Major food companies offer deals, new sizes as low-income Americans spend less
NEW YORK — Americans relying on government benefits to buy food and other essentials are slashing spending, prompting food makers like Kraft-heinz and Conagra Brands to overhaul their products and strategies following years of price hikes.
Many of the biggest makers of packaged foods and drinks are seeing their sales volumes fall, due partly to low-income consumers — typically making roughly less than $35,000 per year — cooking from scratch, using up leftovers or just buying less.
Roughly one-third of Black American households and 21 per cent of white American households fell into this category in 2022, according to the latest available U.S. census data.
“We expect reduced SNAP (food stamp) benefits will be a headwind,” Dollar Tree CEO Richard Dreiling said during a March 13 earnings call. Dreiling was referring to the U.S. government’s supplemental nutrition assistance program (SNAP), which provides benefits to low-income families to help them afford groceries.
At Circle K convenience stores, sales from people using food stamps were down 40 per cent from last year.
“We can look geographically and see that where we’ve got lower-income consumers, our results are worse,” Brian Hannasch, CEO of Alimentation Couche-tard, which operates Circle K, said during a March 21 earnings call.
To appeal to Americans who can no longer afford fast food, Conagra in late May will introduce new Banquet chicken patties, priced at $6.99 for six, a company spokesman said. Chicken sandwiches are top picks at fast-food chains.
Sherry Frey, Nielseniq vice president of wellness, said that low-income consumers eat less produce and fresh meat than wealthier shoppers.
“For sure SNAP and WIC shoppers are looking for value,” Frey said, referring to government food benefits for women, infants and children (WIC). “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.
They are “forgoing items you normally want, which is fresh nutritious food,” Rodriguez said.
Consumer companies’ new emphasis on value and discounts is a reversal from their strategy during the pandemic and immediately after, when they focused on premium products, touting new flavors and options in an effort to justify climbing prices.