Coronavirus lockdown sees spike in snacks sales for Mondelēz and PepsiCo

By Gill Hyslop contact

- Last updated on GMT

People are snacking more thanks to the coronavirus lockdown. Pic: GettyImages/Shironosov
People are snacking more thanks to the coronavirus lockdown. Pic: GettyImages/Shironosov

Related tags: Mondelez International, Pepsico, coronavirus, consumer behaviour, earnings report, Oreos, Lay's, Doritos, Quaker oats

The two snacking giants have reported a rise in organic sales in the first three months of the year as consumers rushed to stock up on comforting snacks before lockdown.

Mondelēz reported organic growth of 6.4% for the first quarter ended March 21, 2020, while PepsiCo said organic sales grew 7.9% for the same period.

Mondelēz posted $6.71bn in revenue and 69 cents in adjusted earnings per share, topping Wall Street expectations of $6.61bn and 66 cents.

Chairman and CEO Dirk Van de Put said the Oreo maker saw a spike in demand for biscuits – which represent about 45% of its revenue – due to COVID-19, as consumers “are looking for that moment of comfort offered by biscuits and chocolate in today’s stressful circumstances”.

He added there had been an initial spike in North American weekly sales growth of around 30%, and although this has tapered off, it is still growing in the high single digits, above pre-crisis growth levels.

The Oreo, Belvita, Ritz, Triscuit and Wheat Thins brands registered growth in the mid-teens or greater in Q1.

“A lot of the out-of-home eating has now gone in home, and that leads to more snacking ... the second thing is that sharing a snack with your family, with your kids brings a feeling of comfort,”​ said Van de Put.

‘We’ll emerge stronger from this’

PepsiCo’s finance chief Hugh Johnston painted a similar picture, noting home-bound Americans were snacking on Tostitos tortilla chips more frequently, while more time for breakfast supported sales of Quaker Oats cereals and Aunt Jemima pancakes.

The Lay’s and Doritos maker generated $13.9bn in sales and $1.07 per share, beating Wall Street estimates of $13.21bn and $1.03, but expects revenues to decline at a low single-digit rate in the subsequent three-month period as restaurants, movie theatres and other venues remain closed around the world.

It still expects to return $7.5bn to shareholders in this financial year and repurchase $2bn in shares, though.

The company withdrew its financial guidance for the full year.

“Despite a strong first quarter, there is still a great deal of uncertainty that exists in relation to COVID-19, including how geographies, retail channels and consumer behaviours will evolve over time,”​ the company said in a statement.

However, PepsiCo’s CEO Ramon Laguarta told analysts, “We see many opportunities, along with some risks, associated with the dynamic changes in society and consumer behaviour”.

Mondelēz also ditched its full-year guidance, citing coronavirus uncertainty, but Van de Put expects the company to see growth.

“The challenges we face are unlike anything we've seen before, but we firmly believe we’ll emerge stronger from this,”​ he said in a call to analysts.

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