By Jack Hough

If you find slide presentations about packaged food exciting, there's nothing like February to Orville your Redenbacher and Duncan your Hines. Each year then, the likes of Kraft Heinz, General Mills, and Conagra Brands spend a week with the Consumer Analysts Group of New York -- in Florida, naturally. This year's CAGNY conference moved from Boca Raton to Disney World, which isn't quite as winterproof but is more inspirational when it comes to overcharging for overeating.

Big Food could use some fresh ideas. While the broad U.S. stock market is up smartly over the past year, shares of the aforementioned companies have declined, along with J.M. Smucker, Mondelez International, Hershey, and PepsiCo. Lingering inflation is pinching family budgets -- eggs are so expensive in my suburban town that backyard chicken coop owners are swaggering like Bitcoin billionaires. Consumer confidence "dropped sharply" in February, says the Conference Board. Wall Street is worried about trade wars. And obesity drugs are a looming threat to the long-term Cookie Monsterization of consumer eating habits.

Meanwhile, spice seller McCormick is up 20% in a year. "We do not compete for calories; we flavor them," its CEO boasted in an earnings report that showed strength in seasonings, recipe mixes, mustards, hot sauces -- pretty much everything but sales of flavorings to fast-food restaurants. What kind of post-snackpocalyptic hellscape are we living in, where families are gathering together over fragrant roasts?

The most important part of CAGNY isn't the slide presentations; it's when analysts return to frigid New York and publish bar charts and bullet points about the presentations, and the broad themes that emerged. J.P. Morgan took a data-driven approach this year, counting topic mentions and comparing with past years. On the rise versus last year were consumer sentiment, inflation, and cash flow. Falling were sustainability and emerging markets. Value hit an eight-year high, and premiumization an eight-year low. Rising in mentions for each of the past seven years was elasticity -- presumably a reference to demand, not pants.

Mentions of snacks also hit an eight-year CAGNY low, which is like space not coming up much at Trek to Vegas 2025. JPM points out that snacks have been in a "deep slump for over a year." General Mills, the cereal giant that also owns Bugles and Chex Mix, barely mentioned snacks. Conagra bucked the trend and talked plenty on the subject. Snack occasions, it said, are up, especially for kids and teens, and now outnumber meals, with more consumers engaging in "mealtime snackification." It's just that demand is shifting from chips and cookies to categories like meat snacks and nuts, it said. Did I mention that Conagra owns Slim Jim and David Sunflower Seeds?

Innovation is back -- the subject dipped during Covid when supply chains were crimped, and then rebounded the past few years as food makers searched for growth. But are we pushing boundaries too far? J.M. Smucker discussed the "humanization" of family pets and presented Milk-Bone Peanut Buttery Bites made with real Jif. It called it the "first dog treat featuring a human food brand" and part of its strategy of "expanding consumption through impulse across innovation and activation." My kids have been sneaking dinner scraps to the dogs for years, and I never thought of applauding their humanization impulse activation.

Conagra has noticed that consumers who take GLP-1 drugs for obesity tend to buy more frozen foods, so it is adorning boxes for some of its Healthy Choice meals with the words "GLP-1 friendly." That seems sensible. On the other hand, I'm taking a wait-and-see-and-don't-eat approach to Conagra's new frozen Vlasic Big Crunch! Crispy Fried Pickles.

BofA Securities asks in a report whether we're hitting peak protein. It means product proliferation, but it could be just as easily talking about font size. To my eye, General Mills is using larger and more muscular can lettering for 24g PROTEIN than for Progresso and Mediterranean-Style Lentil. The same goes for boxes of Strawberry Cheerios Protein, which trumpet eight grams of the macronutrient and whisper 12 grams of sugar.

WK Kellogg stressed how "we can expand beyond cereal," including through "inorganic growth," or acquisitions. Oopsie. Recall that Kellogg split in 2023, leaving WK Kellogg with North American cereal and Kellanova with snacks, frozen food, and international cereal. You can read all about it in that year's WK Kellogg Investor Day presentation, slide five of which has only nine words: "Everything we do will be in service of cereal." Not grrreat.

If Big Food sounds like it's stretching, blame algorithms -- the term Wall Street insists on using to discuss the group's growth. I think it's to evoke steadiness. Consumer staples are supposed to provide small but dependable revenue gains, resulting in moderate earnings growth, and respectable stock returns, including dividends. That's mostly not happening now. This year and next could be "below algo" for General Mills, according to BofA. Kraft Heinz will have "no algo until '27." Hershey, hit by high cocoa prices, could get "back to on-algorithm," but it will take until next year. And so on.

Oppenheimer sums up the outlook given inflation, limited pricing power, obesity drugs, tariff risks, and private-label encroachment: "A difficult backdrop is likely to continue." Investors should keep that in mind as talk swirls once again about a U.S. market rotation into value stocks, including staples. The cheap ones don't look growthy, and the growthy ones don't look cheap. General Mills, at 14 times earnings, is expected post a modest earnings decline for its fiscal year ending May. McCormick, growing at mid-single-digit percentages, goes for a peppery 25 times earnings.

For next year's CAGNY, if things haven't improved, does Chris Stapleton do corporate gigs, and would he be willing to tweak his mournful "I've seen my share of broken halos..." to refer instead to algos? Just brainstorming. I also have an idea for Kibble n' Slim Jims.

Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.

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February 28, 2025 14:36 ET (19:36 GMT)

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