4 days ago
As Consumers Lose Their Appetite, Food Brands Fight to Keep Wall St. Happy
For generations, Cool Whip topped pies. Tropical punch Kool-Aid was served at children's birthday parties. And an Oscar Mayer bologna sandwich was a lunchbox staple.
But in recent years, the big packaged food brands that dominated American pantries and refrigerators for decades are struggling as consumers spend less on brand-name cookies, spaghetti sauce and cream cheese.
The companies are grappling with a number of stressors. Shoppers, feeling pinched by higher food prices over the past two years, are cutting back or trading down to less expensive private labels. Others are eschewing highly processed foods for healthier, more natural items. And the continued rise of weight-loss drugs like Ozempic are reducing cravings for sugary and salty snacks.
Among the debates consuming executives in boardrooms of U.S. food companies is which brands consumers are buying and avoiding — and how large and lasting the impact of the weight-loss drugs will be, said Charlie Hadid, Morgan Stanley's head of consumer investment banking in the Americas.
As growth in the packaged goods industry stalls, its stocks have lagged. While the broad S&P 500 index has gained 40 percent over the last two years, an index of food and beverage stocks has flatlined.
To jump-start growth and satisfy investors, companies are starting to re-engineer some of the big deals of the past, banking on a smaller-is-better, or narrower-is-better, strategy.
Source: FactSet
By The New York Times
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