Nestle, Tyson and other food giants bet on air fryer boom to grow sales
An Air Fryer for sale at Kroger Marketplace in Versailles, Kentucky, U.S., on Tuesday, Nov. 24, 2020.
Scotty Perry | Bloomberg | Getty Images
Kettle Foods, known for its kettle-cooked potato chips, recently unveiled what it called “the future of the potato chip category”: air-fried chips.
The Campbell Soup brand’s snack launch, made with patent-pending technology, is the latest example of Big Food betting on consumers’ love of all things cooked in air fryers.
In 2022, U.S. consumers spent nearly $1 billion buying air fryers, up 51% from 2019, according to market research firm The NPD Group. Sales of the cooking appliance have been soaring since 2017, and they received an extra boost during the early days of the pandemic as people cooked more at home.
And now with more workers returning to the office and spending less time in the kitchen, consumers are increasingly turning to the portable convection ovens. Joe Derochowski, home industry advisor at the NPD Group, said the main draw is the ease and speed of using the appliance, plus achieving a crispy texture without deep-frying. And food manufacturers want to capitalize on the trend.
“They say necessity is the mother of invention. And in this case, the necessity is to continue to grow the top line,” said Ken Harris, managing partner at Cadent Consulting Group. “The best way to grow the top line is to take behavior that already exists and find a new use for that behavior.”
Big food companies like Kraft Heinz and Nestle saw a surge of sales early in the pandemic. When consumers started eating out at restaurants again and cooking less, food manufacturers’ sales still kept growing thanks to double-digit price hikes. But as shoppers’ grocery bills climbed in 2022, they started buying cheaper options instead, leading to shrinking volume.
As inflation cools and retailers put pressure on suppliers to stop raising prices, food companies have had to look for growth elsewhere.
Adam Graves, president of Nestle U.S.’s pizza and snacking division, said the company is leaning into the air fryer boom through its frozen food brands, specifically to offer customers more value.
“It’s the biggest trend that we’re seeing right now in modern cooking,” said Graves, who owns two air fryers himself.
Last year, Nestle launched pizza bites under its DiGiorno and Stouffer’s brands. Both lines’ packaging tells consumers “Try It in Your Air Fryer.” Other Nestle products, like Hot Pockets, now include air fryer cooking instructions alongside directions for heating up in the microwave and oven.
Tyson Foods jumped on the trend relatively early, launching its air-fried line in 2019. The products, ranging from chicken strips to its newest addition, parmesan-seasoned chicken bites, contain 75% less fat. Colleen Hall, senior marketing director of the Tyson brand, said the line has reached roughly $100 million in annual retail sales.
Tyson is also a third of the way through adding air fryer directions to its packaging for its frozen prepared foods.
“If you look at how often it gets used as a preparation method, it’s around 5%,” Hall said. “I think consumers want to use it more, they want more options to use it. So it’s good timing for us to be putting it on our packaging.”
The air fryer directions are boosting Tyson’s brand favorability, according to Hall, who cited recent brand health data. She chalked it up to the convenience of the appliance and the perceived health benefits of the cooking process.
For fishstick maker Gorton’s Seafood, getting more into air frying is a means of holding on to the customers it gained during pandemic lockdowns.
“[The pandemic] was a pretty dramatic shift that brought a lot of new households into our category and into the brand,” Jake Holbrook, Gorton’s vice president of marketing, told CNBC. “And we’ve worked hard through our messaging and our products to keep those consumers in the category and keep Americans eating more seafood.”
The bandwagon is filling up
Air frying is the second-most popular way to heat up frozen prepared foods, according to Holbrook.
The company, which is owned by Nissui, got into the trend by putting air fryer cooking instructions on its website. Then it added the directions to packaging. In January, it unveiled Air Fried Butterfly Shrimp and Air Fried Fish Fillets.
Gorton’s launched Air Fried Fish Fillets and Air Fried Butterfly Shrimp nationwide in January.
Source: Gorton’s Seafood
Gorton’s new butterfly shrimp and fish fillets were cooked by air frying before being packaged, but consumers can heat the seafood up by air frying it again. The products’ packaging touts that it contains 50% less fat.
“Everyone will jump on this bandwagon for the next two years while it’s trendy,” Harris said.
Other food makers following the trend include Kellogg, which started including air fryer instructions for its plant-based Morningstar Farms products in early 2021 in response to customer inquiries. Likewise, Hormel Foods has been responding to consumers’ air fryer demand by updating its packaging and adding recipes on its website and cooking videos on YouTube to create Spam fries and Mary Kitchen corned beef hash.
