As consumer spending tightens, the snacking industry is feeling the impact.
Major food companies like PepsiCo, Mondelēz International, and The Campbell’s Company are experiencing a slowdown in snack sales due to inflation and economic uncertainty, causing consumers to cut back on cookies, crackers, and other indulgences.
Mondelēz’s CEO, Dirk Van de Put, noted that consumers are opting for essential grocery items like meats, vegetables, and eggs over snacks. In North America, one of Mondelēz’s key markets, net revenues dropped by 4.1% in the last quarter.
“Consumers are shifting towards grocery essentials, impacting the snack categories,” said Van de Put. “The uncertain economic climate is influencing consumer behavior.”
Industry executives are pessimistic about the future, with no immediate signs of improvement. PepsiCo’s CFO, Jamie Caulfield, mentioned a decline in consumer sentiment since February, resulting in reduced demand for snacks and beverages.
PepsiCo’s snack business continues to struggle, with a 2% drop in organic revenue for its North American foods division. The subdued performance in savory snacks, including brands like Doritos and Cheetos, is a concern for the company.
“Consumer confidence remains a challenge for revenue management as disposable income tightens,” stated Ramon Laguarta, PepsiCo’s CEO.
Competitor The Campbell’s Company also revised its sales outlook downward, citing softness in snack categories like cookies and crackers.
As inflation concerns grow, snack companies are introducing more affordable options. Mondelēz’s focus on selling products under $4 and PepsiCo’s launch of smaller, budget-friendly items aim to retain consumer loyalty and boost sales.
While overall snacking consumption is subdued, Mondelēz’s biscuit business, including brands like Oreo and Chips Ahoy, is performing relatively well compared to other categories.