Americans are snacking less — and that’s a problem for the packaged food industry.
Why it matters: After years of inflation, consumers are recoiling, fed up with food price increases and suddenly immersed in economic uncertainty.
Driving the news: General Mills on Wednesday became the latest food giant to sound the alarm about what CEO Jeff Harmening called a “slowdown in snacking.”
- The company’s net sales fell 5% in its latest quarter, with U.S. snacks sales down “mid-single digits.”
- “Our view is that a lot of that has to do with consumer confidence,” Harmening said.
State of play: Other signs of a snacking slowdown:
- J.M. Smucker’s sales of sweet baked snacks fell 7% in the company’s most recent quarter to $278.6 million.
- Campbell’s Company CEO Mick Beekhuizen noted “softness in some of our snacking categories” earlier this month, as organic net sales declined by 3% in its most recent quarter.
- Sales fell 4.3% for U.S. convenience stores in the year ended Feb. 23, according to market-research firm Circana cited by WSJ.
What we’re watching: Product innovation and price cuts are possible as companies look to reenergize sales, CFRA Research analyst Arun Sundaram tells Axios.
- “We’re in this limbo period where volumes are still soft and price increases aren’t benefiting the top line anymore,” he says.
Caveat: It’s not just snacks that are suffering. Two major discount retailers sounded the alarm recently of a broader pullback among lower-income consumers.
- “Many of our customers report that [they] only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities,” Dollar General CEO Todd J. Vasos said last week on an earnings call.
- Walmart has seen a similar trend. “You can see that the money runs out before the month is gone,” CEO Doug McMillon told the Economic Club of Chicago two weeks ago.
The intrigue: Is the rising use of weight-loss drugs causing people to snack less?
- Maybe a smidge, but not in meaningful amounts, most execs say.
- Harmening noted on an earnings call that General Mills even experienced a decline in sales of dog snacks — “and to my knowledge, there is not GLP-1s for dog treats.”
💭 Nathan’s thought bubble: You know the situation is serious when we’re buying fewer snacks for our four-legged friends.