Tags: Coronavirus | froot loops | canned soup | new | american | diet

Froot Loops and Canned Soup Are Not the New American Diet

Froot Loops and Canned Soup Are Not the New American Diet

(Pamela Mcadams | Dreamstime.com)

By Thursday, 14 May 2020 08:23 AM Current | Bio | Archive

As panic-ridden consumers stock up on essentials, kitchen pantries are looking like a blast from the processed-food past: boxes of Kraft macaroni and cheese, cans of Bumble Bee tuna, Kellogg’s Frosted Flakes, Shake ‘N Bake, etc.

Brands of yesteryear that had been struggling to find their place in a new health-conscious society are suddenly having a moment once again.

But a moment is probably all it will be, not a new normal, which is why packaged-food companies shouldn’t get too comfortable about their comfort food.

The Covid-19 pandemic and shelter-in-place orders have led consumers to revert to old ways of shopping in search of ready-made meals and foods with long shelf lives. Parents who are working from home during this time are multitasking like never before, taking on the role of cook, housekeeper, teacher, disciplinary and full-time employee all at once in a Groundhog Day-like loop. As such, traditional meal times have blurred, and in some cases snacks are replacing them, according to research by Euromonitor International.

This explains the resurgence of companies such as General Mills Inc., whose brands include Annie’s, Betty Crocker, Cheerios, Pillsbury and Totino’s pizza rolls. Its U.S. retail sales surged 45% in March and 32% in April. To put that into context, the company’s average annual growth rate was just 1.5% over the last decade.

In the U.S., the food category that saw the biggest uptick in demand during the week ended April 25 was bread crumbs and other mixes for coating foods, followed by dough and batter products, according to Nielsen tracking. That bodes well for brands such as Shake ‘N Bake, whose parent company, Kraft Heinz Co., just reported its first quarterly sales boost in more than a year.

In recent years leading up to this crisis, Campbell Soup Co. was perhaps the hardest hit by changing consumer tastes and demand for fresher foods. The company lost $8.6 billion of shareholder value between mid-2016 and mid-2018, a performance that saw its last CEO out. But amid the shutdowns, Campbell’s stock has been staging a recovery and is trading near its highest price in three years. 

Kellogg Co. has called this a “reappraisal opportunity” for cereal — a chance to persuade shoppers to give its sugary products another try. Speaking during Kellogg’s recent earnings call, CEO Steve Cahillane said: “Consumers rediscovering these benefits could be very positive for this category, and we plan to seize this opportunity.”

But careful, Kellogg. The fact of the matter is, even if the coronavirus leaves a lasting impression on certain aspects of consumer behavior, the dislocation taking place at supermarkets is shaping up to be more of a temporary phenomenon driven in part by food shortages and fear. 

Consider the absurdity that about 20% of store-bought noodles have been out of stock in the U.S. since mid-March, when the earliest lockdowns began, according to Euromonitor. That’s on the same level as toilet paper shortages. Even baker’s yeast, of all things, is still sold out in many places. But just like we’re not all going to turn our YouTube-taught hair-cutting skills into new careers, most of us won’t keep up such rigorous home training for “The Great British Bake Off,” either.

Consumers generally still want fresh, less-processed and healthier-sounding foods. Nielsen is already seeing this in surveys of other countries: In France, shoppers continue to seek out organic items, while Asian consumers say healthy eating has become more of a priority after the virus. And if the post-virus rise of virtual fitness classes is any indication, health and wellness is still top of mind for lots of people.

It’s true, families need convenience right now and many are looking to save money as the U.S. dips deeper into a recession and the unemployment rate soars above 14%. That’s partly why seemingly dated grocery products are coming back into favor. They also provide a sense of nostalgia and familiarity at a time when life has been thrown off course.

Another significant factor is all the bulk-buying: Wholesale stores such as Costco and BJ’s offer a much more limited variety that tends to be dominated by big-name food brands (although new trendier products are increasingly making their way in). Buying fresh and organic also usually costs more and sells in smaller packages. Over the next few months, Euromonitor analysts expect a greater shift toward more affordable items, private-label brands and bulk purchases.

That does create an opportunity for the food giants. A downside to stocking up is all the packaging and cardboard that accumulates, taking up space. It’s an annoyance that companies could try to resolve if sheltering at home is to become a more regular part of life over the next couple of years rather than a distant memory. 

As U.S. states reopen, though, consumers will probably start to go back to their old routines — or at least some version of them. A bit of the doomsday-prepper mentality may remain, leading more households to keep their cupboards stocked with nonperishables, just in case. But it’s fair to say that the future of the supermarket isn’t Kraft mac and cheese or Campbell’s canned soup. It would be short-sighted to interpret this moment as a rebuke of their innovation efforts. If anything, it’s a time to step it up. 

Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.

© Copyright 2020 Bloomberg L.P. All Rights Reserved.


   
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Familiar old food brands are getting a sales boost during the pandemic, but they shouldn't get too comfortable.
froot loops, canned soup, new, american, diet
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2020-23-14
Thursday, 14 May 2020 08:23 AM
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