2023 CAGNY Meeting Offers the Outlooks of 12 Food & Beverage Company CEOs

Every February, top executives of some of the largest, publicly held food & beverage companies “sell” their companies to the nearly 500 financial analysts who attend the Consumer Analyst Group of New York Conference in Boca Raton, Fla Following are highlights from the 12 food company presentations from Feb. 21-24.

General Mills

General Mills focused on touting its strong financial results centered on its “Accelerate” strategy. Guided by this strategy, General Mills has prioritized resources to drive improved return, centered around decisions on how to create competitive advantages and also what businesses to embrace and what to divest, said Jeff Harmening, chairman and CEO. The company called out its North American Retail and Pet Food business units specifically as drivers of its growth, both now and in the future. General Mills also raised its full-year fiscal 2023 guidance, now forecasting organic net sales growth of approximately 10%.

Conagra Brands

As it closes in on the finish line of a nearly eight-year company transformation, Conagra Brands offered an update on the milestones it has achieved and insights into what may come next. President/CEO Sean Connolly detailed the overhauls given to its frozen food brands and pointed out positive signs of further growth, including Millennials starting families, the rise in remote work and in-home meals and the improved perceived value of frozen foods among consumers. On the snacking side, Conagra sees accelerating growth opportunities in meat snacks and popcorn, with seeds and sweet treats also having opportunities.

Coca-Cola

James Quincey, chairman and CEO, shared its belief the company has significant room for growth among consumers who do not currently consume Coca-Cola products around the globe and through categories it anticipates will grow significantly between 2023 and 2026, including energy drinks and alcohol. To capitalize, Coca-Cola will continue to invest in its brands and claims to be raising the bar on both marketing and innovation, leaning on digital experiences and access points for consumers. The company cautioned against inflation and macroeconomic uncertainty as factors that could slow growth, but it also believes it has strong momentum across its operating segments and will continue to invest with an eye to the future.

Kraft Heinz

Miguel Patricio, chairman and CEO, updated attendees on the progress of the final stage of Kraft Heinz’s strategic transformation plan, focused on bringing technology and cutting-edge innovation to the scale at which it operates. The company views U.S. retail as a “must-win,” but expects all three pillars (including global foodservice and emerging international markets) to drive growth. Carlos Abrams-Rivera, Kraft Heinz EVP & president, North America, says the company sees “the opportunity for $2 billion in incremental net sales from innovation in North America Retail from 2023 to 2027,” delivered by brand innovation. The company did note that it expects high single-digit inflation to continue to pressure results this year.

Mondelez International

Mondelez spotlighted progress its brands have experienced through its reinvented marketing and sales strategy, leading to growth, increased efficiency, improved productivity and reinvestment into those brands. It has shifted investment to a more focused portfolio of brands at higher levels than in the past, and presenters highlighted three areas driving long-term growth for the company: initiatives in the company’s chocolate, biscuits and baked snacks categories, advancing digital-enabled personalization and customer-focused initiatives, and continuing to pursue mergers and acquisitions in areas of scale and expertise.

McCormick & Co.

Lawrence Kurzius, chairman and CEO, said today’s consumers are interested in flavors that are fresh, convenient and a good value, and that they are more interested in flavor exploration — all areas of focus for McCormick & Co. The company highlighted new packaging for its Everyday Spices and Herbs line, featuring printing on the top of the newly designed lid, which the company claims to seal in flavor and aroma better than previous iterations. In addition, McCormick discussed how it is working to build hot sauce to be the condiment of the next generation, responding to Millennial and Gen Z consumers’ craving for spicy, hot flavors in their eating and drinking occasions.

Kellogg

Since its previous CAGNY presentation in 2019, the Kellogg Co. said it has adopted new strategies to strengthen its brands and focus on occasions-based marketing of products. As it prepared to split into two companies, its snacks category experienced more growth than cereal and frozen in that period, and the strategy has been oriented more toward snacks and top-performing brands. The company believes supply chain and capacity challenges that hampered frozen foods and cereal are in the past and momentum is building in those categories in 2023. Kellogg believes the cereal business will thrive on its own once fully recovered from supply challenges due to a plant fire in 2021 and workers’ strike in 2021-22.

PepsiCo

Ramon Laguarta, chairman and CEO, discussed the results from a multiyear portfolio transformation project, focused on consumers making positive choices in its convenient foods and beverages segments. Investments into beverage brands have been centered around zero sugar attributes, and brands such as Gatorade, Mountain Dew and Pepsi have seen positive response, as have the Propel, Lifwatr and Bubly brands. On the convenient foods side, PepsiCo reports initiatives in the works around sodium reduction, fat content and new ingredient bases (such as multigrain, rice and peas, for example). PepsiCo sees grand opportunity to broaden its portfolio in North America by entering new categories and eating occasions, to become part of meals for consumers.

J.M. Smucker

Mark Smucker, chairman and CEO, explained the company’s shift toward Uncrustables, cat food, dog snacks and coffee product lines, and away from the dog food category. The company estimates Uncrustables will grow to $1 billion in sales by fiscal 2026, and that pet brands Meow Mix and Milk-Bone will carry that category to new heights after the divestiture of its dog food business to Post Holdings. Today, the coffee category represents approximately half of Smucker’s net sales, but the company expects Uncrustables to take over as the leading category in net sales for the company in the future — even with expected growth in cold-brew coffee products.

Hostess Brands

While discussing its recent product innovation successes during its CAGNY presentation, Hostess Brands unveiled a new snack cake product for 2023, named Hostess Kazbars. Kazbars are said to be “candy-bar-inspired,” and feature multiple layers and textures, with cake, crème, chocolate, caramel and crunchy candy layers enrobed in chocolate. Kazbars will be available in two flavors: Chocolate Caramel and Triple Chocolate. Hostess believes consumers seek indulgent snacks but also balance those occasions with “better for you” options throughout the day.

Constellation Brands

Constellation Brands opened its CAGNY presentation by demonstrating that its move toward higher-end beverage brands was directly in response to consumers’ shift toward premium wine, spirits and beer. The company believes its beer brands to be strong with potential to grow in the U.S. and plans to invest $5-5.5 billion in capital expenditures into the beer business by 2026 in order to support growth. In the wine business, Constellation expects to upgrade its in-person experiences at its wineries, led by a new tasting facility at The Prisoner winery and renovations to the Robert Mondavi winery. Any acquisitions in the near future are expected to be on the smaller side, the company said.

Nestle

The first thing of note is that Nestle SA’s global sales exceeded $100 billion for the first time in 2022 (based on our conversion of 94.4 billion Swiss francs), cementing its position as the world’s largest food & beverage company. Corporate EVP & CFO Francois-Xavier Roger devoted the company’s presentation to its petcare division, apparently the company’s star, which has grown sales by double digits the past three years and now represents 19% of the company (about US$19 billion). Annual growth of the entire category is estimated at 6-8% through 2025, premiumization continues and it’s a loyal category – “there is very little brand switching,” he said.