Will the current spike in sales of legacy branded processed foods carry into a post-COVID-19 world?

At issue is whether consumers will continue to have increased appetite for comfort food, after steadily rising sales of better-for-you labels and formulations of the past few years.

Triple-Shifting
To be sure sales of long-standing brands from the likes of Mondelez International, Conagra, Campbell Soup Co., J.M. Smucker Co., Post Holdings and Hostess have been increasing. Kraft Heinz has some factories working three shifts to meet increased demand for packaged foods such as Kraft Mac & Cheese. Said CEO Miguel Patricio: ““We feel that people are seeking more comfort food at this moment, as they seek some other ways to feel pleasure.”

But whether consumers’ return to old standbys extends beyond the next several months is unclear. Pre-coronavirus, sales of processed foods had long fallen from favor as consumers – especially coveted millennials – moved toward healthy, locally sourced foods. During the pandemic, however, there has been a return to packaged foods that historically have their highest sales during periods of low consumer confidence. And the current food-at-home trend will likely have a 12-month run, rather than being a two-month blip, says Credit Suisse analyst Robert Moskow.

A Comeback?
“Over the past few years, big food has struggled to revitalize legacy brands in an environment that was hostile to their products,” says another Wall Street analyst who follows the food industry. “Millennials were less brand loyal than previous generations and people were seeking healthier, less processed foods. But processed food has made a comeback and the pace of change (sales increases) has never been faster. Consumers now find themselves eating most meals at home and they are going back to trusted brands and comfort food.”

The research firm Sanford Bernstein, however, reached the opposite conclusion. Citing a survey of 1,052 consumers on April 2, the firm argues that “health and wellness remains or has become a more important consideration for people when they shop for food.” In fact, with many consumers looking to eat more vegetables, fruits and fresh foods, they are “seeking to reduce their consumption of processed foods with high carbs, salt, fat and sugar” which doesn’t bode well for companies heavily reliant on processed categories such as canned soup and cereal.

It’s worth noting that even before “Wuhan” became part of the global vernacular, not all the food aisles were part of the health-and-wellness kick. Take cereal, where Post has licensed in Hostess brands (Twinkies, Donnettes and others), and longtime Hershey licensee General Mills late last year announced such versions as Jolly Rancher, Hershey’s Kisses, and Reese’s Puffs Big Puffs cereals Bill McClinton, SVP of Licensing at Global Icons, which represents Hostess in licensing. , says sales of the Post cereals have been “steady” in recent weeks, but also notes that retailers have postponed delivery of new products for store resets until later in the year.