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Low-Income Americans Are Being Targeted By Food Businesses Like Kraft-Heinz And Coke; Here’s How

Low-Income Americans Are Being Targeted By Food Businesses Like Kraft-Heinz And Coke; Here’s How
Food manufacturers like Kraft-Heinz and Conagra Brands have redesigned their products and methods in response to years of price increases as Americans who depend on government assistance for food and other necessities are cutting back on their spending.
Sales volumes of many of the largest manufacturers of packaged foods and beverages are down, in part because low-income consumers—who typically earn less than $35,000 annually—are cooking at home, using leftovers, or just purchasing fewer items.
Based on the most recent U.S. census statistics available, approximately 33% of Black American households and 21% of White American households were included in this category in 2022.
"We anticipate that decreased SNAP [food stamp] benefits will be a challenge," stated Richard Dreiling, CEO of Dollar Tree, on a March 13 earnings call. Dreiling was alluding to the Supplemental Nutrition Assistance Programme (SNAP) of the United States government, which gives low-income families money to help them buy groceries.
Food stamp users' sales at Circle K convenience stores decreased by 40% over the previous year.
"We can look geographically and see that our results are worse where we've got lower-income consumers," stated CEO Brian Hannasch of the company that runs Circle K, Alimentation Couche-Tard, in a call with investors on March 21.
Conagra will launch new Banquet chicken patties in late May, priced at $6.99 for six, in an effort to attract Americans who can no longer afford fast food, a company official said. At fast-food chains, chicken sandwiches are a popular choice.
Monday's closing price of US equities was virtually unchanged ahead of important inflation data and the beginning of the first-quarter earnings season.
Richer consumers consume more fresh meat and produce than low-income consumers, according to Sherry Frey, vice president of wellness at NielsenIQ.
"Sure, shoppers for SNAP and WIC—the government's food benefits programme for women, babies, and children—are searching for value,” stated Frey. "Unfortunately so many SNAP and WIC shoppers are food insecure and they’re subsidising at food banks as well."
"Whatever is on the shelf that you can stretch longer and further to feed the many mouths that might be sitting around the table" is what people who are having financial difficulties are purchasing, according to Carlos Rodriguez, chief policy and operations officer of City Harvest, a fresh food distribution company in New York City.
According to Rodriguez, they are "forgoing items you normally want, which is fresh nutritious food."
In contrast to their approach during and immediately following the pandemic, when they concentrated on premium items and touted new flavours and alternatives in an attempt to justify rising pricing, consumer corporations are now emphasising value and reductions.
According to Duleep Rodrigo, U.S. consumer and retail sector head at KPMG, food companies now need to "make sure they are attracting the value buyer back into the fold." "They need this crucial part in order to get volume."
Executives have stated that some consumers are switching from low-calorie snacks like popcorn to ones that are more substantial. Larger bags of Skinny Pop, which cost less per ounce than smaller ones, were introduced by Hershey. According to an official, PepsiCo is developing fresh advertising initiatives to support its rival Smartfood brand.
According to a Coca-Cola representative, the manufacturer of soft drinks has been extending the number of weeks that merchants provide 1.25-liter sodas as a part of a value bundle meant to entice budget-conscious and lower-class customers.
According to Brian Huff, CEO of Nissin Foods' U.S. business, the Japanese company reported a fall in unit sales last year in its category. Nissin Foods sells items like Cup Noodles for less than $1. Huff made this statement in an interview on March 18.
According to Huff, the corporation is spending money on various marketing and buy-one-get-one-free offers at Publix, a store located in Florida, to promote "pantry loading."
Food firms ramping up discounts after a years-long vacation during the epidemic include Kraft Heinz, the maker of Kraft macaroni and cheese, WK Kellogg, and Kellanova, the company that manufactures Pringles chips, according to a research note released by investment bank Jefferies on April 3.
CEO Sean Connolly stated in an interview on April 4 that Conagra's strategy for discounts is to increase their frequency rather than their depth.
"We might invest to get below a key price threshold," Connolly said, such as discounting an item regularly priced at $3.25 to $2.99. It's "a shallow discount but something to make it provocative and make it therefore more effective."
Charsetta Reed, 61, of Chicago is shopping at Dollar Tree more frequently in an effort to get better deals. She usually buys food there, such as Hershey's candy, Pampa tinned sardines and mackerel, and jars of relish, jalapeño peppers, and pickles.
"These are items that I use often, so they need to be replaced," Reed stated. "I can’t afford to go keep buying $3-$4 jars of food."
According to executives, low-income consumers' financial stress is evident in the foods they purchase, such as more substantial corn-based snacks and proteins.
"We have a sizable portfolio of canned meat," Bob Nolan, senior vice president of demand science at Conagra, stated. "It's on fire." Conagra is the manufacturer of Armour Star Vienna sausages, which retail for $1 in Walgreens shops for a 4.6-ounce tin.
Conagra's Andy Capp's corn-based snack sales, according to Nolan, have "been up 20-30%." David Seeds, a snack made of sunflower seeds that "last you a whole baseball game," is "doing spectacular," he added.
Sales of JIF peanut butter, which "provides a very cost-effective form of a protein," are still on the rise at J.M. Smucker, according to CFO Tucker Marshall.

Christopher J. Mitchell

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