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LEUVEN, BELGIUM — EIT Food and Mars Petcare have partnered to launch an Open Innovation Challenge, which seeks to identify innovative solutions to transform fiber into protein and sugar. The goal of this is to work with organizations to develop more sustainable pet food ingredients. 

This initiative aims to transform byproducts from agricultural processing — such as straw from crop harvesting or waste from peeling and chopping vegetables — into ingredients of nutritional value for pet food by improving ingredient digestibility.

“Agricultural byproducts often comprise of high-quality proteins but come with high levels of insoluble fibers that limit usage in pet food due to being difficult for pets to digest,” said Benoit Buntnix, director of business creation at EIT Food. “Transforming the insoluble fiber fractions into materials that can be effectively digested in the gut of a dog or cat would allow the usage of what would otherwise be a waste material as a valuable and more sustainable option for pet food.”

The challenge provides an opportunity for organizations in the pet food industry to work with the two companies, creating the potential to scale innovations rapidly.

“This Open Innovation Challenge with EIT Food represents a significant step forward in our mission to drive more sustainable food solutions for pets,” said Michael Horan, global S&T platform leader material science at Mars Petcare. “We believe that we have a lot to offer when it comes to open innovation approaches and are excited to tap into this using the ecosystem and know-how of EIT Food.”

Applications are open until Sept. 22 for startups, academia, research institutes or established organizations. Register for the Open Innovation Challenge here.

Stay up to date on the latest pet food processing industry headlines on our News page. 

AUSTIN, TEXAS – Pasture-raised food manufacturer Vital Farms introduced Reena Van Hoven as the company’s new chief people officer, effective Sept. 16.

Van Hoven most recently served as senior vice president of talent and rewards for Danone North America. 

Vital Farms said Van Hoven will lead the company’s people team in the newly created CPO role, overseeing business partnerships, organization and people development, and total rewards.

President and chief executive officer Russell Diez-Canseco said Van Hoven will build on a foundation established by Vital Farms’ people team.

“We believe our true competitive advantage is our people, and deepening our investment in this function will help us scale our high-performing organization and purpose-driven culture,” Diez-Canseco said. “Reena’s deep expertise and passion for people will continue to strengthen our work engaging, inspiring and developing our crew members, and attracting world-class talent.”

During close to two decades in human resources, Van Hoven’s experience includes roles with Danone North America, organic salad producer Earthbound Farms, WhiteWave Foods and Deloitte.

Van Hoven described Vital Farms as a purpose-driven food company that “improves the lives of people, animals and the planet” through its work.

“Vital Farms not only embodies its mission and values, but also fosters an environment where talent can thrive, make a significant impact, and grow both personally and professionally,” she said.

Diez-Canseco also noted that senior vice president of people and strategy Stephanie Coon will remain on Vital Farms’ senior leadership team as senior vice president of strategy.

“Stephanie has played an instrumental role in evolving Vital Farms’ people team into the high-impact function it is today,” the CEO said. “In addition to welcoming an incredible leader in Reena, this move enables Stephanie to put even more focus on the critical strategy work ahead as we build Vital Farms into a $1B company and a disruptive force in the food industry.”

10 – Mars ready to offer much more than chocolate, candy

In one big transaction, Mars Inc. is set to transform its candy-based snack business into a diverse portfolio anchored in grain-based baked foods through its planned acquisition of Kellanova.  

9 – FDA mandates labeling for added sugar

Mandatory front-of-pack labeling rules for added sugars, expected from the Food and Drug Administration in October (originally expected in June), are just the beginning of government efforts to reduce sugar consumption and prompt product reformulation away from sugar.

8 – Dairy products trending in social media spotlight

When it comes to food-centric videos on social media platforms, the sky is the limit. Some of these videos have racked up more than 4 billion views, bringing attention to every meal of the day, from breakfast to dinner, midnight snacks and everything in between.

7 – Private label brands gain momentum with consumers

Consumer packaged goods companies sizing up private label competition need only look at the nation’s largest retailers to see how the brands have become a food shopping staple, new research from Numerator shows.

6 – Laughing Cow formulates first limited-time flavor

The Laughing Cow’s snack-sized spreadable cheese wedges have a new twist. The Bel Brands USA snack brand revealed its debut limited-edition product, a new Everything Bagel Style flavor.

