By Evie Liu

Weaker consumers, inflation, and tariffs are tightening the screws on packaged-food companies, and a series of announcements Thursday illustrated the dynamic landscape across the industry.

Conagra Brands, which sells a variety of frozen meals and snacks, reported fourth--quarter results. Both earnings and sales fell short of expectations for the second straight quarter, while the company trimmed the full--year forecast to far below what analysts had penciled in.

Management cited persistent inflation, supply--chain constraints, and an unfavorable foreign--exchange rate. Looming tariffs are also expected to have an impact, ranging from 50% on tin plate steel and aluminum to a potential 30% on imports from China.

The stock dropped more than 3% on Thursday. This year, shares have declined 28%, reaching their lowest level since 2012.

Conagra's challenges reflect broader headwinds across the packaged food business. Companies that heavily rely on their legacy brands are particularly vulnerable to consumer belt--tightening and changing preferences.

Not all packaged--food names are sinking, though. Simply Good Foods, which also reported earnings on Thursday, has seen some success by tapping into fitness and weight--loss trends.

Net sales for the May quarter increased 14% from a year ago, driven by the 2024 acquisition of Only What You Need, a rising brand of plant-based protein shakes and powders. Even organic sales for existing businesses improved 4% as Quest, its brand that primarily sells high-protein, low-sugar snacks, continued to gain consumer traction.

"Simply Good Foods is uniquely positioned to lead the continued mainstreaming of consumer demand for high-protein, low-sugar, low-carb food and beverage products, and to create meaningful shareholder value," said CEO Geoff Tanner.

The stock jumped 3.3% following the earnings report.

As companies scramble to adapt to the changing tastes of consumers, many are actively reshaping their portfolio through strategic acquisitions and divestitures.

On Thursday, Ferrero announced it would acquire cereal company WK Kellogg in a $3.1 billion all--cash bid, marking the Italian chocolate maker's latest effort to bulk up its North American footprint. It has already bought the U.S. candy units of Nestlé and ice cream maker Wells Enterprises in recent years.

WK Kellogg has struggled with sales decline in recent quarters, weighed by consumers steering away from high--sugar, high-carb food and mounting criticism over its use of synthetic dyes. Ferrero said it would invest in and grow WK Kellogg's iconic brands, and WK Kellogg's said it is open to explore opportunities beyond cereal.

Meanwhile, Kraft Heinz announced the sales of its Italian baby and specialty--food unit as it aims to drive profitable growth through its "accelerate platforms," which focus on areas with high industry growth rates and margins such as ketchup, sauces, and cheese.

Kraft Heinz has seen negative sales growth since the last quarter of 2023. The stock has tumbled 14% year to date to the lowest level since the Covid-10 pandemic.

The packaged--foods arena is entering a strategic reset. Only those with agility and targeted execution could emerge as winners.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 10, 2025 13:34 ET (17:34 GMT)

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