Americans ditch Kale for packaged comfort foods to ride out virus

Healthier eating choices fall victim to coronavirus as Americans load up on shelf-stable items.

Oreo cookies
The shift back from healthier fare towards traditional staples may boost the fortunes of packaged food companies, which have been struggling with lagging sales as consumers opted for fresher alternatives [Bloomberg]

Out with the Tuscan kale and acai berries, in with the Spam and popcorn.

In a stark reversal, American shoppers who were taking up healthier eating are gravitating back to old ways as they hunker down to weather the coronavirus pandemic. They are loading up on shelf-stable items from canned meat and soup to pretzels and Kraft Macaroni & Cheese as they comply with orders to stay home.

The shift back from healthier fare toward traditional staples may boost the fortunes of packaged food companies, which have been struggling with lagging sales as consumers opted for fresher alternatives.

General Mills Inc., Tyson Foods Inc., Campbell Soup Co. and Kraft Heinz Co. saw sales gains between 10% and 20% in the rolling four weeks that ended March 8 for items such as soup and breakfast food, Bloomberg Intelligence analyst Diana Rosero-Pena said in a Thursday report, citing IRI data. Hormel Food Corp.’s sales of Spam increased as much as 37% and Oreo-maker Mondelez International Inc. saw growth in the sales of cookies and crackers.

Americans aren’t holding back on treating themselves, either. Popcorn sales rose nearly 48% in the week ended March 14, compared with a year earlier, while pretzel sales were up 47% and potato chip sales surged 30%, according to Nielsen data.

“People are retreating back into comfort habits,” said Bloomberg Intelligence analyst Jennifer Bartashus. “There’s a lot of uncertainty and in those kind of times people tend to retreat to what’s known to them and what’s comforting to them.”

Meat eaters are no longer cutting back on animal protein as beef cases at grocery stores have been cleaned out and profit margins for packers have spiked to all-time highs.

Shares of Tyson and Sanderson Farms Inc. were upgraded as outstanding retail demand for meat is more than offsetting soft demand at food service, JPMorgan Chase & Co. analysts Ken Goldman and Anoori Naughton said in a note.

Meat is “flying off the shelves” and in some locations there are completely empty rows of dried meat snacks, according to the report.

Milk is also seeing a boost after decades of poor sales and dwindling consumption. Cows milk sales increased 32% for the week ended March 14 compared with a year earlier, according to Nielsen.

“The things that they considered the laggers in their portfolio that they were trying to move away from are now suddenly the same of attention,” said Nick Fereday, executive director of food and consumer trends at Rabobank. “Now it’s really a flight to value, comfort and safety and that’s interesting.”

Even the humble potato is having a moment. After years of low-carb diets scaring some shoppers away, spuds are disappearing from shelves across the nation.

Demand has shifted to the retail space where people are buying potatoes since they are inexpensive, stay fresh for weeks and are a source of comfort in stressful times, said Frank Muir, president and chief executive officer of the Idaho Potato Commission. The demand is so great the commission is encouraging restaurants to shift unused cartons of potatoes to local retailers in need, he said.

The move toward eating at home and choosing less expensive food items may outlast the pandemic, Bartashus said. Many workers will lose their jobs or see reduced hours from the fallout of the virus which will pressure household budgets, she said.

If the government offers additional aid for the unemployed or underemployed, shoppers will use food stamps to purchase items that can help stretch a tight budget, according to Bartashus.

Source: Bloomberg