Not Just Food... Everything.
Since our last piece, the big food names are down another ~10%. But from McDonald's to Nike to Diageo to P&G, most large public consumer brands are bleeding.
It’s been about six weeks since we published Unilever Just Proved Us Right. And It’s Going to Get Worse.
It’s gotten worse…
Since We Last Wrote
The Big Food names we’ve been focused on — Campbell’s (CPB), Conagra (CAG), and General Mills (GIS) — are down roughly another 10%. Even the smaller Utz (UTZ) and B&G (BGS) are down ~10%. Although, B&G is down largely because the company finally cut its dividend in half on May 11. Things are not going well in the center of the grocery store.
The global/European names are no better. Unilever stock got beat up after the McCormick announcement and hasn’t rebounded. It’s down over 20% since its February highs. Nestle’s flat this year and down about 11% over the past 12 months.
A few names have held up though. Kraft Heinz (KHC) is up slightly. Smucker (SJM) is roughly flat — and notably, both are in some form of strategic overhaul the market seems to be giving credit for. Cahillane has paused the KHC split and committed $600 million to a turnaround. And on May 7, Axios reported that Smucker has hired Goldman Sachs to conduct a strategic review of its portfolio, under pressure from activist Elliott Investment Management, with a sale of Hostess (the Twinkies business Smucker acquired in 2023 for $5.6 billion) perhaps the most likely outcome. That’s the framework in real time — Smucker getting smaller and more focused, shedding the Hostess deal that diversified it away from its core spreads-and-coffee identity.
Meanwhile, Conagra’s dividend yield has climbed to ~10% — the classic “show me” signal from a market that doesn’t believe the payout is sustainable. With Sean Connolly out as CEO May 31 and John Brase from Smucker taking over June 1, a dividend cut is high on the list of things the new CEO has to address. The B&G playbook — cut the dividend, redirect cash to debt paydown — is exactly the template Conagra is staring at now. Two very similar businesses in their category mix historically.
That’s the food story. Six weeks, just more carnage and lack of investor faith.
But Big Food isn’t alone…
It’s Not Just Food
Let’s step back and look at the broader consumer landscape…