Nestle has gone even further, targeting consumers who haven’t yet bought an air fryer. In December, it partnered with Insta Brands, the maker of the Insta Pot and its own version of the air fryer, to give away the appliance. It ran a similar giveaway internally at Nestle U.S. for its employees.
Graves estimates that roughly 60% of U.S. households have an air fryer at this point. But it’s not ubiquitous yet.
“If you benchmark it to a microwave — there’s a microwave in practically everyone’s home — the air fryer’s got a long way to go,” Harris said.
Still, it’s well on its way to joining the microwave as a staple in U.S. kitchens. In 2022, the air fryer leapfrogged over grills and multicookers to become the No. 4 cooking appliance, according to the NPD Group.
“I think people originally thought [the air fryer] was something that might be a fad,” Tyson’s Hall said. “It’s similar to the 1970s — people thought the same thing about the microwave.”
Lucid to cut 1,300 workers amid signs of flagging demand for its EVs
Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.
Andrew Kelly | Reuters
Struggling EV maker Lucid said in a regulatory filing on Tuesday that it plans to cut about 18% of its workforce, or roughly 1,300 employees, as part of a larger restructuring to reduce costs as it works to ramp up production of its Air luxury sedan.
Lucid said it will incur one-time charges totaling between $24 million and $30 million related to the job cuts, with most of that amount being recognized in the first quarter of 2023.
News of the job cuts was first reported by Insider earlier on Tuesday. Lucid’s shares closed down over 7% on Tuesday following the Insider report.
In a letter to employees, CEO Peter Rawlinson said the job cuts will hit “nearly every organization and level, including executives,” and that affected employees will be notified over the next three days. Severance packages will include continued healthcare coverage paid by Lucid, as well as an acceleration of equity vesting, Rawlinson wrote.
Lucid ended 2022 with about $4.4 billion in cash on hand, enough to last until the first quarter of 2024, CFO Sherry House told CNBC last month ahead of the company’s fourth-quarter earnings report. But there have been signs that demand for the high-priced Air has fallen short of Lucid’s internal expectations, and the company may be struggling to convert early reservations to sold orders.
Lucid said that it had more than 28,000 reservations for the Air as of Feb. 21, its most recent update. But it also said that it plans to build just 10,000 to 14,000 vehicles in 2023, far fewer than the roughly 27,000 that Wall Street analysts had expected.
With Lucid’s factory currently set up to build about 34,000 vehicles per year, the company has warned of continuing losses.
“As we produce vehicles at low volumes on production lines designed for higher volumes, we have and we will continue to experience negative gross profit related to labor and overhead costs,” House said during Lucid’s earnings call on Feb. 22.
Lucid hasn’t yet announced a date for its first-quarter earnings report.
Virgin Orbit extends unpaid pause as Brown deal collapses, ‘dynamic’ talks continue
NEWQUAY, ENGLAND – JANUARY 09: A general view of Cosmic Girl, a Boeing 747-400 aircraft carrying the LauncherOne rocket under its left wing, as final preparations are made at Cornwall Airport Newquay on January 9, 2023 in Newquay, United Kingdom. Virgin Orbit launches its LauncherOne rocket from the spaceport in Cornwall, marking the first ever orbital launch from the UK. The mission has been named Start Me Up after the Rolling Stones hit. (Photo by Matthew Horwood/Getty Images)
Matthew Horwood | Getty Images News | Getty Images
Virgin Orbit is again extending its unpaid pause in operations to continue pursuing a lifeline investment, CEO Dan Hart told employees in a company-wide email.
Some of the company’s late-stage deal talks, including with private investor Matthew Brown, collapsed over the weekend, people familiar with the matter told CNBC.
Hart previously planned to update employees on the company’s operational status at an all-hands meeting at 4:30 p.m. ET on Monday afternoon, according to an email sent to employees Sunday night. At the last minute, that meeting was rescheduled “for no later than Thursday,” Hart said in the employee memo Monday.
“Our investment discussions have been very dynamic over the past few days, they are ongoing, and not yet at a stage where we can provide a fulsome update,” Hart wrote in the email to employees, which was viewed by CNBC.
