COVID-19-Related Growth Led to Soaring U.S. Packaged Food Valuations; We Still See Pockets of Value

While growth abounded for domestic food manufacturers as consumers rushed to stock up on essential wares as COVID-19 took hold, it hasn’t been a pure panacea for this intensely competitive space. And we think the future trajectory hinges on which of the trends that took center stage the past few years will hold. In this context, while we concede many consumers honed their cooking skills while sheltering at home, as busy schedules resume, we think food consumption will revert such that a greater portion of budgets are expended outside of the home, in line with prepandemic levels. Further, although grocers simplified shelf assortments to maximize productivity during the peak in demand, we think variety will return as supply chains normalize.