Expensive gasoline and inflation put pressure on candy sales in the US, says Hershey
The largest chocolate maker in the US says consumers are stopping shopping, and not just buying Halloween costumes.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 2 MIN
If the American consumer is tightening their belts, the candy aisle may be one of the first to feel it. According to InfoMoney, Hershey, the largest chocolate manufacturer in the United States, points to expensive fuels and persistent inflation as factors that put pressure on family budgets.
The company released its third-quarter results in a conference call on Thursday. When commenting on the period, the company brought data from the convenience store channel: sales of sweets in the entire category fell 5% in September. According to the same report, the weakness continued into October.
The most revealing point is Hershey's reading of consumer behavior. For the company, the biggest concern is not Halloween costumes and decorations, but the fact that customers stop going shopping. In other words, the problem would be the frequency of visits to retail, and not a specific date on the calendar.
The case illustrates a mechanism known to those who follow the Stock Exchange. When fuel and inflation erode disposable income, impulse purchases and discretionary items often fall off the list before essentials. In a scenario of persistent inflation, the discussion about interest rates and fiscal discipline tends to gain weight in the economic debate.
What changes for the investor
For those who invest in food and beverage companies, the message is to pay attention to the volume sold, and not just the price. If the drop in store attendance is confirmed in other reports, the weakened consumption reading may appear in the sector's quarterly results before appearing in general indicators. It is worth monitoring how companies describe demand in upcoming conference calls.
Automatically translated from Portuguese.
