Key facts
- The US cooking oil market is shrinking due to economic and immigration enforcement pressures on Latino households.
- Hispanic consumers are reusing cooking oil more frequently, impacting sales.
- The rise of appetite-suppressing drugs like GLP-1s is affecting demand for fried foods in the foodservice sector.
- Associated British Foods reported a 1% increase in grocery sales, with lower US oil sales offset by other brands.
- The company's overall sales increased by 3% to £5.3 billion in the quarter.
The US cooking oil market is experiencing a contraction, with Associated British Foods (ABF) CEO George Weston attributing the decline to financial and immigration enforcement pressures on Latino households. Weston stated that these pressures are leading consumers, particularly within the Hispanic population, to reuse cooking oil more frequently, impacting sales of brands like Mazola. He also noted that the increasing use of appetite-suppressing drugs, such as GLP-1s, is contributing to reduced demand for fried foods in the foodservice sector.
Despite the challenges in the cooking oil segment, ABF reported a 1% rise in overall grocery sales for the three months to June 20, with growth in brands like Twinings offsetting the lower US oil sales. The company's total sales increased by 3% to £5.3 billion during the quarter. Sales at Primark, which ABF is considering spinning off into a separate listed company, were up 3% after adjusting for exchange rate changes. However, the group experienced a 4% slump in sugar sales and a 14% slump in agricultural supplies, largely due to animal feed.
Weston described the consumer environment across most of ABF's markets as challenging. The report also touched upon job cuts at Asda, the UK's third-largest supermarket, which reduced its workforce by nearly 6,000 last year. These cuts were attributed to various factors, including the sale of the Leon food business, a reduction in the technology team following IT system revamps, and a general non-replacement of staff who had left. Asda has been working to turn its business around since its acquisition in 2020, though it reported a near £1 billion loss last year amid a supermarket price war and significant investment in IT system changes.