Reuters: Food and Drink Makers Target Low-Income Americans

Americans are cutting spending and prompting food makers to use new strategies.

April 10, 2024

Americans relying on government benefits to buy food and other essentials are slashing spending, prompting food makers to overhaul their products and strategies following years of inflation, reported Reuters.

According to the article, many of the biggest makers of packaged foods and drinks are seeing sales volumes fall, due partly to low-income consumers—those typically making roughly less than $35,000 per year—cooking from scratch, using up leftovers or just buying less.

"We expect reduced SNAP [food stamp] benefits will be a headwind," Dollar Tree CEO Richard Dreiling said during a March 13 earnings call.

Sherry Frey, NielsenIQ vice president of wellness, told Reuters, "For sure SNAP and WIC shoppers are looking for value. Unfortunately so many SNAP and WIC shoppers are food insecure and they’re subsidizing at food banks as well."

People struggling to make ends meet are buying “whatever is on the shelf that you can stretch longer and further to feed the many mouths that might be sitting around the table," said Carlos Rodriguez, chief policy and operations officer at City Harvest, which distributes fresh food in New York City.

To appeal to Americans who can no longer afford fast food, Conagra Brands will introduce new Banquet chicken patties in late May, priced at $6.99 for six, a company spokesman told Reuters.

Additionally, Conagra's approach to discounts is to make them more frequent instead of deep, CEO Sean Connolly said in an interview April 4. "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."

Consumer companies' new emphasis on value and discounts is a reversal from their strategy during the pandemic and immediately after, according to the article. Some shoppers are ditching low-calorie snacks, like popcorn, for more filling ones, executives have said.

"We have a large canned-meat portfolio," said Bob Nolan, Conagra senior vice president of demand science. "It's on fire."

Nolan said sales of Conagra's corn-based snack Andy Capp's have "been up 20-30%." And sunflower seed snacks like David Seeds, which "last you a whole baseball game," are "doing spectacular," he said to Reuters.

J.M. Smucker is continuing to see an uptick in sales of its Jif peanut butter, according to CFO Tucker Marshall, which he said, "provides a very cost-effective form of a protein.”