Corporate Profiles - 2024 - 8

EDITORIAL
Amid discouraging results, CPG
companies move forward confidently
n a difficult environment, more difficult than generally had been
expected for the consumer packaged goods (CPG) industry, company
leadership teams over the past year were anything but on
the defensive. To the contrary, what stands out in a review of the
companies and industries profiled in the pages that follow are the
bold steps taken to capitalize on longer-term opportunities still seen
on the horizon.
I
As 2024 approached, many top CPG company executives voiced
optimism that consumer backlash against higher prices, which intensified
severely in 2023, was waning. While expecting residual
weak demand trends in the first half of this year, a resumption of
normal or near normal volume growth patterns was anticipated as
the year progressed.
That this hopeful scenario has failed to materialize was evident
in soft financial results, weak sales data and share price underperformance.
In contrast to the surging value of the S&P 500, the
stock price performance of various food segments tracked by Milling
& Baking News and Food Business News has been weak in 2024.
Through the end of September, the S&P 500 was up about 20%
while grain-based foods shares were up 1%, confectionery companies
and diversified food companies were up 2%, and food ingredient
companies were down 7%. Meat and poultry company shares
did better, rising 13% (after falling 11% in 2023), and still falling
seven points shy of the overall market.
Undaunted by the circumstances, companies took a range of bold
steps over the past year, including some of the largest food and
beverage acquisitions in years. For example, the Campbell Soup Co.
in March acquired Sovos Brands for about $2.7 billion. Campbell
Soup has made several acquisitions in recent years and has a checkered
history of success with the transactions, but with the Sovos
transaction several years after its $6 billion acquisition of Snyder'sLance,
the company is leaning into a new persona, proposing a
name change to The Campbell's Co. for the 169-year-old business.
Within its snack business,
the company is forecasting
$1.3 billion in net sales
for Goldfish by fiscal 2027,
which would make it the
single largest brand in the
company's portfolio.
No major food category
has faced more challenges
in 2024 than chocolate,
with unit volume falling
more than 10% in the
second quarter of the year,
according to Circana. Still,
L. Joshua Sosland
President
Sosland Publishing Co.
8 \ October 2024
Mars, the second largest chocolate company in the United States
behind Hershey Co., was in anything but a holding pattern this year.
In August, Mars announced it was acquiring Kellanova in a $35.9
billion deal, its largest acquisition ever. Kellanova was newly formed
in October 2023 as a spin-off from the former Kellogg Co. Kellanova's
snack foods and other lines includes the Pringles, Cheez-It,
Pop-Tarts, Rice Krispies Treats, NutriGrain, RXBAR and Eggo brands.
If the transaction is completed, Kellanova and Mars would have annual
revenue of more than $63 billion.
A third large acquisition, completed in November 2023, was
The J.M. Smucker Co.'s deal to acquire Lenexa, Kan.-based Hostess
Brands, Inc. for about $5.6 billion. Changes in consumer shopping
habits, notably a slowdown in convenience store traffic, left early
Hostess results short of Smucker expectations. Even as it remains
optimistic in Hostess' outlook, Smucker continued investing in a
perennially successful product within its portfolio - Uncrustables.
Annual sales are expected to reach $1 billion by the end of 2026, a
prospect made possible due to new capacity coming online at a new
plant in Alabama.
Major corporate action took many forms this past year other than
merger and acquisition activity. For instance, Grupo Bimbo SAB de CV
during the year effected a leadership transition with the company's
chief operating officer Rafael Pamias succeeding Daniel Servitje as
chief executive officer. Servitje had been CEO since 1997, a longer
tenure than the head of any other major North American CPG company.
While the Bimbo transition was part of a long-term succession
plan, another major food company, Nestle SA, made a change more
abruptly. Laurent Freixe, the Switzerland-based company's new CEO,
took over the top leadership post Sept. 1, succeeding Ulf Mark Schneider,
who was CEO for eight years. " We will be laser-focused on execution,
starting with quality, safety, simplicity, speed and agility, " Freixe
said. " This is pivotal to our success going forward. "
Numerous changes were announced atop foodservice companies.
Wendy's, Starbucks, Papa John's and Shake Shack all gained new
CEOs. Additionally, Pizza Hut, Popeyes and Wendy's each saw a new
president take the helm for their respective US divisions.
New product innovation continued its post pandemic recovery,
including the Kraft Heinz 360Crisp platform, offering consumers the
same experience eating a microwaved grilled cheese sandwich in
the microwave as they would get from stovetop. Through its joint
venture with TheNotCompany, Inc. (NotCo.) using NotCo's artificial
intelligence, a plant-based macaroni and cheese, called Kraft NotMac
& Cheese launched in late 2023.
Just a sampling of the corporate actions highlighted in the pages
ahead, the steps demonstrate that even in a year yielding tepid financial
results, enthusiasm about prospects for the food sector continue
to burn brightly in the actions of leading industry players. CP
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Corporate Profiles

Corporate Profiles - 2024

Table of Contents for the Digital Edition of Corporate Profiles - 2024