Three months of strict lockdown and Americans are gradually beginning to reclaim their lives. However, the spike in new coronavirus cases is derailing all plans. In fact, record-breaking rise in daily infection cases acts as a major setback to economic reopening plans. The United States registered 61,848 new cases on Jul 8.
While the spike in cases is hindering the economic rebooting process, it gives a boost to the packaged food industry as more customers prepare to hoard given the prospects of a resurgence of the virus.
Packaged Food Stock Up to Continue
Since the coronavirus outburst, panic buying and hoarding has led to a sharp spike in the sale of packaged food products. Per the New York Times report on Apr 7, even healthy American eaters turned to packaged food products during the lockdown. With restaurant and food delivery services closed, the demand for frozen and other packaged food products has grown drastically.
Infections are already on the rise and many expect cooler weather conditions to drive the number of cases further, if no effective vaccine is discovered. This will create another spike in grocery demand.
Food manufacturers, producers and suppliers have begun preparing for the second wave, as many had witnessed shortage of ingredients during the first COVID-19 wave. The heightened demand caused a rippling effect in the supply chain, pushing companies to think about a shift in strategies to counter further disruptions.
With uncertainties looming, Campbell Soup’s CEO believes that the COVID-19-driven change in consumer and retail trends will continue to shape the landscape for packaged food businesses in the immediate future.
Campbell Soup saw a surge in demand for pantry staples like Prego pasta sauce and Kettle potato chips during the first wave. The company stocked up on certain ingredients to keep production on track if things go south.
Additionally, there are some key factors propelling the packaged food market even beyond the pandemic. Rising number of working women and rapid urbanization are driving the market.
However, the coronavirus-led lockdowns have reinstated the eating-at-home trend. Hence, people are cooking more at home, triggering healthy eating habits, especially to boost immunity. Yet again, packaged food is not just about instant or microwave or ready-to-cook meals.
Eating-at-home calls for more quick scratch cooking, which requires simple ingredients that can be easily assembled to make a great-tasting meal. This in turn raises demand for sauces, seasoning, dressing and condiments. Per a Technavio report, this micro-segment is poised to rise by $25.42 billion during 2019-2023, at a CAGR of over 4%.
The Global Packaged Food Market is expected to reach a worth of $4.89 trillion by 2027, at a CAGR of 6.5% from 2018, per a strategymrc.com report. In fact, the coronavirus-led stock-pilling has and will give additional boost to the market. Hence, we have shortlisted six stocks that belong to the Zacks Food – Miscellaneous industry and can make the most of this boom.
B&G Foods, Inc. BGS manufactures, sells, and distributes a portfolio of shelf-stable and frozen food, and household products. The company’s expected earnings growth rate for the current year is 31.1%. The Zacks Consensus Estimate for its current-year earnings has climbed 3.9% over the past 60 days. B&G Foods sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Natural Foods, Inc. UNFI offers grocery and general merchandise, produce, perishables and frozen food, and nutritional supplements. The company’s expected earnings growth rate for the current year is 15.4%.The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days. United Natural Foods sports a Zacks Rank #1.
General Mills, Inc. GIS offers ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes and more. The company’s expected earnings growth rate for the current quarter is 10.1%.The Zacks Consensus Estimate for its current-year earnings has climbed 2% over the past 60 days. General Mills carries a Zacks Rank #2 (Buy).
McCormick & Company, Incorporated MKC manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products. The company’s expected earnings growth rate for the current year is 7.7%. The Zacks Consensus Estimate for its current-year earnings has moved up10.8% over the past 60 days. McCormick carries a Zacks Rank #2.
Conagra Brands, Inc. CAG offers shelf stable food products, temperature controlled food products, meals, entrees, sauces, and various custom-manufactured culinary products. The company’s expected earnings growth rate for the current year is 5.3%. The Zacks Consensus Estimate for its current-year earnings has climbed 3.9% over the past 60 days. Conagra Brands carries a Zacks Rank #2.
Flowers Foods, Inc. FLO produces and markets packaged bakery products, it offers fresh breads, buns, rolls, snack cakes, and tortillas, as well as frozen breads and rolls. The company’s expected earnings growth rate for the current year is 13.5%. The Zacks Consensus Estimate for its current-year earnings has risen2.8% over the past 60 days. Flowers Foods carries a Zacks Rank #2.
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Conagra Brands Inc. (CAG) : Free Stock Analysis Report
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