5 – DMI establishes dairy research hub

The dairy checkoff developed a site dedicated to product innovation with the help of the Dairy Management Inc. dairy products research and development team. DMI said the hub supports those who innovate with dairy to make products that “drive sales and trust across the industry.”

4 – Product mashups create consumer intrigue

The wave of co-branded, cross-category products hitting the food and beverage market in recent years has continued to surge, and consumer packaged goods industry observers don’t expect the trend to crest anytime soon.

3 – Sargento makes various leadership promotions

Cheese manufacturer Sargento announced several leadership promotions in its consumer products, and foodservice and ingredients business units.

2 – Idaho Milk Products to add facility for ice cream

Milk protein supplier and dairy processor Idaho Milk Products revealed it plans to enter the ice cream market as part of “a significant broadening of its business,” highlighted by a new $200 million dual ice cream and powder blending facility.

1 – Yogurt leads Danone’s growth in North America

Effective pricing and volume/mix gains carried Danone SA to an earnings increase of 11.5% in the first half of the fiscal year, which saw headwinds in foreign exchange and the effects of deconsolidating its Essential Dairy and Plant-based business in Russia.

KIELER, WIS. — A Packers Sanitation Services Inc. (PSSI) spokesperson confirmed that the sanitation company would be opening an office in Atlanta to expand its presence in the Southeast.

“Atlanta is not only home to many universities and leading research centers in sanitation science but is also a reliable and robust travel hub — offering more opportunities for us to interact with our customers and team members across the country,” said PSSI spokesperson Gina Swenson.

The company stated that the expanded footprint to Atlanta will shift several job functions based in Wisconsin to the new office at the end of 2024.

“The Kieler-based chemical plant [in Wisconsin] will continue to operate, while some corporate duties will be shifted to the Atlanta office,” Swenson said. “The transition will present no disruption to our customers.”

Several changes were recently made to PSSI’s business.

During March 2024, PSSI filed a WARN notice that the company would lay off 175 people working at the JBS USA meat processing plant in Greeley, Colo.

The company also filed a WARN notice in the same month to lay off 76 employees at the Tyson facility in Perry, Iowa, which was scheduled to close its doors.

In April 2023, Cargill announced it would terminate its contracts with PSSI following an investigation by the Department of Labor that accused PSSI of child labor violations.

PSSI was also issued a $1.5 million fine after the DOL claimed that at least 102 workers from 13 to 17 years of age were employed to clean meatpacking plants.

Later in the year, PSSI hired Diego Alvarez to the new position of chief compliance officer.

ARLINGTON, VA. — Aligning consistent data and assessing the environmental benefits of innovation across the feed industry were among the goals covered with the release of new Sustainability Road Map project materials by the Institute for Feed Education and Research (IFEEDER).

Representing US and Canadian industry members and stakeholders, these resources, developed in collaboration with the Context Network and the Animal Nutrition Association of Canada (ANAC), include findings from a comprehensive assessment of industry sustainability practices and a literature database of the impact of novel feed ingredients on animal performance.

“These resources are designed to address the need for efficient and effective tools for measuring, reporting and verifying sustainability efforts,” said Lara Moody, executive director of IFEEDER. “By engaging our animal food customers and considering how we can help them achieve their environmental footprint goals, we will be better equipped to make informed decisions and meet their sustainability objectives.”

During the second phase of the Sustainability Road Map project, IFEEDER, ANAC and the Context Network collaborated with partners across the animal food industry to achieve several objectives. 

One objective included aligning and ensuring industrywide consistency in how data is measured, reported and verified across indicators and metrics important to the industry and its customers. The project also sought to improve the efficiency and effectiveness of life cycle assessments (LCAs) to support the industry and its customers in their sustainability efforts. 

The project also focused on assessing and considering the environmental benefits of innovations in areas such as animal food ration development, ingredients and additives to help stakeholders meet corporate sustainability commitments. 

The first phase of the Sustainability Road Map initiative laid the groundwork by defining “sustainability” for the animal food industry and creating the Animal Food Industry Sustainability Toolkit, a resource for animal food industry companies establishing or advancing internal sustainability programs. The insights gained during this phase identified several critical knowledge and data gaps, which the new materials aim to address. 

As part of phase two of the Sustainability Road Map project, the following resources have been added to the toolkit:

• Results of a matrix assessment, documenting common themes among the metrics tracked throughout the animal agriculture industry. 
• Insights from interviews with allied organizations on current data collection and information management practices.
• A strengths, weaknesses, opportunities and threats analysis of current sustainability practices within the North American animal food industry.
• Findings from a literature review and a comprehensive database, which assess animal performance metrics relative to environmental footprint reduction benefits.

