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Snack Sales Slump as Consumers Lose Appetite for High Prices
By Pete Grieve MONEY RESEARCH COLLECTIVE
Rising snack prices are driving consumers to choose more affordable brands and cut back on purchases.
High prices for popular branded snack foods are pushing some consumers to cut back or choose more affordable alternatives.
Several companies in the snack industry are reporting lower-than-expected sales, citing price sensitivity from consumers worried about the economy and struggling to cope with food inflation. Prices for snacks are up about 22% since February 2020, which is basically on par with food-at-home inflation, according to 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 some of the most popular cereals such as Cheerios, as well as Nature Valley granola bars and Fruit Roll-Ups, said the trends in snacking impacted the company’s performance for the most recent quarter.
Asked if the troubles in snack-food sales could be a result of GLP-1 weight loss drugs such as Wegovy, General Mills CEO Jeff Harmening said on an earnings call that it’s more about consumer confidence.
“Our belief is that consumers have become much 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 companies are reporting to investors that they are feeling the impact of Americans’ more economical shopping behavior in the grocery aisles.
J.M. Smucker recently said its Hostess brand was seeing decreased sales, with the company’s executive citing general inflation in the economy that is 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 due to rising cocoa prices, which have prompted price increases.
Research confirms that consumers with tighter budgets are adjusting their shopping habits, choosing cheaper options or store-brand snack foods at the grocery store. One survey by 84.51°, which is part 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 are 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 when it comes to snacking.”
Beyond price sensitivity, PepsiCo, which owns Frito-Lay, reported another market shift affecting snack sales: health. In an earnings call last month, CEO Ramon Laguarta suggested that companies will need to market healthier products: “There’s a higher level of awareness among American consumers toward health and wellness,” he said.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.