It seems that the choppy waters CPG has been traversing in recent years will continue into 2024 - but there's hope and stability on the horizon. The Nosh team has pulled out all the stops with some fantastic insights this week. But, more on all that below.

And, celebrity shout-out: Robert Downey, Jr. is all in on happy™ coffee, while Seth Rogen is betting the house on café au cannabis culture. Hey, we did say 2024 was the year of the celeb endorsement. You heard it here first.

Alright! On with the pregame Sunday newsletter.

FIRST UP! CHOC-TASTROPHE? Hershey fires a brown warning shot across the CPG bow.

This week Hershey was the latest company to hit a brown note on future earnings thanks (in part) to ‘historic’ cocoa prices, writes a frankly bummed out Shauna ‘Sweet Tooth’ Golden.

The conglomerate reported modest Q4 net sales growth of 0.2% YOY as inflationary headwinds start to catch up following a bumper period. Cocoa prices have doubled over the last 12 months, hitting a new high of $5,874 on Thursday as dry weather caused by a pesky El Niño continues to impact crops in the vital west African region. With no let up in sight, chocolate-heavy companies like Hershey and Mondelēz are battening down the profit hatches for 2024.

In a further kick to the corns, Hershey’s snacks division (that’s Skinny Pop, Pirate’s Booty etc) recorded a 24.6% sales decrease as the popcorn category suffered ‘continued softness’ (ew). Prez and CEO Michele Buck expects the segment to rebound to growth and market share gains in H2 ’24.

Read the full Q4 report over on Nosh.com.

🥡 Key Takeaway: It’s a rough ride for Hershey as it navigates a slack earnings report. Buck is firing back with a new value size bigger pack format, heavy investment in advertising and innovation, ERP implementation and - unfortunately - job cuts with a goal to righting the ship by the end of 2024. Quite when cocoa costs will come back down to earth is anyone's guess.

AND: Who needs cocoa anyway? Alt-choc startup WNWN is throwing the pigskin at the goal line with its fermented carob product, set to launch shortly in the UK.

At the heart of it is co-founder and CTO Johnny Drain’s distaste for the much documented labor and environmental issues that plague cocoa. Is alt-choc a viable way for multinationals to offset increasing cocoa costs without impacting on quality? He sat down with Nosh Chief Chocolatier Adrianne DeLuca to discuss all things cocoa.

Click here to read the insightful interview.

With Expo West just around the corner this week's Community Call sees the New Hope/Informa team fill us in on the latest show updates for exhibitors and attendees.

Join us to discuss best practices for sampling and networking, retailer programs, and answers to the most common expo questions.

Listen up: Community Call open meetings are free to take part in and are as easy as hopping on a 30min Zoom call - except way more exciting, obviously.

Click - hey! - here to register.

The first episode of the brand-new CPG Week podcast features Nosh Managing Editor Monica Watrous joined by reporters Brad Avery and Lukas Southard, who sit down to discuss the various M&A deals seen in the first month of the year.

Aside from quick-firing the major deals in January, the dynamic trio discuss forecasts for 2024, insights from Editor-in-Chief Jeff Klineman and Monica's unusual ham sandwich order.

Spin this week's podcast here.

"It’s very difficult to have a branded product in foodservice if you’re not well known [...] or have made very lucrative deals behind [closed] doors"

This week's deep dive comes from back of house managers Adrianne DeLuca and Shauna Golden, who take a look a why plant-based brands are increasingly focusing on foodservice - a traditionally difficult-to-break-into market.

The crux is anchored by a GFI report that shows plant-based consumers made around 30 more trips to foodservice operators in 2022 than average, spending some $400 more to boot. With retail sales flagging, why wouldn't brands like Konscious Foods and Just Egg look to commercial kitchens for growth?

Foodservice at all levels - from high end restaurants to hospital cafeterias - offers its own unique barriers. Suppliers move slowly, operator margins are razor-thin, and getting in between entrenched chef relationships is daunting. But get it right and the opportunities are lucrative (Just Egg is in over 120 higher education institutions, jumping the company's foodservice sales 45% YOY).

Read the full deep dive over on Nosh.com.

What are your thoughts, Sunday readers? Is foodservice a viable route to market, or will brands get bogged down in complex sector politics? Click here to send in your comments.

Notable new products: THC chocolate hazelnut spread, Loaded Cocoa Puffs.

A roundup of some of the more interesting product launches this week.

Flings has secured a Target listing for its gluten-free toaster pastries.

Will these $9 frozen delights disrupt Pop-Tarts' market dominance, asks Monica 'Frosted Strawberry' Watrous.

Kellanova has reported flat net sales and a 12.3% profit margin in its first full quarter report.

The results were 'better-than-expected', writes Lukas 'Frosted Blueberry' Southard.

CEO of Temescal Brewing - Temescal Brewing

Oakland, CA

Sales Representative - Navy Hill

USA

Quality Director - Tonewood Brewing

Barrington, NJ

CPG funding has been steadily drying up over the last two years - but is it ready to turn around, asks Nosh Chief Financial Advisor Jeff Klineman.

The relative scarcity of funding can be traced to 2020's stock market dive. Fund allocators, still rebalancing their portfolios, are shying away from consumer funds. Startups in turn are scratching for runway funding while investors see conglomerates struggling with acquisitions as canaries in the mine.

As Nick McCoy, MD at investment bank Whipstitch Capital, puts it; "This has been the worst two years of capital funding in this industry that I can remember in more than 20 years of covering it." Yeouch.

Read the full sobering take over on Nosh.com.

🥡 Key Takeaway: Investment frequency, capital amounts and fund closings are all hugely down, but it may have bottomed out. A stable interest rate is a hopeful sign. And the basics remain - a solid team and a great product will still attract the necessary investment, notes Liz Myslik at VC firm Loft Partners.

Gas station chain Casey's is celebrating National Pizza Day the only way it knows how - by hiring a Midwesterner to drink beer, eat pizza and - presumably - pump gas.

In a most excellent press release Joe Cruz from Lincoln, Nebraska professed his love of both pizza and beer on multiple occasions, making him 'uniquely qualified' to take the job. Right on, Joe. H/T Jeff 'Gas Station Hot Dogs' Klineman.

AND FINALLY: Someone call the pun police because there's been a murder: avo brand Avocados From Mexico has launched a generative AI recipe platform called - sorry about this - GuacAImole.

Users can simply upload a picture of ingredients or a finished dish, and the clever clog AI will generate a guacamole recipe using the items. The example recipes are staunchly football specific - leftover wing sauce? GuacAImole recommends a Gridiron Glory Guacamole. Feta cheese? Big Game Greek-Inspired Guacamole Fiesta. Huh.

Try it for yourself at betterbowl.ai. H/T AdrAInne DeLuca.

If anyone needs me, I'll be whipping up a batch of my (in)famous game day special White Castle-con-Queso dip a la PBR. Until next week, your host,

Mark Murphy

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