Tariff uncertainty is hammering one of America’s favorite food escapes — snacks

Tariff uncertainty and inflation are driving consumer decisions at the grocery stores, and for big packaged food companies, one key area is bearing the brunt of these changes: snacking.

In its quarterly report released Monday, Campbell’s (CPB), which owns snack brands like Goldfish crackers and Cape Cod chips, said that it saw “increased headwinds” in snacking, leading to a 5% decline in volume mix and an 8% decrease in revenue in its fiscal third quarter results.

Consumers “are increasingly intentional about the discretionary snack purchases,” CEO Mick Beekhuizen told investors on the company’s earnings call, a trend that has only gotten worse as the year’s gone on.

“If you look at the quarter, Q3, and you put it in perspective versus Q2, you see … the aggregate categories deteriorated … driven by the deteriorating consumer confidence,” Beekhuizen added.

Campbell’s is only the latest in a series of packaged food giants to call out a shift in snacking behavior.

“Revenue management clearly is becoming more complex,” PepsiCo (PEP) CEO Ramon Laguarta told investors on the company’s earnings call in late April, “as consumers are feeling more challenged with their disposable income.”

Laguarta said consumers’ approach to shopping changed in the quarter. In early April, consumers were looking to see how much they got per item, and by the end of the month, they were more focused on the “absolute price per unit.” Pepsi’s snack portfolio includes Frito-Lay brands like Lays, Cheetos, Doritos, and Tostitos, among others.

Kraft Heinz’s (KHC) portfolio overall — ranging from Jell-O to Lunchables — saw its volume mix drop 5.6 percentage points in the quarter. Kellanova (K), which is behind brands like Cheez-Its and Pringles, saw its volume decline in North America. The company is in the process of being acquired by Mars.

The summer months could potentially catalyze a turnaround in consumer habits, with holidays offering what Kraft Heinz CEO Carlos Abrams-River called “volume opportunities” on the company’s latest earnings call in late April.

Winning holidays is crucial.

“Holidays matter … It’s like holidays are almost worth double relative to a regular week,” Bank of America analyst Peter Galbo told Yahoo Finance. Better weather also plays a key role.

For example, if Memorial Day weather isn’t very good in much of the country, it can create a “meaningful swing factor” for snacks. If “the weather is bad,” Galbo added, “You’re not going to have a barbecue, so you don’t buy Tostitos or Lays.”

This snacking slowdown also comes as consumer confidence has fallen sharply, rising in May for the first time all year. At the same time, the US labor market is beginning to show some cracks, with the number of Americans collecting unemployment checks in mid-May standing at the highest in 3.5 years.

Uncertainty surrounding tariffs has also weighed on pricing and the consumer outlook. Data from PwC found prices for shelf-stable categories like sauces, pasta, canned beans, and snacks are up 1%-6% over the last week due to the impact of tariffs.

Read more: What Trump’s tariffs mean for the economy and your wallet

From a product packaging and ingredient standpoint, Galbo said he doesn’t expect tariffs to impact snacks, which are mostly sourced domestically or from Canada, which is likely exempt as a result of the USMCA.

Inflation data out last month showed grocery prices fell 0.4% in April while overall food inflation fell 0.1%, the sharpest drop in both measures since 2020. Still, measures like this year’s spike — and then sharp decline — in egg prices show consumers navigating a volatile food pricing environment and acting with caution as they roam the aisles.

“Snacking is way more discretionary than we probably all thought it was, as opposed to being a staple,” Galbo said. “Which is what these companies were supposed to be.”

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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