraging their existing ingredient data, and they should embed the ingredient premium into growth forecasts. The analysis highlights that securing supply and pricing for common substitutes ahead of time is essential, because competitors’ lists may also depend on those inputs.
The FDA’s review of the January 2025 front-of-package labeling proposal projected annual costs of $333 million, of which $227 million would stem from reformulation. However, that proposal does not mandate recipe changes, and the authors conclude that an average seller would never pursue reformulation solely for sales reasons, given the high expense involved.
In the International Food Information Council’s 2026 Food & Health Survey of 3,005 U.S. adults, 52% said they’re familiar with “ultraprocessed food.” Among those familiar with it, 56% said they decide by reading the ingredient list, highlighting the importance of transparency and accuracy in food labeling for consumer choices.