The longer people stay close to home, the more CPG manufacturers continue to benefit. Surging rates of new coronavirus cases, coupled with some states either pausing or reversing their reopening efforts, suggest this trend will last for the foreseeable future.
General Mills and Conagra Brands are the latest companies to reveal just how in demand the packaged-food industry is during the pandemic.
Today, General Mills, which produces brands such as Pillsbury, Cheerios and Annie’s, reported that net sales spiked 21% to reach $5 billion for the fiscal quarter ending May 31.
Likewise, Conagra Brands, the company behind Slim Jim, Duncan Hines and Chef Boyardee, stated on Tuesday that year-over-year sales rose 25.8% to $3.3 billion throughout the same time period.
“Our business clearly benefited from increased at-home eating in the fourth quarter, as the elevated retail demand outweighed the reduced foodservice demand,” said Sean Connolly, president and chief executive of Conagra Brands, in a statement. “In retail, many consumers tried our modernized products for the first time and then returned for more.”
After months of sheltering in place due to the Covid-19 outbreak, Americans have begun cooking more. Research from PricewaterhouseCoopers indicates the activity has brought people joy—a good sign that the behavior is likely to persist even after restaurants begin operating at full capacity.
Survey data from the sales and marketing agency Acosta shows that, in early June, consumers remained cautious about dining in restaurants. Only 12% showed an eagerness to eat at a restaurant as soon as they open. In addition, nearly two-thirds of shoppers (65%) said one of their biggest concerns included a second wave of the virus that might force another shutdown.
With high unemployment rates, money is also an issue for many.
“There’s about a third of shoppers out there that say their financial situation is worse than it was previous to Covid,” said Colin Stewart, executive vice president of business intelligence at Acosta. “They’re already starting to cut back on spending to focus on more essential products. So, I think the recession is starting to weigh on people, as well.”
During last week’s virtual NewFronts, Brad Hiranaga, General Mills’ chief brand officer of North America, expressed that the pandemic has brought not just an opportunity, but also a responsibility for those in his industry.
“As a company, we’ve [had] a purpose for a long time. It’s been about serving the world to make food that people love,” said Hiranaga while in conversation with Michael Kassan, founder, chairman and CEO of MediaLink. “Through the crisis, we had a rallying call that changed it slightly, that said we actually are serving the world by making food that people need.”
Last week, spices and condiments manufacturer McCormick & Co. reported that year-over-year net sales increased 8% to $1.4 billion for the quarter ending May 31. Household penetration also rose 16%.
“It’s a true expansion, which we’re pretty excited about,” Jill Pratt, McCormick’s chief marketing excellence officer, told Adweek.