In our daily reporting, you’ve read about the travails of food and beverage processors as they work through this COVID-19 pandemic. Most are working hard to keep plants open, production running and grocery shelves stocked. As often is the case, hard work pays off.
As first-quarter financial results trickled in, several of the biggest public companies recorded stellar first quarters as a result of increased demand for their products. Doing especially well are those specializing in pantry staples and comfort foods.
As consumers stocked up on staples such as mac & cheese, condiments and lunch meats, Kraft Heinz Co.’s first-quarter sales increased 3.3% overall and 6.2% in organic growth to near $6.2 billion – slightly higher than analysts predicted. Operating income leaped 37% to $770 million. But the company also recorded reduced demand in foodservice channels on a global basis, as did many companies.
“Our first quarter results reflect how strongly our employees have responded to the global COVID-19 challenge and the exceptional level of service our teams have demonstrated during this critical time,” said CEO Miguel Patricio. On a conference call, he said the company was postponing some product launches to focus on core brands.
While fighting other headwinds at the start of this year, Kellogg's organic growth was 8% for the quarter, half of that due to pandemic buying. Total sales, however, were down 3% due to divestitures. “From a brand investment standpoint, many of our second quarter commercial activities as well as product launches have been delayed to the third and fourth quarters,” CEO Steven Cahillane noted. “So where does this put us for the rest of the year? How long the crisis persists? And how quickly we can return to business as usual, operations and commercial activities is obviously unknown at this point.”
Packaged beverages – both soft drinks and coffee – offset foodservice and fountain losses at Keurig Dr Pepper. Net sales for the first quarter increased 4.4% to $2.61 billion, with company officials calling out its Packaged Beverages segment (sales up 9.1% and operating income up 27%).
At Nestle SA, organic growth reached 4.3%, powered by strong momentum in the Americas and Europe, Middle-East and North Africa zone. The Asia, Oceania and sub-Saharan Africa zone saw a sharp sales decline, “mainly due to a double-digit sales decline in China.” Because of divestitures and negative currency impacts, total reported sales decreased by 6.2% to CHF 20.8 billion (US $21.6 billion).
Hershey's retail sales increased 10% in March alone – “consistent with our expectations and what we typically see with weather-related pantry loading,” Chairman & CEO Michelle Buck told investors. The numbers also were helped by an early Easter. Salty snacks SkinnyPop and Pirate's Booty grew approximately 20%, and gained share. E-commerce sales growth doubled compared to the previous two months.
Grupo Bimbo saw North American sales of $1.5 billion, a 10% rise over the first quarter of 2019. CEO Daniel Servitje said a rise in mainstream bread and other baked goods in retail channels more than made up for a loss of sales to quick-service restaurants and other foodservice venues.
To the other extreme, Cargill is skipping its third-quarter (ended Feb. 29) statement to focus on the pandemic. As a privately held company, they can do that. "Our eye is on making the right day-to-day decisions to keep the food system moving during the pandemic -- and looking to the future to ensure the food system stays viable around the world," the company said.
