Top 100 Food and Beverage Companies for 2021: A Financial Shot in the Arm

Aug. 5, 2021
The coronavirus pandemic provided a sales boost for some of the U.S. and Canada's top food companies, but not all. We talk about that and more in our annual analysis of the Top 100 Food & Beverage Companies in the U.S. and Canada.

2020 wasn't a bad year for Big Food, it just wasn't the gangbusters year that much reporting, even our own, earlier indicated. When we began this project, we expected collective sales for "Big Food," the 100 companies represented in this report, to be up double digits.

How does +1.7% sound?

Among more eating at home, the quest for comfort foods and pantry stocking, the 2020 pandemic created great opportunities for some companies. For example, the U.S. and Canadian operations of Grupo Bimbo—Bimbo Bakeries USA and Canada Bread—saw sales rise more than $1.2 billion, 16%, to $8.8 billion. Mondelez added a billion dollars, up 15%. PepsiCo was up $2 billion, an increase of 5%.

Other double-digit sales increases included Grupo Lala's U.S. operations (+22%), B&G Foods (nearly 19%) and Unilever's U.S. food business (+18%). In a year that was difficult for big brewers, Boston Beer Co., maker of Samuel Adams beer – but more importantly a host of trendier alcoholic drinks – was up a whopping 39%.

All those figures and all those percentages are based on "our numbers": value-added food and beverage products self-manufactured in U.S. and Canadian plants. We'll explain that in our sidebar.

There were sales losers, too, but not that many. While 32 of these 100 companies saw sales increases of at least 5% in whatever fiscal year just ended for them, seven reported decreases (the rest were within +/-5%). Net income was similar: up for 30, down for 15. Only three companies—Molson Coors, Hain Celestial and Utz Brands—reported net losses, and Molson Coors' was a whopper: nearly a billion dollars in the red.

When we totaled up the entire sales columns for 2020 and 2019, sales for the entire 100 (except Sovos Brands) increased 1.7% last year.

Most of the negativity of the past two paragraphs occurred in the biggest companies on our list, and meat & poultry companies appeared especially hard-pressed. JBS' net income was nearly cut in half and sister company Pilgrim's Pride was cut five-fold. Sanderson Farms' was halved. Kraft Heinz's net was one-fifth what it was in 2019, AB InBev went from a profit of $9 billion in 2019 to $1.4 billion last year.

On the other hand, Conagra's net was up 54%, Bimbo SA's rose by a third and Campbell's was up nearly eight-fold. TreeHouse Foods, still in the midst of a portfolio reshaping, went from a $361 million loss in 2019 to a $14 million profit. Constellation Brands, last year reeling from losses at majority-owned cannabis company Canopy Growth, eked out a $76 million profit; this year it earned $1.9 billion.

Boston Beer Co. had a couple things going for it in that troublesome year. "Most of the company’s products are sold through off-premise retailers," not bars and restaurants, the brewer notes in its annual report. And it makes "high-end beers," the only beer category enjoying growth before the pandemic. Plus, it's owned non-beer drinks like Truly Hard Seltzer, Twisted Tea and Angry Orchard Hard Cider for years. 2020 sales also were helped by the mid-2019 acquisition of Dogfish Head Brewery.

Pandemic effects

Any processor that relied on foodservice revenue suffered through 2020. With much of its revenue coming from on-premise (bar, restaurant and live event) sales, AB InBev lost $5.5 billion in sales worldwide, a 10% drop … but its North American operations managed a nearly 1% increase. Bud Light Seltzer debuted in January of last year and Budweiser Zero (no alcohol) followed in July, catching the lighter-drinking trend that had moved to homes. Michelob Ultra and Labatt also had gains.

Molson Coors sales dipped 4.4%. Similar reliance on on-premise sales also took 4%, almost half a billion dollars, out of Coca-Cola Co. sales. "In certain COVID-19 affected markets, consumer demand has shifted away from some of our more profitable beverages and away-from-home consumption to lower-margin products and at-home consumption," said the Coke annual report. As a result, Coca-Cola management felt it was a good time to prune the portfolio. Under-performers like Tab, Zico coconut water, Odwalla, Coca-Cola Life and Diet Coke Feisty Cherry were phased out.

Where We Get Our Numbers

The Food Processing Top 100© is based on numbers you won't find anywhere else. We rank companies based on value-added/consumer-ready (but not necessarily branded or in final form) foods and beverages that were manufactured in U.S. and Canadian plants. That’s why Coke is listed at No. 10 with $11.456 billion in sales, not $33 billion – the rest of its manufacturing and sales are offshore.

That's also why No. 1 PepsiCo’s figure is $43 billion, not the $70 billion the company has in global sales. Cargill appears as a $9 billion meat packer, not a $114 billion owner of ships, trains and iron ore mines around the globe. ADM is not on the chart at all. Monster Beverage Corp., even at $4 billion or so in sales, is not on this list (the company manufactures none of its own beverages, all are done by copackers).

It's tough enough to figure out the sales of value-added, consumer-ready, U.S. and Canadian self-manufactured foods and beverages for the public companies; for the private companies, we rely on their statements to us and other public reports about their finances or the general health of their business and category. We use the most recent fiscal year available; if not marked, that's calendar 2020.

It wasn't just beer and soft drink companies. Most meat processors had to pivot from foodservice to more retail sales during the pandemic (and most did so effectively).

