McCormick 3Q17 Earnings Call Notes

Lawrence Kurzius

Vanilla bean prices have risen to $200 per pound

I’ll also say that we have taken several moves on vanilla as the cost of vanilla beans has moved from single digits per pound to well over $200 a pound and that’s been well understood in the industry and so their price increases have been accepted.

Campbells Soup FY 4Q17 Earnings Call Notes

Denise Morrison

Yes these are challenging times

“Yes, I think that the – again, as I said, I think the retailer environment right now is hypercompetitive. I mean, you’ve got the Amazon acquisition of Whole Foods, the expansion of Leadle and Aldie, creating some new retail formats and some escalated competition in the marketplace.= However, I’m optimistic that retail continues to morph. I mean, I remember and I’m going way back when club stores and supercenters were a new format. And the retailer market and companies like ours adjust to that. So we’re really focused on making our brands accessible in multiple channels, and we believe that the new sales design that we have will help us in that effort. So, yes, I do think these are challenging times. And I do think that, as the consumer changes, retailers will change with the consumer and we’ve got to do the same.”

Anthony Di Silvestro

Expecting sales down 0-2%

“Now, I’ll review our 2018 outlook. We expect sales to change by minus 2% to 0%, adjusted EBIT to change by minus 1% to plus 1% and adjusted EPS to change by 0% to plus 2%. This guidance assumes that the impact of currency translation will be nominal. We are forecasting sales growth in both Global Biscuits and Snacks and Campbell Fresh. However, we expect sales in Americas Simple Meals and Beverages to decline.”

Dean Foods 2Q17 Earnings Call Notes

Ralph P. Scozzafava – Dean Foods Co.

Volume softness continues to weigh on the broader food industry

“Despite some progress to-date, we’re experiencing a decline in our base volume greater than our previous expectations…Volume softness continues to weigh on the broader food industry. And the emphasis of specific retailers on private label within certain segments showed growth in Q2. For Dean Foods, this created a challenging environment on both volume and mix. In the second quarter, total Dean Foods’ volume of 615 million gallons across all products represents a nearly 3% year-over-year decline and was lower than our plan.””

General Mills FY 4Q17 Earnings Call Notes

Jeff Siemon

New CEO

“And before we get to our usual earnings commentary, I would like to turn the call over to Ken Powell, who last month wrapped up 10 years leading General Mills as CEO and he was continuing on as the Chairman of the Board for an interim period. We don’t have time this morning to cover all of Ken’s accomplishments over the past 10 years nor what he want us to.”

Jeff Harmening

Not going to be just one winner in e-commerce

No, thanks for that question, Chris, I mean, obviously, it’s one that’s on the minds of lot of people these days and has been for us for long time. I think with regard to e-commerce, I think there is couple of key things on a high level to keep in mind. The first is that where we have engaged in e-commerce, whether it’s here in the U.S. Our sales online have broadly outperformed our sales in the store. And so we feel good about our ability to win in e-commerce environment. The second is that if e-commerce is going to be broad across many customers, there is not just going to be one customer, even though that lot of talk about the Amazon and Whole Foods deal, I mean, all of our major customers have e-commerce components. As we have experienced around the world, there are variety of customers who participate in e-commerce and so it’s not going to be just one winner. The third is that we have got great relationship specifically with Amazon and we have got great relationships with Whole Foods. In fact, some people will probably be surprised to know that we are actually vendor of the year for 2 years in a row with Whole Foods and we have our e-commerce growth has been – we have been really pleased with it.

China and Korea highest prevalence of e-commerce

“Well, I think that Chris, I think that the growth in e-commerce, especially here in the U.S., but is going to accelerate. And so to the extent that accelerates, then we will accelerate our investment broadly in e-commerce, but really with the growth of the e-commerce business. But we see growth in e-commerce here in the U.S. as really prevalent in China and Korea. I mean, that’s where we see the highest penetration of e-commerce and food and growth. So, we expect that channel to continue to grow.”

