Yahoo Finance Gen Z, Millennials feed COVID-19's snacking boom, boosting brands like Coke, Pepsi
The COVID-19 snacking boom appears here to stay as a majority of U.S. shoppers snack more at home — with big brands moving to satisfy demand for cookies, chips and beverages.
Data suggests that pandemic-era eating trends were driven largely by younger consumers. According to a report issued by Coca-Cola (KO), 73% of Gen Z and Millennials admit they've snacked more during the pandemic; Gen X respondents also admitted to snacking (54%) more, with Boomers not far behind (representing a 48% jump).
Americans also admitted they will do whatever it takes to get a snack "at their 'hangriest'" state, the beverage giant's data found, with nearly half of the nation saying they would walk over a mile for a sweet or salty snack.
So what exactly was the most craved snack? Well, it depends on who was being asked the question — and where they lived.
Coke's data found that more than half of America, including both the western and southwestern region, crave pizza to go along with Cherry Coke, while the majority of Midwest craved potato chips. Separately, nearly half of the Northeast craved wings, and more than half of the Southeast had a hankering for french fries.
Those findings complimented a recent PepsiCo's (PEP) Frito-Lay survey, which noticed a surge in snacking during Super Bowl 2021. According to Frito-Lay’s U.S. Snack Index, 40% of Americans said they planned to snack more than they did during Super Bowl 2020. To meet that expected demand, Frito-Lay shipped more than 70 million pounds of snacks in the week leading up to the big game.
More 'experimenting' and 'innovation'
Major snack brands including PepsiCo and Coca-Cola, among others like Conagra (CAG), General Mills (GIS), Kellogg (K), and Kraft Heinz (KHC), are taking note on the surge in snacking, using celebrities to boost interest in some new products.
During Super Bowl 2021, PepsiCo used a minute-long commercial to make a big splash with its new Cheetos Crunch Pop Mix, (a blend of both popcorn and its classic Cheetos), with celebrity couple Mila Kunis and Ashton Kutcher.
Fast-forward to March of this year, the company launched its "spiciest chip yet" Tostitos Habanero, with the help of comedians Kate McKinnon and Dan Levy.
In PepsiCo's fourth-quarter earnings call, PepsiCo chairman & CEO Ramon Luis Laguarta noted the company is bracing for a return to "more of a normal life" — with a return to physical shopping. That presumably includes more snacking and beverage drinking on items like Pepsi's Marshmallow Cola, a collaboration with PEEPS.
"I think consumers will go back to experimenting a little bit more, and they will be looking for innovation," Laguarta said. "We're going to see a small — slow return back to bit more complex portfolios."
More cooking and baking at home
In early March, Pillsbury made its first entry into the cookie aisle with a line of ready to eat cookies with flavors like chocolate chip, confetti, and peanut butter. The new releases were designed with the company's research that showed "there are times that a ready-to-eat cookie is preferred," according to Jeff Caswell, president of General Mills Snacks Division.
Although General Mills' net snack sales dipped last quarter, General Mills said it was optimistic that changes in "consumer behaviors driven by the COVID-19 pandemic" are here to stay.
It highlighted "more time spent working from home, and increased consumer appreciation for cooking and baking," prompting the company to focus on innovation and growing profits in the snack segment.
Kellogg Company is also hoping to profit from the snack boom, tapping actor Jesse Metcalfe for the launch of Cheez-It loaded popcorn. The limited-edition item includes two types of loaded popcorns: cheddar and white cheddar.
Meanwhile, Lady Gaga-inspired Oreos were one of 2021's first major brand-celebrity team ups. The Chromatica inspired Oreos are filled with green colored creme and feature three brightly-colored designs embossed onto the wafer. In addition, the company also released flavors like Java Chip, Brookie-O's and Strawberry Frosted Donut, among others.
Oreos' parent company, Mondelez International (MDLZ) noted in its fourth-quarter earnings report that snack revenue skyrocketed by nearly 80% in 2020, continuing a trend that saw a 75% jump in the year prior, and a 60% gain in 2018, according to Nielsen data.
Grocers see "long-term potential"
This ongoing snacking behavior, amplified by diners that are still hesitant to dine out amid a surge in new COVID-19 infections, may bode well in the long-run for grocers like Albertsons (ACI), Publix, Kroger (KR) and Trader Joe's.
Foot traffic intelligence platform Placer.ai reported "there is real reason to believe that sector could be heading into an extended period of strength." According to CMO Ethan Chernofsky, "instead of a picture of decline, one of significant long-term potential appears," wrote in the report.
"Top grocers are actually trending in the right direction and could be heading into a period of unique strength. While COVID’s health effects seem to be dissipating, the economic consequences will last far longer. This should buoy grocery as it provides a cost-conscious alternative to eating out," he added.
Snack stocks like Coca-Cola, Pepsi, Mondelez, and General Mills are perched at or near 52-week highs. Meanwhile, grocer stocks like Kroger and Albertsons are up more than 20%.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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