Brown told CNBC’s “Worldwide Exchange” last week he was in final discussions to invest in the company. A person familiar with the terms told CNBC the investment would have amounted to $200 million and granted Brown a controlling stake. But discussions between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a person familiar told CNBC. As of Saturday those discussions had ended, the person said.
Separately, another person said talks with a different potential buyer broke down on Sunday night.
The people asked to remain anonymous to discuss private negotiations. A representative for Virgin Orbit declined to comment.
Hart promised Virgin Orbit’s over 750 employees “daily” updates this week. Most of the staff remain on an unpaid furlough that Hart announced on Mar. 15. Last week, a “small” team of Virgin Orbit employees returned to work in what Hart described as the “first step” in an “incremental resumption of operations,” with the intention of preparing a rocket for the company’s next launch.
Virgin Orbit’s stock closed at 54 cents a share on Monday, having fallen below $1 a share after the company’s pause in operations.
Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. But the company’s last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.
The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to fund the company further.
Virgin Orbit was spun out of Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.
The company hired bankruptcy firms to draw up contingency plans in the event it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company raised $60 million in debt from the investment arm of Virgin Group.
On the same day that Hart told employees that Virgin Orbit was pausing operations, its board of directors approved a “golden parachute” severance plan for top executives, in case they are terminated “following a change in control” of the company.
Historic UAW election picks reform leader who vows more aggressive approach to auto negotiations
Supporters wave signs during an address at the Time Warner Cable Arena in Charlotte, North Carolina, on September 5, 2012 on the second day of the Democratic National Convention (DNC).
Mladin Antonov | AFP | Getty Images
DETROIT – United Auto Workers members have ousted their president in the union’s first direct election, ushering in a new era for the prominent organized labor group ahead of negotiations later this year with the Detroit automakers.
The union’s new leader will be Shawn Fain, a member of the “UAW Members United” reform group and local leader for a Stellantis parts plant in Indiana. He came out ahead in a runoff election by hundreds of votes over incumbent Ray Curry, who was appointed president by union leaders in 2021.
Fain, in a statement Saturday, thanked UAW members who voted in the election. He also hailed the election results as a historic change in direction for the embattled union, which he says will take a “more aggressive approach” with its employers.
“This election was not just a race between two candidates, it was a referendum on the direction of the UAW. For too long, the UAW has been controlled by leadership with a top-down, company union philosophy who have been unwilling to confront management, and as a result, we’ve seen nothing but concessions, corruption, and plant closures,” Fain said.
Curry, who previously protested the narrow election results, said in a statement that Fain will be sworn in on Sunday and that Curry is “committed to ensuring that this transition is smooth and without disruptions.”
“I want to express my deep gratitude to all UAW staff, clerical support, leaders and most of all, our union’s active and retired members for the many years of support and solidarity. It has been the honor of my life to serve our great union,” Curry said.
More than 141,500 ballots were cast in the runoff election that also included two other board positions, a 33% increase from last year’s direct election in which neither of the presidential candidates received 50% or more of the votes.
The election was overseen by a federal monitor, who did not immediately confirm the results. The election results had been delayed several weeks due to a run-off election as well as the close final count.
Shawn Fain, candidate for UAW president, is in a run-off election with incumbent Ray Curry for the union’s highest-ranking position.
Jim West for UAW Members United
Fain’s election adds to the UAW’s largest upheaval in leadership in decades, as a majority of the union’ s International Executive Board will be made up of first-time directors who are not part of the “Administration Caucus” that has controlled the union for more than 70 years.
Fain and other members of his leadership slate ran on the promise of “No corruption. No concessions. No tiers.” The last being a reference to a tiered pay system implemented by the automakers during recent negotiations that members have asked to be removed.
The shuffle follows a yearslong federal investigation that uncovered systemic corruption involving bribery, embezzlement, and other crimes among the top ranks of the UAW.
Thirteen UAW officials were convicted as part of the probe, including two past presidents. As part of a settlement with the union in late 2020, a federal monitor was appointed to oversee the union and the organization held a direct election where each member has a vote, doing away with a weighted delegate process.
For investors, UAW negotiations with the Detroit automakers are typically a short-term headwind every four years that result in higher costs. But this year’s negotiations are anticipated to be among the most contentious and important in recent memory.
Fain has said the union will seek benefit gains for members, advocating for the return of a cost-of-living adjustment, or COLA, as well as raises and job security.
The change in the UAW comes against the backdrop of a broader organized labor movement across the country, a pro-union president and an industry in the transition to all-electric vehicles.
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