What big food can learn from Covid-19

You probably need only look inside your own pantry to have some idea of what a blockbuster spring it has been for the packaged food industry. General Mills Inc reported that organic sales, a measure that excludes currency fluctuations and other factors, shot up 16% in the quarter from a year earlier as people loaded up on Gold Medal flour, Cheerios, and Pillsbury rolls to ride out the pandemic. A day earlier, Conagra Brands Inc, corporate parent of labels such
as Duncan Hines and Marie Callender’s, reported similarly robust growth, with quarterly organic sales
rising 22% percent from a year earlier.
My colleague Tara Lachapelle has written that this sector shouldn’t get too comfortable with these kinds of results, and she’s right. The panic-buying at the beginning of the US Covid-19 outbreak was a one-off spasm of spending that won’t be repeated, and the long-term shift toward healthy eating and fresh ingredients isn’t going away.
But the pandemic is bound to change our eating habits in some ways that stick. Many Americans will be keeping their new routines for months to come if their workplaces don’t reopen and kids don’t return to in-person schooling. That provides ample opportunity to reinforce habits that could outlast stay-at-home guidelines.
The latest earnings results from Conagra and General Mills offer some clues as to where the industry may be able to build durable sales growth.
General Mills saw an especially strong sales increase, 75% percent from a year earlier, in its US meals and baking category. I’m not optimistic it can hang on to much of the growth in its Progresso Soup business, given that canned soup has generally proved an extremely tough sell to younger shoppers.
But the company has products in this portfolio that aren’t necessarily out-of-sync with pre-pandemic eating values and make even more sense for families now that more meals are happening at home.
For example, a shelf-stable Old El Paso taco dinner kit helps make a quick dinner that includes fresh beef and produce.
General Mills reported that sales of Gold Medal flour, Pillsbury refrigerated baking items and Betty Crocker desserts were especially robust in the quarter — no surprise given the surge of interest in baking.

—Bloomberg