The largest food and tobacco companies on the Coins2Day 500 have a big problem. Nearly all of the companies saw their ranking slip in 2014.
Of the top 10 food, beverage and tobacco companies on the Coins2Day 500, nine out of 10 dropped in the rankings last year, with only chicken producer Tyson Foods (TSN) earning a higher spot (climbing ten spots to No. 83). And more broadly, of the 25 food, beverage and tobacco companies that are on the Coins2Day 500 list, only four were able to increase their ranking last year. Profits and earnings have broadly declined for many of the firms within those sectors.
For the tobacco industry, the decline isn’t a surprise. Though the industry aims to prop up results with new products like e-cigarettes and by increasing prices for traditional cigarettes, people are smoking less.
But for Big Food, executives are facing a newer challenge: consumers are increasingly skeptical of big brands that fill up grocery aisle shelves. Instead, smaller niche players are stealing market share. Consumers are also buying more fruits, vegetables and meats on the perimeter of grocery stores. That’s hurting the cereal, snack and soda makers that stock shelves with processed foods that are falling out of favor with more and more Americans.
Still, Big Food is still top dog for now. Here is a look at Coins2Day’s 10 largest food, beverage and tobacco producers.
10. General Mills
Of the top 10, General Mills (GIS) posted the greatest decline in the rankings, tumbling 12 spots to rank No. 171 on the Coins2Day 500. The maker of Cheerios, Lucky Charms and Yoplait yogurt maker has reported consistent sales increases of late, though profitability dropped a bit last year. General Mills has faced a particularly tough challenge in the breakfast food aisle. Data from research firm NPD Group data 29% of breakfast meals include cold cereal, down from 33% in 2004.
9. Altria Group
The Marlboro cigarette producer commands a little more than 50% of the cigarette market in the U.S., a strong position that helps Altria (MO) secure key retail shelf space and also gives it pricing power. In 2014, higher prices offset a decline in volume enough to allow Altria (No. 169 on the Coins2Day 500) to post a slim 1.6% increase in sales. Altria is facing a new, stronger rival in Reynolds American (RAI), which officially merged with Lorillard this month.
8. Kraft Foods
Kraft Foods (KRFT), maker of Kraft cheese, Planters peanuts and Jell-O, has gone through a lot of transformations in just under three years. In 2012, the company was officially spun off from Mondelez (MDLZ), which makes Oreos, Cadbury chocolate and Nabisco snacks. Less than three years later, another transformation is planned: Kraft (No. 165 on the Coins2Day 500) is poised to merge with Heinz in a deal orchestrated by Warren Buffett and private-equity firm 3G Capital Partners. That deal would combine Kraft with Heinz, which ranks No. 272.
7. Philip Morris International
Americans generally associate the name "Philip Morris" with cigarettes that are sold here in the U.S. But there is a quirk: the company named Philip Morris International (PM) derives none of its sales and profits from the U.S. Market. Those sales are booked by a separate company, Altria, while Philip Morris generates tobacco sales from all other markets around the globe. Philip Morris (No. 102 on the Coins2Day 500) faced two significant challenges last year: it shipped 856 billion cigarettes last year, down 2.8% from the prior year. And results were also dragged lower by a stronger U.S. Dollar. When foreign currencies decline, the tobacco maker's profits and sales suffer.
6. Mondelez International
Mondelez's (MDLZ) 3% revenue drop in 2014 caused the company to drop rank this year to No. 91, and was among the largest declines reported by a food, beverage and tobacco producer last year, with results hurt by sharper declines for the Asia Pacific, Latin America and East and Africa regions. That's largely because of currencies woes, which hurt other international companies on this list. Like many of its peers, Mondelez has announced a few bolt-on acquisitions, buying a massive stake in Vietnam snack maker Kinh Do Corp. And also scooping up allergy-friendly and gluten-free snack maker Enjoy Life Foods.
5. Tyson Foods
Tyson Foods (TSN) is one of the few significant growth stories in the sector, with sales jumping 9% and profits up 11% in 2014. Results were bolstered by strong domestic demand for chicken and higher volumes internationally. More Americans are increasingly interested in adding protein to their diet, a trend that favors meat producers like Tyson. The company (No. 83 on the Coins2Day 500) also generated a lot of headlines for participating in a bidding war to buy Hillshire Brands. It won.
4. CHS
Farmer-owned cooperative CHS (No. 69) is the only non-publicly traded company featured on this list. But profits and sales have been stung by lower average selling prices for a handful of commodities the company handles, including grain, fertilizer and processed grains. Though CHS is very diverse, revenues are affected by market price swings for crude oil, fertilizer, grain and other commodities, and those swings are beyond the company's control. But with only 10% of net sales generated outside the U.S., CHS has a lot of opportunity to expand globally.
3. Coca-Cola
Coca-Cola (KO) has been pressured by a huge consumer shift away from carbonated soft drinks, a category that has suffered sales declines in the U.S. For a decade. The company's Diet Coke is facing a particularly tough time as people express more concerns about "diet" labeled foods and beverages. Coke (No. 63) does have one key advantage: as the world's largest beverage company, it can utilize its relationships with retailers to win key store shelf space.
2. PepsiCo
No. 44 PepsiCo's (PEP) greatest strength of late has been the company's growth from the Frito-Lay North America business and from sales in the Asia, Middle East and Africa markets. Like Coke, soda sales trends have been exceptionally problematic. To hunt for growth, Pepsi wants to sell more products with reduced sugar, sodium and saturated fat to address new consumer tastes. The company is also targeting $1 billion in annual sales over the next several years by restructuring its manufacturing operations and increasing automation to help cut costs.
1. Archer-Daniels Midland
One of the world's largest processors of oilseeds, corn, wheat and other agricultural commodities, that scale is why Archer-Daniels Midland (ADM) is the largest food company on the Coins2Day 500 at No. 34. It has acquired a few key companies, including Wild Flavors and Specialty Commodities, while also selling some assets like its' global cocoa business. Those two businesses are so important to ADM that it created a new reporting segment to show off the results of those businesses. There are also a lot of cost and revenue synergies as ADM combines them.
