Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. wants to “Make America Healthy Again” and inflation may help him defeat big food companies, such as Pepsi (PEP), Kellanova (K), and General Mills (GIS). RFK Jr.’s war against unhealthy food has him targeting harmful artificial dyes, seed oils, and sugary snacks and drinks.
While government pressure and regulation are one way to get consumers to change their eating habits, RFK Jr. may have a surprise ally in inflation. Some of the biggest food companies, including Frito-Lay owner Pepsi and Hostess owner JM Smucker (SJM), have reported declining snack sales in recent earnings reports.
Now, data from market research firm NIQ shows that consumers are spending less on expensive snacks. That makes sense, as consumer habits are changing due to ongoing inflation and a trade war between the U.S., Canada, Mexico, and China. This could cause food prices to increase, dissuading customers from spending on luxury foods, such as chips, soda, and sweets.
What This Means for Big Food Stocks
If inflation and the trade war continue to increase the price of snacks and sweets, big food stocks could be in trouble. Shifting consumer habits could hurt sales at the same time RFK Jr. pushes for change in the industry.
The HHS Secretary is playing nice with big food companies right now after a meeting last week. However, he warned that the government will take action to force changes if these companies aren’t proactive in removing unhealthy ingredients from foods.
How to Play Shifting Consumer Food Buying Habits
Rather than focus on companies making food, investors could turn to those selling it. That includes supermarkets like Walmart (WMT), Costco (COST), and Kroger (KR). These are more likely to resist inflation and trade war pressures as they sell necessary goods. WMT and COST both have consensus Strong Buy ratings with upside potential above 20%.
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