General Mills FY 3Q17 Earnings Call Notes

Ken Powell – Chairman & CEO

Thoughts on weakness of Nielsen data

“So as we — you know, we’re obviously seeing the same trends for the industry. If you look at kind of where the food and beverage industry is now versus a year ago, there is about a four point difference from where it was than to where it is now; so sales were up about 1.5 this quarter a year ago and now it’s down to — about half of that is due to pricing; and so we’ve seen deflationary pricing across food and beverage over the past quarter and so as we think about that 4 point gap, half of that is pricing and so the unit volume really is about 2 points and there is really not one factor that impacts it. Although there are — certainly there is movement for the perimeter over the store and there is even more deflation in categories like meat and dairy; but also you see significant growth and increasing growth in channels that aren’t measured by Nielsen and e-commerce is certainly one of those which is growing at between 35% and 50% this year and is probably upto 1.5% of total food and beverage sales. And so without doubt there is increased growth and channels as not measured by Nielsen.”

Don Mulligan

Expect a more modest inflation outlook

“we have every expectation of seeing significant margin expansion, particularly given the fact that we see a bit more modest inflation outlook versus what we saw a year ago in the fourth quarter and last year’s fourth quarter we saw some significant margin contraction.”

Kraft Heinz 4Q16 Earnings Call Notes

Bernardo Vieira Hees

Persistent foreign exchange headwind

“Headwinds remain from highly competitive retail markets to persistent foreign exchange headwind, especially in Europe.”

George Zoghbi

Deflation should turn to inflation

“First, in measured channel, the negative impact from commodity deflation on category growth persisted during 2016 and longer than we originally thought, although, we currently expect that this is likely to turn to inflation as 2017 progresses. ”

Paulo Basilio

Reached bottom on commodities

” price was higher for the year and in Q4, despite persistent headwinds from deflation in key commodities. Although, it appears, we’ve now reached the bottom on commodities and are likely to have to contend with commodity inflation beginning in Q1 of this year. ”

2017 is likely to be an inflation year

“Hi, Jason, this is Paulo. So when we said in terms of the commodity, we said that in 2016 we had a deflationary year. We mentioned at the beginning – not the beginning, in the mid of the year that we would expect this benefit to stay but it didn’t. And in 2017, when we take a look at the spot and forward rates, we’re likely to see year-over-year inflation. And we’re already seeing that in cheese, coffee, bacon, as George mentioned. So that’s what we are today.

Pepsi 3Q16 Earnings Call Notes

PepsiCo’s CEO (PEP) Indra Nooyi on Q3 2016 Results

3% volume growth in snacks

“we had more than 3% organic volume growth in global snacks and more than 2% organic volume growth in global beverages. While foreign-exchange translation continued to pressure our reported revenue results, we delivered more than 4% organic revenue growth, which represents an acceleration from the first half.”

Generated 37% of all food and beverage sales growth in the US

“For example, the third quarter in the US, which is our largest market, we were once again the largest contributor to retail food and beverage sales growth. We generated approximately 37% of all food and beverage retail sales growth, significantly higher than our food and beverage dollar share position of less than 10%. And we generated more retail sales growth than all other $5 billion class food and beverage manufacturers combined.”

SG&A leverage all starts with topline growth

” On the SG&A leverage, it all starts first with topline growth. The minute you get good top line growth, you get leverage on all of the other SG&A costs that we have in the P&L. And so, this quarter was a very, very good top line growth at 4.2%. That’s pretty significant.”

Hugh Johnston

Deflationary environment in commodities, but do have a negative water mix

“We are continuing to get good pricing in carbonated soft drinks. The couple of factors I would remind you of is we do have deflationary commodities right now. So you’re seeing a little bit less of that pricing flow through into retailers as we have deflationary commodities. The other is, we do have a negative water mix going on. So on the one hand, non-carbs were quite positive. But a portion of that was water which is, obviously, from a price mix perspective, negative”

General Mills 1Q17 Earnings Call Notes

General Mills’ (GIS) CEO, Ken Powell on Q1 2017 Results

Sales performance did not meet expectations

“our net sales performance did not meet our expectations due to the challenging macro environment, a difficult year-over-year comparison, and a slower start to the year on certain businesses.’