IFEEDER also recently added an additional toolkit resource that defines 16 issue areas material to the animal food industry sustainability, providing industry examples and tangible benefits. 

The complete toolkit is available for free to American Feed Industry Association (AFIA) members and IFEEDER donors on IFEEDER’s website and ANAC members on ANAC’s website. It is also available for purchase to nonmembers for $995 in AFIA’s Online Store. 

The Sustainability Road Map Advisory Committee and project funders included ANAC; APC LLC; Arm & Hammer; Balchem; BASF Corp.; Bayer Crop Science; Berg+Schmidt America, LLC; CHS Inc.; Chr. Hansen; CJ Bio; Darling Ingredients; DSM; Furst-McNess Company; Hill’s Pet Nutrition; ICM Biofuels, LLC; ILC Resources; Kemin Animal Nutrition & Health; Mosaic; Novus; Syngenta; US Roundtable for Sustainable Beef: The Wenger Group; Western Milling; and Zinpro.

Founded in 2009 by the AFIA, IFEEDER supports education and research initiatives in the animal food industry that ensure access to a safe, healthy and sustainable food supply.

Read more about sustainability efforts across the pet food and treat industry.  

This article was published in the July 2024 issue of Pet Food Processing. Read it and other articles from this issue in our July digital edition.  

The US animal food industry remains a robust player on the global stage, backed by strategic initiatives and proactive measures to ensure its continued success and resilience. In 2023, this industry exported a remarkable $13.4 billion in feed, feed ingredients and pet food, equating to 19.8 million metric tons in total volume. Pet food alone accounted for $2.4 billion of these exports. 

The industry’s strength is bolstered by its commitment to quality, safety and innovation, which drives its competitive edge in international markets. US pet food manufacturers prioritize high standards in sourcing ingredients, maintaining stringent production processes, and adhering to regulatory requirements. Furthermore, strategic partnerships and trade agreements play a pivotal role in expanding market access and facilitating smoother trade flows. 

The American Feed Industry Association (AFIA), which represents the total animal feed and pet food industry, is engaged in several initiatives this year aimed at expanding market access abroad for US pet food exporters and ensuring a stable supply chain for the future.

Market Access Programs 

Under the US Department of Agriculture’s (USDA) Market Access Program (MAP), the AFIA has been working to expand US pet food exports, with targeted efforts in Vietnam. Leveraging MAP resources, the AFIA is collaborating with the Vietnamese Small Animal Veterinary Association (VSAVA) to support veterinary clinics in Vietnam, increasing awareness among dog and cat owners about the critical roles veterinarians and proper animal nutrition play in ensuring the wellbeing and longevity of pets.

Later this year, the AFIA and VSAVA will launch a “Pet Health Month” program uniquely targeting veterinarians, veterinary students and pet owners, when the associations will emphasize the importance of nutritious and complete pet foods in a market where many pets are still primarily fed table scraps. This initiative will be a groundbreaking effort in Vietnam, highlighting the essential connection between improved diets and pet health.

“Expanding Vietnamese pet food production can make pet food more affordable and available to Vietnamese pet owners,” wrote Gina Tumbarello of the American Feed Industry Association.

Recognizing that pet food is considered a luxury good and quite costly for many Vietnamese pet owners, the AFIA has also secured additional USDA funding through the Emerging Markets Program (EMP) to assess how US pet food ingredient manufacturers and suppliers might tap into the Vietnamese pet food market and support the expansion of its domestic pet food production. Expanding Vietnamese pet food production can make pet food more affordable and available to Vietnamese pet owners. This approach, combined with efforts to promote pet nutrition, health and the benefits of complete pet diets, could support a significant increase in the overall demand for pet food in Vietnam. 

The US animal food industry utilizes MAP and EMP funding, which, once again, is being debated under the Farm Bill this year. These programs have not seen funding increases since 2006, yet are instrumental in promoting animal food exports, particularly in key markets like Vietnam and China, especially since no new trade agreements are currently being discussed. A key policy priority for the AFIA is increasing funding for the MAP and EMP programs, as well as other market development programs, under the Farm Bill to promote the continued expansion of US agricultural exports, including pet food, particularly in emerging markets like Vietnam.

