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Pandemic Both Helps and Hurts Food Giants

foodprocessing 2020-07-31
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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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