As newly vaccinated consumers return to activities enjoyed in pre-pandemic life, brands that have struggled through the last 13 months have an opportunity to re-establish themselves, while those that have boomed will be challenged to find ways to make these changes stick in years to come. For the most part, consumer packaged goods (CPG) companies fall into that second category — according to one consumer survey, consumer spending on CPGs increased 19 percent in 2020, as the stay-at-home economy had consumers spending more at grocery stores.
The Kraft Heinz Co. certainly benefited from these shifts. The brand reported on Thursday (April 29) that Q1 2021 gross profit increased 18.5 percent year over year, even amid supply chain interruptions. The Wall Street Journal reported a shortage of ketchup packets earlier this month. However, Carlos Abrams-Rivera, U.S. president at Kraft Heinz, told CNBC in an interview on Friday (April 30) that the production would be back to meet demand in the near future.
He added, “I think for us, the reality is that it’s a great thing … that people just love Heinz ketchup and they want to continue to purchase our products, whether they are in-store, or whether they are going to the restaurants, and now making sure that they take the product home — takeout, delivery.”
CPG brands that have this ability to both offer competitive products on grocery shelves and to integrate their products into the restaurant experience will have the advantage in months to come, as consumers begin to satisfy their pent-up demand for in-restaurant experiences.
“So far, what we’re beginning to see, with this combination of restaurants opening and people getting vaccinated, we certainly see mobility happening more and more of our away-from-home business starting to pick up,” Abrams-Rivera told Yahoo! Finance. “And that actually is something that is encouraging … for us, our foodservice business is actually a pretty … big part of our business, as we go forward, so the fact that this is something that is picking up as well — you know, it’s very positive.”
Looking ahead, CPG companies such as Kraft Heinz, Coca-Cola, and PepsiCo, which have strong foodservice presences, will have the advantage over brands
As PepsiCo CEO Ramon Laguarta told Yahoo! Finance earlier this month, after the company reported its Q1 earnings, “Generally speaking, people don’t consume dramatically different amounts whether they’re in home or away from home, is the reality, and in the Frito-Lay business, because our penetration is so high across all the channels, we are really somewhat channel-agnostic … Generally speaking, mobility is a tailwind for us, not a headwind. ”
Even CPG brands that do not focus on food have the opportunity to benefit from the return to away-from-home life, if the brands can focus on their products that will be relevant to these newly out-and-about consumers.
“We’re seeing a return to higher levels of consumption in categories that suffered as a result of the pandemic,” P&G Vice Chairman and Chief Operating Officer Jon Moeller told Yahoo! Finance in a recent interview. “For example, dry shaving. As people stayed home, they didn’t shave as much. Certainly, our away-from-home business that serves hotels and restaurants is starting to see a little bit more life. And, you know, some of the beauty businesses, like deodorant, for example, the market had declined a little bit and that’s beginning to pick up.”
These changes will be key, as consumers are far more excited to return to hotels and restaurants than grocery stores — PYMNTS data found that 57.1 percent of consumers are somewhat to extremely interested in leaving home more often than they were able to at the height of the pandemic. However, only 38 percent of these consumers are excited to return to brick-and-mortar grocery stores, compared to 50 percent who are excited to travel within the U.S. more often, and a whopping 61 percent are excited to return to restaurants.
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