BofA says packaged food price cuts failed to boost volumes

Investing.com -- Bank of America analysts said price cuts by US packaged food companies over the past year failed to increase sales volumes, prompting firms to shift strategies for revenue growth.

The bank said companies are now pursuing three different approaches: raising prices based on inflation costs while accepting lower volumes, focusing on premium products and better mix, or continuing to invest in lower prices.

Bank of America said Mondelez International (NASDAQ: MDLZ) and J.M. Smucker are best positioned to handle different pricing environments due to low price sensitivity and sustained volume improvements. McCormick is also well-positioned after making early price investments and holding strong market share.

Conagra Brands, Lamb Weston, Hershey and BellRing Brands plan to raise prices based on inflation, according to the bank. General Mills and Mondelez will focus on product mix improvements. Kraft Heinz, McCormick and PepsiCo's Frito-Lay division continue to invest in lower prices, while Smucker and Hormel Foods will likely face deflation-driven price reductions.

Campbell Soup, which will provide guidance in early September, will most likely pursue inflation-based price increases, Bank of America said.

The bank noted that companies with greater exposure to price-sensitive product categories face more challenges in raising prices. General Mills and Conagra have the highest exposure to elastic categories, while Mondelez and Hershey have almost no exposure. McCormick, Kraft Heinz and Smucker maintain limited exposure to price-sensitive categories.

Private label products continue to gain market share even as price differences with branded products have narrowed, the bank added.

Bank of America said a shift toward pricing-led growth could accelerate factory closures across the packaged food sector. Employment growth at food manufacturing plants has declined since 2022 and is down year-to-date in 2026.

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