Snack Food Industry Resilience Amid Economic Uncertainty

Current Market Trends in Snack Food Industry

Organic net sales growth in Latin America, strategic partnerships in emerging markets, a focus on U.S. retail and sweet baked snacks, and international expansion highlight the current market trends in the snack food industry.

"Organic net sales for our Snacks business in Latin America grew 4% year-on-year with growth in both volume and price/mix. Salty snacks categories remain in growth across key markets in the region despite elasticities and Pringles has continued to outpace the category in our two largest markets, Mexico and Brazil. Our cereal net sales also increased by 4% in the quarter, sustaining volume growth." --- (K, earning call, 2024/Q2)

"Partnering with Lotus will enable us to simultaneously scale our sweet biscuit business in the important emerging market of India while also innovating our strong European chocolate business with new products to grow consumer interest and loyalty. As we strive to lead the future of snacking by winning in chocolate biscuits and baked snacks, M&A and ventures remain an important part of our growth strategy." --- (MDLZ, earning call, 2024/Q2)

"The U.S. retail market segments and Sweet Baked Snacks segment in total comprised 85 percent of consolidated net sales in 2024 and represent a major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America." --- (SJM, sec filing, 2024/Q4)

"So more selling of soup as a menu item has been a pleasant surprise and that I think continues to be those two drivers, our soup business and our Snack business are really the two drivers for why I think you're seeing a little bit of a disconnect, if you will, in the growth of our foodservice business versus what you're seeing more macro trend-wise in that particular industry." --- (CPB, earning call, 2024/Q3)

"Internationally as well, I would say that is a huge wide space for growth for our business, both in trying to improve the availability of our current products and also creating new solutions that are more targeting meals and meal replacement as consumers buy more food away-from-home." --- (PEP, earning call, 2024/Q1)

Pricing Strategies During Economic Challenges

Companies like SJM, Kellogg, and General Mills are navigating economic challenges by balancing inflation recovery with consumer-friendly pricing, leveraging currency devaluation to raise prices, and adjusting strategies based on past pricing impacts and market conditions.

"As always, we will continue to manage our coffee business through a strategy that demonstrates a balance between recovering inflationary input costs, while providing consumers with attractive options ranging from value to premium." --- (SJM, earning call, 2024/Q4)

"Recently, we have benefited in part from our ability to raise prices significantly in markets where the currency has devalued sharply of late, but it is differentiated growth, differentiated from our peers and differentiated from our past, and it does reflect the benefits of our sharpened strategy and our more growth-oriented portfolio." --- (K, earning call, 2024/Q1)

"And I think that's important because as we had talked about previously, there were a few events in the back half of our fiscal year, which we thought would improve category performance and they did -- gradually they did, and that really is the lapping of pricing from a year-ago, lapping of SNAP benefits and the on-shelf availability of private-label and some other smaller brands." --- (GIS, earning call, 2024/Q4)

Supply Chain Challenges and Management

Companies in the snack food industry are actively managing supply chain challenges by evaluating disruptions and inflation impacts (SJM), addressing inventory volatility (HSY), leveraging strong supply chains to boost production (CPB), and transforming operations through strategic collaboration (MDLZ).

"We will continue to evaluate the nature and extent to which supply chain disruptions and inflation will impact our business, supply chain, including labor availability and attrition, results of operations, financial condition, and liquidity." --- (SJM, sec filing, 2024/Q4)

"I mean, as we've seen in the last few years, there's been actually quite a bit of volatility around inventory levels, partly based on the COVID era and supply chain challenges." --- (HSY, earning call, 2024/Q2)

"Given the strength of our supply chain, we've been able to step-up production to help meet that need which has accelerated growth in this normally stable category." --- (CPB, earning call, 2024/Q3)

"our iconic brands, but also to our focused and strategic approach to sustainable growth." The company's approach to delivering progress is two-pronged, starting with transforming business operations, including working closely upstream and downstream in supply chains, while playing a leadership role in industry and sector partnerships focused on driving collaboration and collective action." --- (MDLZ, press release, 2024/04/15)

Innovation and Product Development

Snack food companies like Kellogg, Hershey, and Campbell Soup are focusing on innovation and product development to delight consumers and gain market share. New products like Reese’s Caramel Big Cup and differentiated brands like Goldfish highlight their strategies.

"Getting back to delighting consumers through innovation is a key component of what we refer to as getting back to full commercial activity. Another good sign is shown on slide number 11." --- (K, earning call, 2024/Q2)

"2024 is off to a strong start with improved market share across segments and consumer love for: 💡 Innovation like @Reese’s Caramel Big Cup 🎨 Creative marketing 💪 Strong in-store execution https://t.co/oAHCZJj38V" --- (HSY, Twitter, 2024/05/03)

"And when you look at our brands compared to some of our peers, some of the big peers, they tend to have a little bit more of a concentration in the mainstream space. And we tend to be in a bit more of the added value, even brands like Goldfish, where we would argue that's not a premium business, but is a highly differentiated brand and platform within the cracker segment." --- (CPB, conference, 2024/06/13)

"Would you expect that? And would the improvement -- if so, would the improvement be in the areas you were targeting earlier in the year around some of the merchandising and innovation on Cheez-It Rice Krispies Treats. Thank you." --- (K, earning call, 2024/Q2)

"This week, we’re in Indianapolis for @SWEETSandSNACKS! We’re unwrapping insights about our innovative retail capabilities and merchandising strategies and showcasing our newest products." --- (HSY, Twitter, 2024/05/15)

Financial Performance Indicators

Kellogg's margin performance and net sales, along with J.M. Smucker's analysis of financial condition and results, highlight key financial performance indicators. These include gross profit margins, net sales changes, and revenue growth management actions, reflecting the industry's resilience amid economic challenges.

"Margin performance Our currency-neutral adjusted gross profit and gross profit margin performance for the quarter ended March 30, 2024 and April 1, 2023 are reconciled to the directly comparable GAAP measures as follows:" --- (K, sec filing, 2024/Q1)

"(Dollars and shares in millions, unless otherwise noted, except per share data) This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide an understanding of our results of operations, financial condition, and cash flows by focusing on changes in certain key measures from year to year, and should be read in conjunction with our consolidated financial statements and the accompanying notes presented in Item 8." --- (SJM, sec filing, 2024/Q4)

"Europe Reported net sales decreased 4.5% in the second quarter, reflecting volume pressured by elasticity across categories and last year's divestiture of operations in Russia, partially offset by the positive impact of revenue growth management actions over the past year to cover cost inflation." --- (K, sec filing, 2024/Q2)