Snack Sales Slump as Consumers Lose Appetite for High Prices
High prices for popular branded snack foods are pushing some consumers to cut back or choose more affordable alternatives.
Several companies in the snack industry are reporting lower-than-expected sales, citing price sensitivity from consumers worried about the economy and struggling to cope with food inflation. Prices for snacks are up about 22% since February 2020, which is basically on par with food-at-home inflation, according to the the Consumer Price Index.
On Wednesday, General Mills reported a "slowdown" in snacking categories including bars, fruit snacks and salty snacks. General Mills, which makes some of the most popular cereals such as Cheerios, as well as Nature Valley granola bars and Fruit Roll-Ups, said the trends in snacking impacted the company's performance for the most recent quarter.
Asked if the troubles in snack-food sales could be a result of GLP-1 weight loss drugs such as Wegovy, General Mills CEO Jeff Harmening said on an earnings call that it's more about consumer confidence.
"Our belief is that consumers have become much more value conscious," he said, noting that Americans are also going out to restaurants less often and cutting back on other discretionary groceries (i.e., not kitchen staples).
Shoppers are skipping expensive snack foods
Snack food companies are reporting to investors that they are feeling the impact of Americans' more economical shopping behavior in the grocery aisles.
J.M. Smucker recently said its Hostess brand was seeing decreased sales, with the company's executive citing general inflation in the economy that is weighing on consumer spending. Campbell’s, which owns Goldfish and Kettle Brand chips, reported a 2% drop in organic sales, also blaming snack food demand.
Oreos maker Mondelez International recently said it expected a drop in profit due to rising cocoa prices, which have prompted price increases.
Research confirms that consumers with tighter budgets are adjusting their shopping habits, choosing cheaper options or store-brand snack foods at the grocery store. One survey by 84.51°, which is part of Kroger, found that 43% of shoppers are open to switching to lower-cost brands for snacks and candy.
"Consumers still have their snacking occasions, but they are switching to lower-cost brands more often to satisfy their needs," Melissa Myres, insights director at 84.51°, told Progressive Grocer. "They’re willing to trade down or into other options when it comes to snacking."
Beyond price sensitivity, PepsiCo, which owns Frito-Lay, reported another market shift affecting snack sales: health. In an earnings call last month, CEO Ramon Laguarta suggested that companies will need to market healthier products: "There’s a higher level of awareness among American consumers toward health and wellness," he said.
Click below to begin applying to a Debt Relief program
Recommended for debts above $20,000
- Fast & easy online registration with 24/7 customer assistance
- Free, no-obligation evaluation
- Low monthly payments with no upfront fees
- A+ rating from the BBB
- More than $19 billion in debt resolved
- Helping people overcome debt since 2002
Free consultation, 100% Confidential
- Fast and easy application process
- No upfront fees
- One-on-one evaluation with a debt coach
- Become debt-free in 24 to 48 months
- For people with $7,500 in unsecured debts and up
- Rated A+ by Better Business Bureau
- AFCC Accredited
- Resolving debt since 2009
Serving customers with $15,000 of debt and more
- 100% free, no risk consultation
- Significantly reduce your debt
- No upfront enrollment fees
- Get out of debt in 24-48 months!
- Applying won’t affect your credit score
- A+ Better Business Bureau rating
- Building financial well-being since 2008
More from Money:
Could Trump's DOGE Cuts Delay Social Security Payments?
Will You Need Long-Term Care? Here’s What the Statistics Say