Supply chain resiliency

Recognizing the importance of securing vital inputs for feed and pet food production, such as vitamins and amino acids, the AFIA has been proactively working with the federal government to address potential supply chain vulnerabilities. 

“An estimated 78% of total vitamin imports to the United States are from China, creating an overwhelming dependency on this single country for its vitamin needs,” wrote Gina Tumbarello of the American Feed Industry Association.

As an example, an estimated 78% of total vitamin imports to the United States are from China, creating an overwhelming dependency on this single country for its vitamin needs, a concern underscored by the lack of feasible alternative sources for these essential nutrients. Where alternative suppliers exist, they simply cannot match China’s vast production capabilities or scale. China holds a commanding position in global vitamin production, reportedly exclusively manufacturing key vitamins such as thiamine, niacin, biotin, inositol, salicylic acid, cobalamin, cholecalciferol and K. This dependency poses significant risks, as demonstrated by the recent trends in the amino acids market, which follow a similar pattern to what has been observed with vitamins. According to some analyses, the US dependency on Chinese production now accounts for over 62% of the global capacity for amino acids, including 76% for lysine and 91% for threonine.

It goes without saying that pets need vitamins to support their wellbeing. Thiamine (B1) regulates energy and carbohydrate metabolism, while vitamin D facilitates the balance of minerals, like phosphorus and calcium, for robust bone growth, essential for maintaining strong muscles and bones. Vitamin E acts as an antioxidant, protecting cells from oxidative damage, further promoting pet health and vitality. 

In addition, pets require amino acids in their diets to maintain healthy and active lifestyles. There are more than 20 amino acids necessary for pets, with 10 deemed “essential,” meaning they must be provided through the diet, since pets cannot produce them internally. It is crucial that pets consume amino acids in the correct amounts daily to support immune function, brain function, metabolism regulation, stamina and weight maintenance. 

Should a shortage of vitamins and amino acids occur, reformulating pet food diets is not a viable solution due to regulatory requirements that mandate pet food must provide complete and balanced nutrition. The Association of American Feed Control Officials (AAFCO) establishes nutrient profiles that set the minimum and sometimes maximum levels of vitamins and other nutrients necessary for pet foods to be labeled as “complete and balanced.” These profiles are based on scientific research and are designed to meet the dietary needs of pets at different life stages. Also, the Food and Drug Association requires that any pet food claiming to be “complete and balanced” meet AAFCO nutrient profiles.

While this is just one example of a potential supply chain challenge, there may be other instances where overwhelming reliance on a single supplier or a limited number of suppliers for vital inputs could create a precarious situation should geopolitical tensions, trade disputes, natural disasters or other unforeseen events in the supplier country occur. Diversifying supply sources is crucial to mitigating these risks, ensuring a more stable and resilient supply chain. Without feasible alternatives, the animal food industry could become susceptible to fluctuations in supply and pricing, potentially jeopardizing pet health, livestock and poultry health and production, and food security for our nation. 

These points underscore the need for strategic planning and investment in diversifying supply chains to enhance sustainability and reduce dependence on any single supplier. To ensure the resilience of both the US animal food and farm sectors, the AFIA is urging US policymakers to adopt a multi-faceted approach, balancing economic interests with broader strategic considerations to diversify and secure our vitamin and amino acid supply chains. 

Looking ahead

As the US pet food industry continues to flourish on the global stage, it faces myriad challenges and dependencies that require careful navigation and proactive solutions. Industry stakeholders are actively engaged in promoting US animal food exports and expanding market opportunities. 

The AFIA is committed to enhancing supply chain resilience and advocating for strategic initiatives geared toward improving pet nutrition and fortifying supply chain resiliency against potential shocks. By fostering partnerships around the world, embracing innovation and actively participating in policy and regulatory discussions, the AFIA and its counterparts are laying the groundwork for a resilient and thriving US pet food industry.

Find more articles related to pet food export opportunities and trade.

VEVEY, SWITZERLAND — Investment, productivity savings and incrementality are central to Laurent Freixe’s priorities as he steps into the role as the new chief executive officer of Nestlé SA.

“To ensure our success, we will embrace the strategic virtuous circle as our compass with a focus on productivity, cost management, allowing strategic investments in our key brands and key innovations,” Freixe said during an Aug. 23 conference call with securities analysts to discuss the change in company leadership. “We will be laser focused on execution, starting with quality, safety, simplicity, speed and agility. This is pivotal to our success going forward.”

