Food companies in the Philly area are getting a boost from your coronavirus snacking
Americans are eating more snacks and processed foods as they stock up and hunker down. That’s welcome news for some Philadelphia-area and Pennsylvania food manufacturers.
At Campbell Soup Co. in Camden, orders for cases of soup, sauces, and other items skyrocketed 366% one week last month compared with the same week last year.
Kraft Heinz macaroni and cheese is a hot seller, too, giving at least a temporary boost to the struggling food manufacturer based in Pittsburgh and Chicago.
And sales of Herr’s potato chips jumped 20% in March over the same period in 2019, according to the CEO of the Chester County company.
It’s not just you: Americans are eating more snacks and processed foods as they stock up and hunker down during the coronavirus pandemic. That’s welcome news for some Philadelphia-area and Pennsylvania food manufacturers, and stands out as a bright spot in an otherwise bleak economy struggling with government-imposed shutdowns aimed at mitigating the spread of the virus.
What’s behind the change in consumer behavior? No one’s eating out, so we’re cooking more and buying more at the grocery store. Those who were used to eating out are likely to buy easy-to-make meals and canned goods. And in a prolonged global public health crisis, some consumers are seeking comfort in the food they buy.
“What we see in the research is that when people feel a little bit out of control of the situation they’re currently in, sometimes they like to bring themselves back into control by indulging in a product,” said Ernest Baskin, an assistant professor of food marketing at St. Joseph’s University.
“Prior to the pandemic, we had been trending away from some of these products, just because people perceive them to be less healthy,” he said. Whether the change in consumer behavior endures post-coronavirus, he said, will depend in part on “how much of a habit people build up with respect to these products.”
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Darren Seifer, a food and beverage industry analyst at the market research firm NPD Group, said consumers were tending to their mental health a bit: “If I’m going to be holed up in my house, apartment, wherever you live, for a month at a time, I need to make this experience a little more bearable.”
That also helps explain the surge in sales of booze. Sales of alcoholic beverages increased 55% for the week ending March 21, according to Nielsen, with online sales up 243%. Pennsylvania saw a record spike in alcohol sales last month before state-run liquor stores closed, as consumers stockpiled for life in quarantine.
A survey conducted this month by the International Food Information Council Foundation, which is funded by the food and beverage industry, found that four in 10 people said they were buying more packaged foods. That trend was more pronounced for those under 45. And 27% of survey respondents said they were eating more snacks.
GoPuff, the Philadelphia-based convenience delivery service that delivers consumer goods across the country, said sales of chips, chocolate, and candy had all increased since the pandemic.
“Some brands outpaced category growth, showing that a preference for brands was still a driver for what they purchased,” the company said Friday. For example, York County-based Utz Quality Foods Inc. showed more continuous growth than the chip category as a whole, GoPuff said.
It added that the Hershey Co. “continues to dramatically outpace the chocolate category growth by double digits.”
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Customers are also buying more healthy snacks from GoPuff. Sales of wellness beverages, such as kombuchas and enhanced waters, have increased 115% since the week of March 2, the company said.
Herr Foods Inc. — which makes five to six tons of potato chips every hour at its Nottingham facility — had to increase production last month to meet greater demand, chief executive Ed Herr said.
“We definitely offer a food that is considered a comfort food,” he said. It’s also affordable, at a time when many households are squeezed for cash.
“You can get a pretty good-size bag of chips for a couple bucks,” Herr said.
Sales came back down to normal in early April, he said, as public health officials encouraged residents to stay home. “What we’re starting to notice now, just with a little bit of warmer weather and people kind of using up their pantry supply… we’re starting to see the stores get a little busier again,” Herr said.
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Lancaster County-based Turkey Hill Dairy, which makes one of the top-selling ice cream brands in the nation, has also increased production. Online orders increased threefold in the last couple of weeks, said Andrea Nikolaus, a Turkey Hill spokesperson.
Turkey Hill’s ice cream and iced tea, she said, “provide a sort of comfort not just for your appetite, but for your soul in a way.”
A private company that was sold last year by Kroger Co. to a Texas private equity firm, Turkey Hill declined to share sales data.
Campbell said last week that it was “experiencing significantly higher sales for our retail products” in its meals and beverages businesses and in snack products.
Campbell’s snack unit includes Snyder-Lance Inc., which it acquired in 2018 for $6 billion. Lots of those snacks are produced at a York County manufacturing facility developed by the pretzel maker Snyder’s of Hanover, which merged in 2010 with Charlotte, N.C.-based Lance Inc.
An increase in consumer spending on food purchases has “more than offset” declines in Campbell’s food service business, which works with restaurants, the company said in a regulatory filing last week.
However, Campbell cautioned: “The recent higher sales trends of our retail products may lessen or reverse in the coming months if customers or consumers alter their purchasing habits.”
Campbell’s stock has been volatile in recent weeks but has outperformed the broader Standard & Poor’s 500 index.
There have been some bumps for other food manufacturers. Shares of Hershey fell last week after the Pennsylvania chocolate giant’s earnings fell short of Wall Street expectations for the quarter ended March 29.
Customers were still buying Hershey’s Kisses and other sweet treats: The company reported $2 billion in revenue for the quarter, or 1% over the year-earlier period. But analysts had projected stronger growth.
CEO Michele Buck said products like Hershey’s Syrup, Baking Chips, and Cocoa all grew about 30% in March, and “trends have remained strong as families are spending more time together at home baking.”
But the company withdrew its fiscal forecast for the rest of the year, citing uncertainty around the pandemic and its impact on consumer behavior.
“While many consumers have shared how our categories are helping them cope during this time and bond with their families, they’ve also shared how their shopping priorities have changed,” Buck said during a conference call Thursday.
Correction: An earlier version of this article misstated Hershey’s quarterly revenue. It reported $2 billion in total revenue for the quarter, an increase of 1% from the same quarter last year.