Total food and beverage retail sales have slowed because price appreciation has decelerated

“We have seen total U.S. food and beverage retail sales slow over the last few quarters. Units have held stable, but net price appreciation has decelerated from adding two points of growth a year ago to adding less than 50 basis points of growth in our first quarter.

12% growth in natural and organic food portfolio

“Now let’s turn to our natural and organic portfolio, where we’ve seen our top line results accelerate recently behind excellent ideas and great execution. For the most recent three-month period, our nine natural and organic brands posted 12% retail sales growth across natural and traditional channels. Annie’s and Larabar have been leading our growth so far this year. Retail sales for the Annie’s categories that existed at the time of acquisition, like mac ‘n cheese, crackers, and fruit snacks, were up 20% in the first quarter driven by continued distribution expansion and progress we’ve made moving Annie’s SKUs into the main aisle.”

Don Mulligan

Sales results did not meet expectations

“our organic net sales results did not meet our expectations. We expect our sales growth to improve in the balance of the year as we see continued growth in certain businesses as we execute a number of consumer first actions across our portfolio. We’ll also lap easier net sales comps in the remainder of the year.”

Tough comparisons

“Over the course of our remarks this morning, we’ll note the businesses that saw particularly challenging comparisons this quarter. ”

Sales down 7%

“Net sales totaled $3.9 billion, down 7% as reported. Organic net sales declined 4%. Total segment operating profit totaled $787 million, down 4% on a constant currency basis.”

Net sales down 8%, 5% excluding green giant divestiture

“U.S. retail net sales declined 8%. The snacks operating unit posted 2% net sales growth driven by excellent performance on Annie’s and Larabar. This was offset by declines in the other operating units. Organic net sales were down 5% from year-ago levels that were up 1%. The difference between reported and organic net sales results in U.S. retail primarily reflects the divestiture of Green Giant in fiscal ’16.”

Jeff Harmening

Focused on things we can control

Well David, this is Jeff. I think as we–as Ken started out his comments, the macro environment is tough. It’s tough globally, but our focus really is on what we control. One of the things that we’ve seen time and again is that when we focus on the things that we can control, we can have a lot of success. Gluten-free is a great example of that in the cereal category.

EGg prices account for a lot of deflation

“Big picture, we see in Nielsen data and certainly I have heard from a lot of our retailers over the last month in my direct conversation with them, is that we see prices deflationary, or the inflation reducing in the store over the course of the last quarter or so. As we look, and Ken shared with you earlier, as we look at the items in grocery that contain the UPC code, we have about half a percent growth – I think it’s 0.4%. A big portion of that is really reduction in egg pricing from a year ago, so if you strip out the pricing on eggs, it’s about 1% inflation, which is pretty consistent with the last couple of quarters. So we had the flu last year and the price of eggs was really high, and it’s a lot lower now, so that accounts for a lot”

Seeing appreciation in our categories though

“I’ve also heard from a lot of retailers about deflation in other parts non-UPC, so the perimeter of the store in things like dairy and meat, but what we’re seeing in our categories really is about 2.5% price appreciation in the first quarter, and that’s what we’re seeing in our Nielsen in our categories as well. “

Pepsi at Barclays Conference Notes

Vivek Sankaran

If you want to know where consumer taste is headed look at college campuses

“We have a great deal of consumer research that tells us where the [indiscernible] consumer is going and the millennial moms those are two we watch real carefully. But at the end of the day, it’s simpler than that. Just go in a college campus and see what are the highest selling products on campus water, Gatorade, third, which is a surprise Lipton Pure Leaf Tea, then we’ve got Starbucks, then we got Mountain Dew. Those are the five selling. So, if we’re not heading where that consumer is going in the next five years is, we would have a tough time. But I think we are making some progress in that area.”