The company announced Freixe’s elevation to CEO on Aug. 23. He took replaced Ulf Mark Schneider, who left the company. Freixe was executive vice president and CEO of Latin America. He became CEO on Sept. 1 and is expected to be nominated to Nestlé’s board of directors at the company’s 2025 Annual General Meeting in April.

From a macro perspective, Freixe said his focus will be on organic growth and market share gains to drive organic growth.

“That requires investments in the brands, that requires investments in growth platforms,” he said. “And the objective — my objective is to create space with the management team to allow for those investments. I’ve always made the case that innovation, for instance, has to be incremental. Incremental innovation requires incremental funding.”

To illustrate his point, Freixe used Nestlé’s Nescafe Dolce Gusto coffee-making machines and accessories as an example.

“If we would have taken resources from Nescafe to grow Nescafe Dolce Gusto, for instance, we might have done a good job on Nescafe Dolce Gusto, but we would have done a poor job on Nescafe,” he said. “… We want to work that line going forward to keep supporting Nescafe, one of our best brands, while putting incremental resources behind Nescafe Dolce Gusto.

“To do this … we will need to be very strong on productivity, cost efficiencies to create the space again and generate the funds and the resources to invest incrementally behind the brands and the growth platforms. It’s through investment behind the brands, through quality and execution, of course, that we will achieve that.”

Analysts on the call asked Freixe if he has any plans to subtract from or add to Nestlé’s portfolio of brands and businesses.

“… The focus will be on driving the current portfolio, primarily organic growth is of the essence,” he said. “On the portfolio, there might be, of course, adjustment. But again, (the) top priority is absolutely organic growth and M&A is there to complement the strategy to strengthen our portfolio where it can be (but) is not the core of the strategy.”

Reducing the complexity of Nestlé also will be a priority for Freixe.

“…You know the work we have done on SKUs (stock-keeping units), for instance, lately, but we are doing the same type of exercise on the brands and the innovations and the growth platforms,” he said. “(We’re) just trying to clarify where are the big bets, where are the big priorities, and make sure that those we resource with everything we can and we should to make them thrive and win. Not everything is equal in the portfolio. So, we want to make sure that we resource and support the best possible way the core.”

ARLINGTON, VA. — The American Feed Industry Association (AFIA) released its annual “Our Industry, Our Promise” report on Aug. 26, detailing its continued support of the animal nutrition industry, as well as the industry’s economic impact.

According to the association, in 2023, there were approximately 5,650 US animal food manufacturers, including pet food processors. The industry generated an estimated $267.1 billion in total sales, as well as $98.4 billion in value-added contributions, and $18.5 billion in local, state and national taxes. Overall, the industry directly paid $6.9 billion in wages to more than 80,3000 employees in 2023. 

Regarding its role in the industry, the AFIA highlighted its major focuses, including ensuring safety, modernizing regulatory practices, developing a more resilient supply chain, promoting global competitiveness and advancing sustainability. 

During the past year, the association advocated for the Innovative Feed Enhancement and Economic Development (Innovative FEED) Act.

“Modernizing the regulatory process for new animal food ingredients is essential for innovation,” wrote Constance Cullman, president and chief executive officer of the AFIA, in the report. “This past year, the AFIA successfully advocated for the introduction of the Innovative FEED Act in Congress and encouraged the Food and Drug Administration to rescind its outdated policy guide that wrongly regulates some animal feed ingredients as drugs versus feed additives. Both efforts will help the United States regain its competitive edge in animal production.”

Addressing supply chain challenges also continues to be a focus for the association. The AFIA continues to raise awareness of the imperative need for the US to diversify input supplies and markets. In the pet food industry specifically, the association is working to address the United States’ dependency on Chinese production of essential vitamins, as about 78% of total vitamin imports to the United States are from China, according to the AFIA. 

“Recognizing the need for resiliency, the AFIA formed a task force to develop strategies for reducing risks in our supply chain and launched initiatives to expand industry’s presence in new markets,” Cullman wrote. “Through member visits to Congress and representation on Cabinet-level task forces, the AFIA is raising awareness of the need to diversify input supplies and markets for US food and animal food security.”

Enhancing exportation

Among its many initiatives to support the industry, the AFIA continues to promote US products in international markets in hopes of strengthening the industry’s global competitiveness. According to the association, from 2022 to 2023 the value of US animal food exports rose 79% to $13.4 billion, and export volume increased 120% to 19.8 million tonnes. The industry’s top export destinations continue to be Canada, Mexico, China, Japan and South Korea. Pet food was the industry’s second top export, generating $2.4 billion in value and second only to corn coproducts, which generated $4 billion. 

