Quaker Oats' Secret to Continuing Pandemic Sales Success in 2021

Publish date: 2024-07-30

At the end of 2019, Quaker Foods' sales growth was trailing both PepsiCo's beverage and snack-focused divisions. The brand was also facing questions from analysts about its strategy, including the failed rollout of its own version of oat milk.

Now, Quaker Foods — best known to consumers for its oatmeal — is on track to end 2020 as one of the fastest-growing components of PepsiCo's empire. And its top executive says it can keep the momentum going in 2021 thanks to new products introduced this year, including protein-enhanced oatmeal and Cheeto-flavored macaroni and cheese.

"The year to date has been our best year in at least a decade," said Robbert Rietbroek, senior vice president and general manager at Quaker Foods North America.

North American sales at Quaker grew 6% on an as-reported basis for the third quarter ended September 5, on-par with growth at PepsiCo's Frito-Lay snack division and its core beverage business. Quaker sales for the second quarter, which ended in June, notably jumped 23% as consumers stocked up on goods as COVID-19 cases rose during the spring.

According to data from IRI, Quaker sales at retailers have increased 12.1% in 2020 through November 15 — more than offsetting losses at foodservice establishments. Products from mainstay oatmeal to cold cereal, a category where sales were declining prior to the spread of coronavirus, have benefited. Only Quaker's snack bars, including its Chewy granola bars, have lost ground as fewer consumers look for foods that they can take on-the-go, Rietbroek said.

The introduction of new products has been one key part of Quaker's strategy this year, even as it has broadly narrowed the products it produces to account for soaring demand at retailers. The company introduced Cheetos Mac 'n Cheese, for instance, as part of a slate of 10 new product lines it had planned for 2020 before the pandemic.

"We were very clear from the very beginning of this year when all the events unfolded that we could not stop innovating," Rietbroek said.

Quaker, which has an established pasta line under its Rice-A-Roni and Pasta Roni labels, got into the mac and cheese business after noting that 70% of Cheetos buyers also regularly consumed the dish, and that many mac and cheese eaters liked to sprinkle a crushed form of the cheese snack on their pasta.

"We are experts in pasta," Rietbroek said. "We were simply not participating in the very large mac and cheese segment." After refining a formula and designing a box that includes Cheetos' mascot, Chester Cheetah, Quaker realized that the concept was potentially a "really big idea," he added.

Other product launches during the pandemic have been more incremental. Quaker developed high-protein versions of its best-selling oatmeal flavors, such as maple brown sugar and apple cinnamon, and convinced grocers to sell them even as many were trying to reduce the number of new products on their shelves in order to keep other key items in stock.

"The retailers were super excited that [the protein improvement] was actually one of our best-selling flavors, and that's why we got strong distribution," Rietbroek said.

Families with young children are one group that has consumed more Quaker products during the pandemic. Even Quaker's standard oats have attracted new first-time buyers, including many who have bought Quaker products to include in baked goods.

In response, Quaker has introduced larger packs of oatmeal at retailers, debuted new flavors, and tailored advertising campaigns to appeal to families. The goal, Rietbroek said, is to keep as many of the new buyers coming back to Quaker as possible.

"We are really doubling down on that cohort," he said. "We believe that new trial will lead to repurchase in 2021. At least, we're hopeful that that's the case."

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