Despite being the category leader in frozen foods and a top supplier of pet foods – two growing categories during the pandemic -- Nestle's U.S. and Canadian operations lost 10% and 3% respectively in sales last year – although 7 or 8 points of that can be attributed to the appreciation of the Swiss franc against most global currencies, including the U.S. dollar. In local currency, Nestle Canada's sales actually grew 4%, although Nestle USA was still down more than 4%.

"The effects of COVID-19 on the Group's organic growth varied by product category and sales channel," Nestle SA wrote in its annual report. "Demand for at-home consumption, trusted brands and products with nutritional benefits was strong. Purina PetCare, dairy, coffee at-home and Nestlé Health Science reported robust growth."

On the other hand, "Sales in confectionery and water decreased, reflecting their high exposure to out-of-home channels and on-the-go consumption. Retail sales posted high single-digit organic growth, reflecting elevated demand for at-home consumption. Sales in out-of-home channels declined significantly."

We assume Nestle USA's sales will drop again during 2021 because it sold off its $4 billion water business early this year.

The pandemic didn't just mean a loss of sales; it also increased costs for many companies. Boston Beer noted it experienced "higher labor and safety-related costs at the company’s breweries. … In addition … COVID-19 related safety measures resulted in a reduction of brewery productivity. This has shifted more volume to third-party breweries, which increased production costs and negatively impacted gross margins."

Nestle SA quantified the costs of the pandemic. 2020 COVID-19-related costs were CHF 420 million (US$475 million), including expenses for bonuses paid to frontline workers, employee safety protocols, donations and other staff and customer allowances. The company also absorbed costs of CHF 170 million (US$192 million) related to staff and facilities made idle due to lockdown measures – although it admitted there were some savings in travel expenses.

The bright spots

As Boston Beer Co. hinted, 2020 was a good year to be a contract manufacturer. "We saw massive growth," says Ron Puvak, executive director of CPA: The Association for Contract Packagers & Manufacturers. "Our members ramped up production, especially on the big, bulk stuff."

As Kraft Heinz and Mondelez had trouble keeping up with soaring sales of boxed macaroni & cheese and cookies, respectively, they turned to contract manufacturers to take up the slack.

It also was a good year to make pantry staples and comfort foods, and Campbell Soup became the poster child. "Our soup performance this year was historic," CEO Mark Clouse wrote in the 2020 annual report. After years of decline, both within the company and across the category, U.S. soup consumption was up 15% in 2020.

With a stable of ancient but familiar pantry staples (Crisco oils and shortenings, Clabber Girl baking powder, Cream of Wheat) plus Green Giant vegetables, B&G Foods grew 18.5%. "We set a company record for net sales, which increased 18.5% to $1.968 billion, and adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization], which increased 19.4% to $361.2 million," interim CEO David Wenner gloated in the annual report.

2020 also was a good year to initiate or rev up ecommerce, direct-to-consumer (DTC) sales and other ways of reaching consumers who were "sheltering in place." "E-commerce sales grew by 48.4%, reaching 12.8% of total Group sales," Nestle SA wrote. "Coffee, Purina PetCare and Nutrition & Health Science were the main growth contributors, with strong momentum in all other categories."

PepsiCo opened micro-fulfillment centers to meet the spike in ecommerce demand. It launched two DTC sites: Snacks.com offers more than 100 Frito-Lay products from such brands as Lay’s, Tostitos, Cheetos and Ruffles, as well as dips, crackers and nuts. On PantryShop.com, consumers can order predetermined bundles of pantry favorites from brands such as Quaker, Gatorade, SunChips and Tropicana. The kits were priced at $29.95 and $49.95. Also, PepsiCo acquired Be & Cheery, one of the largest online snacks companies in China.

Not only did food & beverage companies make up some lost sales ground in ecommerce and DTC, the direct contact with consumers yielded some interesting data and insights. "Our 20+ e-commerce direct-to-consumer (DTC) ventures across the world offer convenience for our consumers and provide valuable data that allows us to anticipate emerging trends," wrote Anheuser-Busch InBev.

Comings and goings

One remarkable point to this year's list is that not one company from the 2019 Top 100 disappeared due to acquisition – the first time in memory that's happened. There's always been a Dean Foods or a Pinnacle Foods that's gotten consumed by a larger company and drops off our list. There are, however, two newcomers this year.

Utz Brands till recently was a small, regional chip maker. But since its 2020 acquisition by Collier Creek Holdings, a company formed by former executives of Blackstone Group just for this transaction, and subsequent public offering of stock, it's been on a buying spree and debuts this year at No. 96 with $964 million in sales (and one of our biggest net losses, -$104 million, according to reports).

Similarly, Sovos Brands (No. 97), created in 2017 by investment firm Advent International, has been assembled by small acquisitions such as Michael Angelo’s Gourmet Foods, Rao's Specialty Foods, Noosa Yoghurt and Birch Benders, and reportedly has amassed $800 million in sales.

Let's end on a cautionary tale. When the pandemic looked like it was ending a month or two ago, most sales already were returning to normal — in some cases that proverbial "new normal," in some the old normal. Campbell’s overall sales dropped 12% compared to last year in its third fiscal quarter, ended May 2, with soup sales down 24%.

For Conagra's fourth quarter, which just ended May 30, net sales decreased 17%, and organic net sales decreased 10% "driven by lapping the prior year's significant surge in at-home food consumption at the onset of the COVID-19 pandemic," the company explained.

But as of this writing, the pandemic is staging a comeback. And we're seeing many company warnings about inflation – some of those cost increases but not all of which will be passed on to consumers. So 2021 will be another interesting year for Big Food.

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