Looking toward the future of US animal food exports, the AFIA will continue to focus on Brazil and Vietnam. In Brazil, the AFIA recently completed an assessment on the country, examining opportunities for the overall animal food industry.

According to the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS), Vietnam’s pet population continues to rise. During the past five years the dog and cat populations have risen 30% and 20% respectively. To help promote US pet food products in Vietnam, the AFIA recently partnered with the Vietnamese Small Veterinary Association to promote pet parent education on the importance of complete-and-balanced pet foods. 

Seeking sustainability

Additionally, the AFIA is also working toward helping the industry become more sustainable. According to the association, more than 40% of ingredients used in animal feed are coproducts from other industries. This means that about 113.6 million tons of materials are diverted from landfills annually, avoiding about 61.3 million tonnes of carbon dioxide and 7.4 million tonnes of methane emissions. 

To continue this, the AFIA launched many new sustainability policies in 2023 aimed at promoting global collaboration and partnerships with industry stakeholders, governments and non-governmental organizations to address challenges in reducing environmental impact. 

“Whether it is called conservation, sustainability, regenerative agriculture or smart resource use, the need to do more with less is part of our industry’s culture and future,” Cullman wrote. “The AFIA’s work on sustainability continues to gain momentum with the development of policy priorities that emphasize animal nutrition in environmental solutions, while balancing food security needs. The association is leading efforts to shape sustainability agendas and dialogues at international fora on climate change and through international standard-setting, all while supporting members on their sustainability journeys.”

Additionally, the association’s Institute for Feed Education and Research (IFEEDER) launched its Animal Food Industry Sustainability Toolkit in early 2023 to help industry members with their environmental journeys. IFEEDER intends to expand the resource, adding additional information and resources. 

“We owe the AFIA members and staff a debt of gratitude for their dedication to our industry and for encouraging us to continue improving and innovating,” wrote Carlos Gonzalez, Ph.D.,

vice president of Global Regulatory Affairs at Hill’s Pet Nutrition and AFIA’s Board Chair. “Our future is bright, and it will be brighter with your participation.”

Read more news from associations and agencies in the pet food sector. 

JEROME, IDAHO — Milk protein supplier and dairy processor Idaho Milk Products revealed it plans to enter the ice cream market as part of “a significant broadening of its business,” highlighted by a new $200 million dual ice cream and powder blending facility. 

Construction on the 183,000-square-foot plant is scheduled to begin within two months and the company anticipates it will be operating at full commercial production by May 2026.

Idaho Milk Products shared that its strategy for ice cream will focus on premium indulgent and functional recipes, not only in bulk, but also in novelty formats.

Additionally, the company said its blending capabilities will support its ice cream business “and create capabilities to provide custom formulations to both existing and new customers.”

The leadership team at the Jerome, Idaho-based company said the new facility is “a natural extension of its existing model and has the potential to create one of the world’s most sustainable ice cream businesses.”

Chief executive officer Daragh Maccabee noted that Idaho Milk Products also remains committed to its core business of producing milk protein concentrates and isolates.

“At the same time, we constantly seek out new ways to add value to our milk, always doing so in a way that is sustainable for the longer term,” Maccabee said. “Our vision for this plant is to build on the strength of our existing business, leverage our Milk Innovation Center, the strength of our R&D team and the unique synergies that this business will create.”

Kevin Quinn, vice president of sales and marketing at Idaho Milk Products, said the commercial strategy involves adding incremental value to the company’s fresh, high-quality cream.

“The inclusion of a blending facility in the new plant creates new ways to service our customers and add to the benefits of our vertically integrated model,” Quinn said.

MINNEAPOLIS — Though improved performance in discretionary categories headlined the second quarter, Target Corp. sees plenty of runway for its burgeoning food and beverage business, said Brian Cornell, chairman and chief executive officer.

“We think we have significant opportunity for growth in that space, led by the unique combination of great national-brand partnerships and some really strong owned brands that are connected with the consumer,” Cornell said in an Aug. 21 analyst call on fiscal 2024 second-quarter results. “So we think we’re still in the early days of building out our food business.”

