Pandemic Both Helps and Hurts Food Giants

July 31, 2020
Quarterly results for some of the biggest food processing companies are being affected by the pandemic.

Quarterly results for some of the biggest food processing companies are being affected by the pandemic, in both positive and negative ways.

Kraft Heinz saw a rise in year-over-year comparable sales of 7.4% in its second quarter, which CEO Miguel Patricio attributed to homebound consumers turning to familiar center-store brands. However, Kraft Heinz also took impairment charges of $2.9 billion based on what it calculated as the decrease in long-term value of some of its brands, like Oscar Meyer processed meats and Maxwell House coffee. This move follows a $17 billion such charge last year.

Hershey saw a sales loss for the quarter of 3%, even though North American sales were up 1%. Chocolate products were up 13% and baking ingredients up 40%, but breath fresheners took a hit of up to 25%, apparently because consumers feel that masks and social distancing make them unnecessary.

Grupo Bimbo saw a sales surge of 36% over the second quarter of last year, to $2.3 million. The North American unit had profits of $183 million, exceeding the profit total of the Mexican unit for the first time in the company’s history.

Nestlé experienced a rise in sales of 1.3% over the second quarter of last year. Sales are slowing down from the first quarter, which saw a 4.3% year-over-year increase, but are still being bolstered by pandemic trends, especially with pet food.

Keurig Dr Pepper saw 1.8% growth in the second quarter, due to strong performance in both beverages and coffee brewing systems. Packaged beverages, its biggest segment, rose 6.2%. However, operating income went down 4.4%, due in part to increases in operating cost related to the pandemic.

Kellogg saw a sales surge of 9% year-over-year for its second quarter. Breakfast cereals, which had been declining for years, went up 15%, and Eggo frozen waffles 26%.

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