The Surprising Way Gasoline Prices Are Affecting Snack Food Sales
Talk to anyone with a car these days and it won't be long before the topic inevitably turns to gas prices. Gas prices have skyrocketed in the past month, due in part to the ongoing invasion of Ukraine and the subsequent worldwide sanctions on oil-rich Russia (via Wall Street Journal). According to CNN Business, the average price of gas in the U.S. has shot to $4.10 per gallon, with Los Angeles Times reporting prices in California topped $6 per gallon in late March.
The increased cost of fuel has had a ripple effect on the economy, combining with ongoing pandemic-related supply chain issues to not only drive retail prices up, according to United Press International, but also put a squeeze on people's pocketbooks, leading to a decrease in other, more impulsive spending.
According to a survey conducted by AAA and published in early March, 59% of Americans stated they plan to alter their habits to offset additional fuel expenses when gas prices climb above $4 per gallon, which (as stated above) they have now done. CNN reports that one of the first things to go in the category of lifestyle adjustments is usually last-minute gas station convenience store items like snack foods.
Slumping snack sales
According to CNN Business, 80% of the gas sold in the United States comes from local convenience stores, which bring in $475 million in revenue annually. Of that money, 25% is generated from in-store purchases including candy bars, jerky, beer, and other groceries.
A scale-back of Americans' driving habits hits convenience store profits doubly hard because it reduces the number of people buying gas regularly and sees a drop in in-store purchases, over 80% of which CNN reports are consumed immediately. However, it's not just convenience stores that lose out. The manufacturers of those products are seeing an impact on their bottom line. MarketWatch reports that companies like ConAgra – the makers of gas station staples like Slim Jim — were already losing money to the increased costs of supplies and transportation, and could now see even more trouble. Earlier this month, ConAgra announced plans to increase prices on some of its brands to make up for a portion of the loss.
Goldman Sachs managing director Bonnie Herzog wrote in a research note that convenience store sales are down across the board, with a particular downturn in packaged snack sales. "This is evidenced," Herzog shared, "by the slowing volume trend seen across most major snack food categories and outright volume declines for single-serve chocolate and jerky meat."
The U.S. government announced plans on April 12 to lower gas prices by expanding the availability of E-15 fuel this summer, according to Reuters, but it is unclear if it will be enough to significantly slow down the rampant inflation Americans are seeing throughout the economy.