Target’s food and beverage sales have increased nearly $9 billion over the past four years to become a $24 billion business. Food and beverages represented about 23%, or $23.90 billion, of Target’s fiscal 2023 sales of $105.8 billion, up from 21% ($22.92 billion) in 2022, 20% ($20.3 billion) in 2021, 20% in 2020 ($18.14 billion) and 19% ($15.04 billion) in 2019.

Food trips spur traffic

Low-single-digit comparable sales growth in food and beverages during the second quarter contributed to an overall comp-sales uptick of 2%, which marked Target’s first such gain in over a year. Cornell said the category benefited from a plan Target announced in May to lower the everyday prices on thousands of popular products.

“On the frequency side of our assortment, both our food and beverage and essential categories saw traffic growth in the quarter, as consumers are responding to our offerings in an environment where they are focused on value,” he said. “Over the summer, we reduced our prices on about 5,000 frequently purchased items in many markets, and we saw an acceleration in both our unit and dollar sales trends in these businesses.”

Because of their purchase frequency, food and beverages have been a big contributor to traffic. Target’s traffic rose 3% overall in the second quarter, and during the call Cornell singled out traffic growth as the chief factor behind the comp-sales increase.

“While it was fantastic to see top-line growth in the second quarter, it was even more gratifying that was driven by traffic, as more guests choose to make more trips to Target, following unprecedented growth during the pandemic,” he said. “Altogether, over the first six months of 2024, our guests have already made nearly 1 billion trips to Target, a number that’s grown by more than 20% since 2019.”

Assortment expansion

Target’s seasonal merchandising has provided a key growth vehicle for food and beverages, and that was no different in the second quarter, said Rick Gomez, chief commercial officer. In early July, Gomez was promoted to that role after serving as chief food and beverage officer since February 2021. Lisa Roath, currently chief marketing officer, is slated to become chief merchandising officer for food, essentials and beauty in early 2025.

“In food, comp sales growth in the low single digits was led by seasonal moments, with hundreds of new items across snacking, grilling and entertaining,” Gomez said in the second-quarter call. “With exclusive-to-Target items like Bubly’s Melted Ice Pop flavor (sparkling water), which quickly grew to be the highest-selling item in its category, we help guests celebrate summer with fun, new flavors and items.

“We’ve also pushed ourselves to rethink assortment strategies that have been tried and true for years. For example, we transitioned our candy aisles, leading into some of the most popular trends like better-for-you options, including lower-sugar treats and wellness candies. While this category is already growing, these changes raise the bar, accelerating comp growth into the double digits.”

Formula based on affordability, differentiation, convenience

Responding to an analyst’s question, Gomez sketched out the growth picture for Target’s food and beverage business.

“We believe there is continued runway for the business to deliver growth, driven by a few things,” he said. “The first is continued emphasis on affordability. As we talked about, the 5,000 price reductions across everyday items was incredibly well-received. We’ll continue to lean into value on food and beverage, not just through everyday pricing but also through personalized promotions on Circle (Target’s loyalty program), as well as with our own-brand portfolio, which offers incredible value. The second thing that we’ll continue to lean in to drive growth for food and beverage will be newness. Just going into the fall season, right now we have a ton of new products coming, over 150 new own-brand products and over 500 new national-brand products, leveraging those flavors that everybody loves for the fall. I’m talking about pumpkin spice, apple, pecan pie. That will continue to fuel growth.”

The fall food assortment will span “sweet to savory” flavors, Gomez said, with new private label and national brand offerings ranging from pumpkin donut holes and jack-o-lantern sandwich cookies to pecan pie ice cream and turkey stuffing-flavored potato chips from Target’s Good & Gather brand. Launched by Target in 2019, Good & Gather — now covering nearly every food and beverage category — took less than a year to top $1 billion in sales and currently is on its way to $4 billion. Target followed up in 2021 with indulgent brand Favorite Day, designed to offer premium flavor at affordable prices.

Strong digital traction also has lifted the food business, Gomez said. Digitally originated sales account for over 18% of Target’s sales by channel, and in the second quarter the retailer tallied double-digit growth in Drive Up curbside pickup and same-day delivery via the Target Circle 360 online membership program.

“The last opportunity to continue to drive growth in our food and beverage business is around ease and convenience,” Gomez said. “Consumers have a lot on their plate, and they’re looking for simple solutions. We’re very excited about the continued growth that we’re seeing on both Drive Up as well as same-day delivery, which achieved double-digit growth in Q2, and we continue to see runway on that going forward.”