As Old-Guard Food Companies Stumble, Milk, Sugar and Cheese Take Hits
With many old-guard food companies teetering on the edge of profitability, 2019 is shaping up as pivotal year for foods that dominated dinner tables for decades.
Last week, Kraft Heinz Co., the owner of Jell-O and Oscar Mayer’s Wienermobile, lost $16 billion in market value after reporting a writedown that reduced the value of some big-name trademarks. Dean Foods Co.’s announcement it is contemplating a sale had some analysts doubting if the top milk company would lure any buyers for its shrinking business.
Such legacy stalwarts have been criticized for not being in tune with where consumers are going, which is away from sugary, highly processed products that line the brand portfolios of such companies. New-fangled plant-based products are nipping at the heels of big dairy companies like Dean.
“A lot of these companies all seem to say the year 2019 will be one of little or no growth,” said Kenneth Shea, a Bloomberg Intelligence analyst. Many are doling out dividends while struggling with heavy debt and narrowing margins, with no money left over to innovate. “The old guard is going to have to change,” he said.
In the meantime, companies are racing to adapt. Here’s some examples:
Americans are drinking 40 percent less fluid milk than in 1975, turning instead to almond, oat and soy-based alternatives made by companies that range from the small, vegan company Oatly AB to major players like PepsiCo Inc.’s Quaker Oats. Sales of milk alternatives rose 7.8 percent in the year through January 26, 2019, hitting $1.7 billion, according to data from Nielsen. Meanwhile, as prices fell for regular milk, many smaller farms closed or were bought out by bigger, more efficient operations.