High prices for popular branded snack foods are pushing some consumers to in the reduction of or select cheaper alternatives.
Several firms within the snack industry are reporting lower-than-expected sales, citing price sensitivity from consumers frightened in regards to the economy and struggling to deal with food inflation. Prices for snacks are up about 22% since February 2020, which is largely on par with food-at-home inflation, based on the the Consumer Price Index.
On Wednesday, General Mills reported a “slowdown” in snacking categories including bars, fruit snacks and salty snacks. General Mills, which makes among the hottest cereals equivalent to Cheerios, in addition to Nature Valley granola bars and Fruit Roll-Ups, said the trends in snacking impacted the corporate’s performance for essentially the most recent quarter.
Asked if the troubles in snack-food sales could possibly be a results of GLP-1 weight reduction drugs equivalent to Wegovy, General Mills CEO Jeff Harmening said on an earnings call that it’s more about consumer confidence.
“Our belief is that buyers have turn into rather more value conscious,” he said, noting that Americans are also going out to restaurants less often and cutting back on other discretionary groceries (i.e., not kitchen staples).
Shoppers are skipping expensive snack foods
Snack food firms are reporting to investors that they’re feeling the impact of Americans’ more economical shopping behavior within the grocery aisles.
J.M. Smucker recently said its Hostess brand was seeing decreased sales, with the corporate’s executive citing general inflation within the economy that’s weighing on consumer spending. Campbell’s, which owns Goldfish and Kettle Brand chips, reported a 2% drop in organic sales, also blaming snack food demand.
Oreos maker Mondelez International recently said it expected a drop in profit as a result of rising cocoa prices, which have prompted price increases.
Research confirms that buyers with tighter budgets are adjusting their shopping habits, selecting cheaper options or store-brand snack foods on the food market. One survey by 84.51°, which is a component of Kroger, found that 43% of shoppers are open to switching to lower-cost brands for snacks and candy.
“Consumers still have their snacking occasions, but they’re switching to lower-cost brands more often to satisfy their needs,” Melissa Myres, insights director at 84.51°, told Progressive Grocer. “They’re willing to trade down or into other options in terms of snacking.”
Beyond price sensitivity, PepsiCo, which owns Frito-Lay, reported one other market shift affecting snack sales: health. In an earnings call last month, CEO Ramon Laguarta suggested that firms might want to market healthier products: “There’s the next level of awareness amongst American consumers toward health and wellness,” he said.
More from Money:
Could Trump’s DOGE Cuts Delay Social Security Payments?
Will You Need Long-Term Care? Here’s What the Statistics Say