Pentallect Finds Inflation Provided Big Boost for Food Companies in 2022

CHICAGO, April 5, 2023 (Newswire.com) - Food industry strategic consulting firm Pentallect Inc. has comprehensively assessed the 2022 sales and profit performance of 70 major publicly traded food companies that operate in all major industry sectors - food and beverage manufacturers, nonfood manufacturers, grocery wholesalers and foodservice distributors, supermarket chains, foodservice management firms, and restaurant chains. The assessment focused on trends in sales, gross profit, operating expenses and operating profit. 

Food companies achieved solid sales growth in 2022, with an "all sector" average of +13.8%. The vast majority of reporting companies (97%) had sales increases, paced by the 32.9% increase experienced by the foodservice management firm segment as its institutional client base recovered. However, on average, all the growth was due to price increases as organic volume growth and acquisitions played a very minor role. Other than the foodservice management firm sector, all but one food company's 2022 sales are ahead of pre-Covid (2019) levels.  

Pentallect partner Bob Goldin noted, "Going forward, we anticipate growing and significant consumer resistance to high food and beverage prices, which will favor private label and lower-priced brands. Therefore, food companies will be far less reliant on price increases as a growth driver."

Despite ongoing supply chain and cost pressures, food company profitability trends were generally favorable, with all sectors experiencing modest increases in gross profit and, except for beverage manufacturers, operating profit. More than 80% of the companies had gross profit increases, and over 70% had operating profit increases. 

Food companies in all sectors have had gross profit margin declines since 2019. Operating expense control, some mix improvements and pricing actions have minimized the impact on operating profit margins; food and beverage manufacturers and restaurant chains have had the steepest declines.

Pentallect partner Rob Veidenheimer stated: "To maintain or improve somewhat lagging profit margins in a slow volume growth environment, food companies will need to increase focus on operating expense reduction and brand building initiatives, while continuing customer and SKU portfolio management efforts."

About Pentallect Inc.

Pentallect is a food industry consulting firm specializing in business and strategic planning, M&A due diligence, go-to-market effectiveness and food distribution/supply chain optimization. The firm's clients include manufacturers, distributors/wholesalers, restaurant and supermarket chains and private equity firms. Each Pentallect partner has a unique understanding and perspective of the challenges facing the various market channels and segments, as each have held executive positions with multi-category manufacturers, distributors and/or consultancies. Their experienced-based thought leadership and pragmatic advice lead to improved sales and financial performance and company positioning. For more information, visit http://www.pentallect.com or call at 888-651-3104.

Source: Pentallect Inc.