You’ve heard anecdotes and seen piecemeal reports of how good the pandemic has been to Big Food companies, especially those with shelf-stable, center-of-store, trusted brands. February’s annual Consumer Analyst Group of New York conference provided the hard-data confirmation for at least a handful of those big companies.
CAGNY is where the CEOs and CFOs of publicly traded companies pitch their stocks for the new year. I’ve attended it for at least 10 years, and most of the recent conferences featured executives apologizing, explaining shortfalls and promising that the new year would be a better one for their company’s performance. This year’s meeting was virtual, and maybe because of that the presentations seemed staged, maybe even pre-recorded, with more visuals and marketing spin than financial nuts and bolts. And that’s a pity because there was a lot of positive financial news in this group from 2020.
As you’ll see in the table below, there were 12 mainstream food and beverage companies represented, and nine of them recorded sales increases in 2020. PepsiCo’s sales jumped more than $3 billion! Of the three with sales decreases, both Nestle and Unilever are clearly adjusting their portfolios, selling off underperforming or ill-fitting businesses, but they’ve managed to maintain their profitability. With so much dependence on foodservice sales and no significant snack portfolio to offset that loss, Coca-Cola’s troubles have been widely reported.
The elephant in the virtual room was: what happens next? Have shoppers rediscovered their love of familiar, processed, packaged, branded foods and beverages? Or, once this pandemic ends, will they resume their search for the next exotic, plant-based, fortified, small-company something-or-other?
There was some talk about e-commerce (it’s become an obligatory topic over the past few years) and direct-to-consumer efforts. PepsiCo acknowledged some success from its snacks.com and pantryshop.com websites. Unilever sold some ice cream via its Ice Cream Now program. The most persuasive was Hershey CEO Michele Buck, who’s been talking up online sales for quite a while. She said Hershey’s e-commerce began 2020 as accounting for 2% of sales and ended the year accounting for 5% of sales.
While that’s nice growth, if e-commerce can’t hit it out of the park during a lockdown, I doubt it will ever amount to much. People have multi-sensory connections with food that transcend a computer screen or cellphone. Frankly, none of the CAGNY e-commerce success stories was eye-popping, but several executives noted an interesting side benefit: the consumer insights and consumer contact that come with e-commerce and especially direct-to-consumer efforts.
So here we are, three months into the new year. Despite more uncertainty than we usually see at this point, there’s also a more solid foundation than there has been in years. It will be interesting to see what the next nine months bring.