The Consumer Analyst Group of New York (CAGNY) hosted a conference in Boca Raton, Florida recently where food industry giants like The Hershey Company (HSY) and Mondelez (MDLZ) spoke on the latest trends in the food industry. One new strategy that those companies spoke on was "price pack architecture," or the idea of providing more sizes of products at different prices.
Yahoo Finance's Josh Schafer, Brooke DiPalma, and Pras Subramanian break down the latest from these food companies and what both investors and consumers should keep in mind.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BROOKE DIPALMA: Guys, I was at a consumer conference and the evolving consumer dynamic was definitely on the menu at this event in Boca Raton, Florida. Got back late last night from the conference hosted by Consumer Analyst Group of New York, where some big names in food like PepsiCo, Hershey, and Mondelez all presented. And after Ozempic fears have settled in, consumers pulled back amid higher prices, and a few lingering post-COVID supply chain issues have settled out, food executives were so eager to move the narrative forward in an effort to get back volume.
Now Hershey's and Mondelez, they did none to this price pack architecture. So I thought that was really interesting way of framing it, ultimately providing more sizes more value opportunities as people really get back on the go and are really mindful of how much they're eating and how much they're spending here.
JOSH SCHAFER: The price pack thing is interesting to me, right, because to me, I feel like when I go to the grocery store, you think you're pack of Diet Pepsi or your bag of chips or whatever is just supposed to cost a certain amount without really noticing how many cans you're getting or how many chips you're-- like, it's a smart way to frame it, right? You think your Diet Pepsi should be $5 or whatever it is. And even if they're giving you 10 cans instead of 12, be like, oh, yeah, it's $5 it's always $5.
And then you kind of maybe don't fully take in that you're not getting the same amount of product and you feel better about it or you're just more willing to spend a certain amount on that product. So it seems like a smart move in terms of at least how I think about shopping at the grocery store and buying food.
BROOKE DIPALMA: Yeah. And also, too, you have to keep in mind, there are so many people who are buying in bulk, they have bigger families. And so they are super mindful about the price increases that we saw last year. That's causing a pullback in volume. And so when they go to the store and they realize just how much more they're spending, these companies ultimately want to get out in front of it and offer something that's a little bit leaning towards value but ultimately still getting bang for their buck, even though they are higher in cost.
PRAS SUBRAMANIAN: So we've been seeing that food prices have been sort of a little bit stickier than other types of items, right? Do they talk about why that is potentially?
BROOKE DIPALMA: So volume recovery was a hint of that topic around curve of the conference. Basically, they're trying to get ahead of it by saying that we're talking about this price pack architecture. We're talking about innovation was a big play. And also talking about M&A, that was another little tease there.
But really, it was not sort of-- well, it was sort of the elephant in the room that these companies need to find a way to bring back consumers. They need to find a way to lure people back in after they took such a hit last year with higher prices, higher commodity costs, and so on and so forth. So innovation really is something all these companies are looking at in 2024.
We're hearing some crazy ones. Hershey's introducing a partnership with Shaq.
JOSH SCHAFER: I was going to say, Brooke. We buried the lead. We haven't talked about Shaq yet.
[INTERPOSING VOICES]
JOSH SCHAFER: If you want to sell more Hershey's, you just partner with Shaq. Shaq's awesome.
PRAS SUBRAMANIAN: He's a Midas touch. I mean, anything he does--
BROOKE DIPALMA: He really, really does. Yeah, he walked out on stage as always, look so tall. And yeah, he was sitting next to Michelle Buck. They were both chatting about how they're doubling down on gummy segment. Shaq said they're going to win big in the gummy segment. They said it's the fastest growing sweets category. And I do wonder to myself how this has to do with consumer preference sort of changing. Do they think that gummies was the fastest growing sweet segment?
JOSH SCHAFER: I'm going to go ahead and assume that gummies are what made Shaq grow taller and bigger. So I'm going to take that. I'm going to go find some gummies-- some gummy ones or something, guys.
BROOKE DIPALMA: Hot take from Josh Schafer.
