Global snack giants cite inflation, economic uncertainty as top reasons for poor snack sales

GLOBAL – Major food companies, including PepsiCo, Mondelēz International, and The Campbell Company, are experiencing a slowdown in snack sales driven by inflation and economic uncertainty, which have prompted consumers to prioritize purchasing essential food items over snacks like cookies and crackers.

Dirk Van de Put, the CEO of Mondelēz, indicated that consumers are buying fewer snacks and opting for grocery staples such as meat, vegetables, and eggs.

In North America, one of Mondelēz’s largest markets, the company’s net revenues dropped by 4.1% in its most recent quarter.

“We see consumers shifting towards more essential grocery items, resulting in a decline in snacking categories. Consumers are feeling uncertain about the future,” stated Van de Put during a call with analysts.

Van de Put mentioned that he does not anticipate a significant rebound in consumer confidence in the US anytime soon.

Similarly, PepsiCo’s CFO Jamie Caulfield noted that consumer sentiment has worsened since February, when the company first reported a slowdown in demand for its snacks and beverages. “We probably aren’t feeling as positive about the consumer now as we were a few months ago,” Caulfield admitted.

PepsiCo’s snack division continues to face challenges. In the first quarter, the company reported a 2% decline in organic revenue within its North American foods sector.

The firm’s executives described performance in savory snacks as subdued, particularly highlighting issues within its Frito-Lay brands, which includes Doritos and Cheetos.

“Revenue management is becoming more complex as consumers are facing challenges with their disposable income,” noted Ramon Laguarta, PepsiCo’s CEO.

The struggles in the snack sector led The Campbell Company to lower its sales forecast last month.

The soup and snacks manufacturer now expects sales to rise by 6% to 8% this year, down from an initial estimate of 9% to 11%.

Additionally, organic sales projections have been adjusted to remain flat or drop by up to 2%, whereas the previous prediction was for sales to be unchanged or increase by up to 2%.

CEO Mick Beekhuizen acknowledged that Campbell’s was experiencing softness in certain snacking categories, particularly cookies and crackers. “The broader snacking categories did not improve as we originally anticipated,” Beekhuizen conceded.

As inflation concerns persist, snack manufacturers are introducing more affordable options. Van de Put highlighted that shopper loyalty to Mondelēz’s biscuit brands remains strong, and a focus on offerings priced under $4 is helping to capture market share.

In a similar vein, PepsiCo has launched smaller, single-serve items priced under $2, along with smaller multi-pack options aimed at retaining customers and encouraging more frequent purchases.

While overall snacking consumption is subdued, some categories are performing better than others.

Mondelēz’s biscuit business, which includes brands like Oreo, Ritz, Triscuit, and Chips Ahoy!, is holding up better than many other snacking categories, according to Van de Put.

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