Associated British Foods said the U.S. market for cooking oils has softened and that management does not expect conditions to improve as it moves into the next financial year. The group, which sells the Mazola brand in the United States, reported that volumes in the category are down by mid-single-digit percentages this year.
Chief Executive George Weston linked the decline to pressures on the company’s main heavy-use consumer group. "Our heavy use consumer is that Hispanic population who are under financial pressure, who are under pressure from ICE (Immigration and Customs Enforcement) and are feeling a bit miserable," he said on an analysts call following the group’s third-quarter trading update.
Weston said these pressures have prompted some Hispanic consumers to change shopping habits, including a shift toward online purchasing. He also described a greater tendency among that customer base to reuse cooking oil. "Typically that population will be using oils three times before they throw it out, we think it’s gone to four in many cases," he said.
On the outlook, Weston indicated that the company does not expect that pattern to reverse in the near term. "We don’t think that that’s going to change into 2027," he said.
AB Foods also highlighted impacts in its U.S. foodservice channel. Stratas Foods, the company’s U.S. joint venture supplying oils to foodservice operators, is feeling the effects of rapid adoption of appetite-suppressing drugs. "We are undoubtedly seeing the consequences of GLP-1s on foodservice demand, particularly for fried food," Weston said.
Despite the weakness in oils, AB Foods reported a 1% increase in overall grocery sales for the third quarter. That modest growth reflected gains in other brands within the grocery division, including Twinings, which helped offset the lower sales of U.S. cooking oils.
Context and market implications
- The company’s U.S. cooking oil volumes are declining by mid-single-digits this year, centred on the Mazola brand.
- Management attributes the weakness to economic and immigration enforcement pressure on Hispanic consumers and to behavioural changes such as increased reuse of oil and online shopping.
- Foodservice oil demand is being reduced by the rapid uptake of GLP-1 appetite-suppressing drugs, affecting fried food demand supplied by Stratas Foods.