Americans love to spend – and that may be the biggest factor preventing a US recession.
Shoppers in Europe and Latin America shifted to discount retailers while changes in US consumer behavior were relatively modest, Kellogg Said Co. Chief Executive Officer Steve Cahillane.
“Everybody’s favorite parlor game is, there’s going to be a recession, when is it going to happen?” Cahillane said in an interview. “The one thing that stands the most in the way of that is, the US consumer is stubbornly strong.”
Shoppers in the world’s largest economy are focusing more on absolute dollar value, he added, so Kellogg offers a variety of sizes and price points to meet different household budgets. . The plan appears to be working: In North America, Kellogg’s sales rose 13% year-over-year for the first quarter, beating analyst estimates.
Price increases are an important part of sales performance. Kellogg’s mix of North American prices is about 16% higher than last year, Cahillane said. He declined to say whether there would be further increases, adding that while the inflation rate had stopped worsening, it was still being raised. “We don’t see deflation,” he said.
Faux-meat brand MorningStar Farms “is on the road to recovery” after a difficult year for the label and category, Cahillane said.
He noted that the trends that initially pushed plant-based meat, such as concerns about sustainability and health, “are here to stay.” He predicts a revival as many “subpar” products are pushed off the shelves.
“Those weak players will disappear, and so the consumer experience will continue to improve when they buy brands like MorningStar Farms,” he said. “You see that happening as we speak.”
By volume, sales of frozen meat alternatives fell 6.3% in the 52 weeks ended April 23, according to market-data tracker Circana. On the same scale, sales of refrigerated meat alternatives fell by 19%.