Americans love to spend and that might be the biggest factor fending off a US recession.
European and Latin American shoppers are shifting to discount retailers while changes in US consumer behavior are comparatively modest, Kellogg Co. Chief Executive Officer Steve Cahillane said.
Everybodys favorite parlor game is, is there gonna be a recession, whens it going to happen? Cahillane said in an interview. The one thing that is most standing in the way of that is, the US consumer is stubbornly resilient.
Shoppers in the worlds largest economy are focusing more on absolute dollar amounts, he added, so Kellogg is offering different sizes and price points to meet different household budgets. The plan appears to be working: In North America, Kelloggs sales rose 13% year-over-year for the first quarter, beating analysts estimates.
Price hikes were a key part of the sales performance. Kelloggs mix of North America prices is about 16% higher than last year, Cahillane said. He declined to say whether there would be further hikes, adding that while the rate of inflation has stopped worsening, its still elevated. We have not seen deflation, he said.
MorningStar Farms
Faux-meat brand MorningStar Farms is on the road to recovery after a difficult year for both the label and the category, Cahillane said.
He noted that the trends that initially drove plant-based meat, such as concerns about sustainability and health, are here to stay. He predicted a revival as more subpar products lose shelf space.
Those weaker players are going away, and so the consumer experience will continue to improve when they buy brands like MorningStar Farms, he said. Youre seeing that happen as we speak.
By volume, sales of frozen meat alternatives fell 6.3% in the 52 weeks ending April 23, according to market-data tracker Circana. By the same measure, sales of refrigerated meat alternatives slid 19%.
