Big-name American consumer brands from Kraft Heinz to Colgate-Palmolive are delivering solid growth lately -- outside the U.S.
Major U.S. consumer-staple, food and restaurant companies are seeing substantial increases in overseas revenue, especially in emerging markets, while domestic sales are more lackluster.
For food and beverage chains like Starbucks and KFC, overseas markets offer more runway for new stores that can bolster sales. Meanwhile, sales of everyday items from napkins to salad bowls are slowing in the U.S. as American customers, squeezed by inflation and worried about the economy, spend more selectively, company executives say.
"Consumers are clearly under increased pressure," said Mike Hsu, chief executive of Kimberly-Clark, the maker of Huggies diapers and Scott paper towels, on an earnings call last week.
Kimberly-Clark on Tuesday reported a slight decline in organic U.S. sales. Yet international sales were up, including big gains in Vietnam and India.
In Vietnam, the company is making huge gains by selling on social media, a playbook it used successfully in China, and has doubled its e-commerce business for Huggies so far this year. In India, sales of its high-end diapers are up 67%.
Kraft Heinz on Wednesday said net sales in emerging markets climbed 10% to $771 million in its most recent quarter. Sales in North America and international developed markets -- both bigger revenue generators -- declined in the quarter.
"In the U.S., Kraft Heinz is in every aisle of the grocery store," CEO Steve Cahillane said in an interview. In emerging markets, he said, the company's products are less available, making it easier to boost growth by expanding distribution.
For years, consumer brands and fast-food chains recorded rising sales in the U.S. Many companies raised prices, or found ways to improve margins by shrinking the size of their offerings while keeping the same price. Meantime, American consumers across income levels came out of the pandemic with money to spend.
Some food, beverage and retail companies selling to mainstream American consumers say their customers have dialed back spending as a result of rising fuel and other prices, dimming sales. Many customers overseas are also dealing with inflation, but companies can use expansion in those markets to bolster growth.
Starbucks closed hundreds of underperforming cafes across North America last year, and the coffee giant is continuing to evaluate its domestic portfolio before further growing again. Yet in the current moment, Chief Executive Brian Niccol sees a growth story abroad.
"We expect international to be a meaningful contributor to unit growth," Niccol said during a recent call with investors.
McDonald's sales in many global markets are growing, including Japan, Germany, Australia and the U.K. Chicken offerings stood out abroad, the company said Tuesday, while Red Bull-infused energy drinks and other new beverages performed well in Germany.
In the U.S., not so much. Traffic has stalled and customers didn't respond to promotions it ginned up in the spring.
So the company is shaking up its U.S. leadership, tapping an international veteran to run its domestic market. Skye Anderson, the company's new U.S. president, came up through the chain's Australia business before holding U.S. and global leadership roles.
Yum Brands said systemwide sales at its KFC brand fell 2% in the U.S. and 1% in Canada in the first six months of this year from a year earlier. Sales in all nine of its other regions have increased. The chicken brand opens a restaurant every 3.5 hours somewhere in the world on average. Few of those new KFCs are in the U.S.
Colgate-Palmolive, the toothpaste and soap maker, on July 31 reported a 3% decrease in North American net sales. But comparable sales in the Asia Pacific region were up 4.9% in its most recent quarter, and jumped nearly 14% in Latin America, as the company persuaded more consumers to pay up for its premium products, particularly in Brazil and Mexico.
And snack giant Mondelez International, the maker of Oreo and Toblerone, reported that net revenue from emerging markets grew 7.4% in its most recent quarter, compared with a 1.9% increase in developed markets.
Mondelez CEO Dirk Van de Put said there was plenty of untapped potential abroad.
"We still have a long runway of more consumers consuming more every day, " Van de Put said on an investor call on July 28.
Chipotle is looking outside the U.S. for growth, too.
The first Mexico location of the California-based, Mexican-style restaurant chain opened last month south of the border, in the Monterrey area. The company's local operator plans to open more locations in Nuevo León later this year and expand into Mexico City in 2027.
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