Despite some Thanksgiving-time drama for the business world and the country at large, there are plenty of signs the overall future is bright, and the food and beverage industry is entering the new year with a full head of steam.
It seems like all we’ve been writing about for the past few months have been problems: a hopelessly backlogged supply chain, recent-record inflation and input cost increases, labor unrest. I dreaded the arrival of companies’ third-quarter financial reports.
Against that backdrop, during the month of November, one big food company after another published their third-quarter numbers, and all of them were stellar. Before I get to some individual reports, let me cite the Consumer Brands Association’s third-quarter Economic Pulse:
“Demand for consumer packaged goods (CPG) products in the third quarter of 2021 was 8.3% more than the same period the year before and 1.8% more than the prior quarter. Demand for CPG products showed year-over-year growth every month since the start of the pandemic with one exception: March 2021 (which showed only a slight decline of 1.4%).”
And if you think they’re using “demand” synonymously with “price,” the association continued: “While consumer prices for CPG products have risen 3.2% over last year, it does not approach explaining the level of demand we are experiencing.”
Demand, demand, demand. The word appears three times in the above two paragraphs from Consumer Brands. Keeping up with demand has been difficult with the hurdles that have appeared in the past two years, but it’s a far better situation than supply outpacing demand.
With all the angst being expressed in recent months by food company CEOs, I expected the typical quarterly financial reports: flat sales and barely improved profits attributable only to some new cost-cutting program. Not to mention some excuse-making. Instead I saw these third-quarter financial headlines:
- Hostess’s third quarter up 10.4%
- Keurig Dr Pepper rose 7.6%
- Kellogg up 5.6%
- Bimbo North America sales increased 6%
- Flowers Foods up 3.9%
- Utz Brands sales rose a whopping 26% (on a small base and thanks to some acquisitions)
- B&G Foods increased 4%
And among those on different fiscal years:
- Tyson’s fourth quarter sales grew 12%, and full-year sales were up 9%
- J.M. Smucker’s second quarter rose 8%
Sure, input costs are up and labor, when it’s findable at all, is costing more (in my view, not such a bad thing). The supply chain cannot remain backlogged forever, not in a capitalist country like ours. These things are getting worked out as you read this, and we all will be better off for the stress we’ve endured.
Post Holdings’ fiscal year ended Sept. 30 and sales were up 9%. CEO Robert Vitale wrote, “Two key assumptions … are that by the end of our second fiscal quarter [next March 30], ingredient, packaging and freight inflation will have peaked and that labor markets will normalize.”
It would be great to be able to assign an end date to the pandemic. Even without that, a certain level of normalcy is returning across the country. Christmas shopping is in full swing. Restaurants and theaters are open. Consumers are no longer stockpiling groceries and toilet paper.
Speaking of the pandemic, the Consumer Brands Association further wrote: “Something that has irreversibly changed American behavior, the economy and the world will not conclude at a specific hour. [But] over the next eight to 12 months, the situation will stabilize, new patterns will solidify and the economic whiplash will settle.”
So these holidays look like they will indeed be merry for the food and beverage industry. And that 2022 will be a happy new year.