- Packaged food consumption rose 20% for the week ended June 20 compared to 2019, doubling the increase of 10% the prior week, Credit Suisse said in a research note that cited data from Catalina.
- The report said the increase "demonstrates that consumers continue to eat more of their meals at home," even though state governments have been lifting restrictions, allowing restaurant dining rooms and other establishments to reopen.
- Credit Suisse said companies with brands skewed to home cooking, such as B&G Foods and McCormick & Co., are best positioned to win, as consumers have been able to improve their cooking skills during the pandemic. Kraft Heinz also could be a winner with its cheese and sliced meat offerings, since people now make more lunches at home. The financial services firm said General Mills could be negatively impacted, with its portfolio heavy on pet food and yogurt.
Even as more states reopen, there is growing evidence consumer eating habits established during the pandemic are going to be hard to dislodge. As coronavirus swept across the U.S. this spring, restaurants closed their dining rooms and consumers spent more time cooking in their kitchens rather than going out, using the time to experiment with new foods and flavorings.
While nearly every food company has benefited from increased time at home, especially early on as shoppers stockpiled items in their pantries, the report from Credit Suisse shows there has been a re-acceleration of at-home food consumption. As states including Florida and South Carolina are now posting daily records of new coronavirus cases, consumers may be retreating to the comfort of their own homes after briefly starting to venture out. At the same time, people who have grown accustomed to cooking at home and experimenting with their own recipes may find it becoming a long-term fixture in their everyday lives.
The Credit Suisse research note predicted while it expects grocery trends to be "quite volatile" in the coming weeks, it forecast above-normal growth rates in the packaged foods group to continue in the second half of the year.
To be sure, the note said some food companies are better positioned to benefit from this uptick "because their portfolios are indexed to cooking-at-home categories." Credit Suisse specifically highlighted recent growth in categories of flour, canned vegetables, salts/seasonings and condiments and sauces as reasons B&G and McCormick should post strong results.
For McCormick, this should provide a tailwind for many of its seasonings as well as its French's mustard and Frank's RedHot brands. At B&G, strong sales could continue for items in its diverse portfolio, including Green Giant vegetables, Dash and Emeril's seasonings and Skinnygirl dressings.
At the same time, companies that had problems before the outbreak could find themselves facing more of the same. General Mills has struggled for years with its Yoplait brand in the face of plant-based competitors and offerings from Greek yogurt giant Chobani. General Mills introduced a French-style variety in glass jars called Oui by Yoplait, and its YQ by Yoplait made with ultra-filtered milk and featuring less sugar. Those and other rollouts have not been enough to revive General Mills' fortunes. The company also has a large cereal portfolio, which remains one recent bright spot for the Minnesota-based manufacturer, Credit Suisse said.
For many large CPG companies that have been struggling to rejuvenate sales and fend off trendier competitors, the recent surge in demand has been a welcome change. Now the challenge becomes sustaining that growth in the face of changing food consumption habits, which are still being shaped by the ongoing pandemic.