High Gas Prices Are Hurting Impulse Snack Sales. 3 Companies Feeling the Pain.

J.M. Smucker owns Hostess Brands, which sells Twinkies, Donettes, and other snack cakes that rely partly on impulse purchases. (Bing Guan/Bloomberg)

Key Points

• A 30% year-over-year surge in gasoline prices to $4.15 a gallon is likely straining impulse snack sales at convenience stores.
• PepsiCo and J&J Snack Foods reported that higher fuel costs are hurting traffic and purchases in the convenience-store channel.
• J.M. Smucker’s Sweet Baked Snacks sales fell 7% in the latest quarter, and the company expects a low-single-digit decline for the fiscal year.

This year’s surge in gasoline prices might be adding a new strain on snack sales. Cash-strapped consumers need to fill the gas tank, and high prices at the pump leave less in their wallets for that Twinkie or bag of chips.

It’s bad news for J.M Smucker , PepsiCo, and other companies that benefit from so-called “impulse snack sales.” After all, convenience stores account for roughly one-fifth of U.S. snack sales, according to Circana data. And about 80% of U.S. convenience stores sell gasoline or other motor fuels on-site.

The national average price of regular gasoline has climbed 30% from a year ago to reach $4.15 a gallon this week, as the Iran war has disrupted the global oil supply. As a result, many consumers have less money—and less appetite—for the chips, snack cakes, meat sticks, and frozen drinks that are often bought impulsively after filling up the tank.

Several companies made that connection in their recent earnings calls. J.M. Smucker said last week that traffic in the convenience-store channel remains challenged. CEO Mark Smucker said it was difficult to identify a single cause, but suggested that gasoline prices were contributing, with consumers filling their tanks but not necessarily continuing into the store.

“The traffic dynamic seems to be somewhat persistent,” Smucker said on the company’s fiscal first-quarter earnings call on Aug. 26.

Smucker owns Hostess Brands, which sells Twinkies, Donettes, and other snack cakes that rely partly on impulse purchases. Smucker’s Sweet Baked Snacks sales fell 7% from a year earlier in the latest quarter, while the unit’s profit declined 13%. Management expects sales in the business to decline at a low-single-digit rate, in percent terms, for the full fiscal year ending in April 2027.

Weak convenience-store traffic isn’t the only problem. Smucker has also removed some underperforming Hostess products from the shelves, as the business hasn’t met its expectations since the 2023 acquisition. Still, management commentary suggests challenges in the convenience-store channel are making the turnaround harder.

PepsiCo CEO Ramon Laguarta also said in July that higher gasoline prices were affecting impulse channels like convenience stores. Consumers might still show up, he said, but fewer visits are turning into purchases.

J&J Snack Foods , which sells products including SuperPretzel, Dippin’ Dots, and ICEE, has voiced the same concerns.

“Where you get hit the most right off the bat with fuel costs rising is in your convenience store business,” CEO Dan Fachner told analysts in May.

To be sure, this doesn’t mean every food company with products sold at gas stations is in trouble—some are more exposed to convenience stores than others, and some have said they’re not seeing a material impact. But the warnings have become harder to dismiss.

For Smucker, however, weaker convenience-store sales probably aren’t enough to derail its overall earnings story. Sweet Baked Snacks, which includes Hostess, accounted for just 11% of overall sales and less than 5% of the Smucker’s segments’ combined profit in the latest quarter.

Coffee, by comparison, generated nearly half of Smucker’s combined segment profit in the latest quarter, while Frozen Handheld and Spreads—home to Uncrustables and Jif—contributed about 20%. Coffee sales rose 13% in the quarter, while frozen-food sales increased 3%.

Pepsi, meanwhile, is trying to restore momentum in its North American food business, and management still expects growth. But soft convenience-store sales could slow that recovery, giving investors another reason to be cautious about how quickly the business can rebound.

Write to Evie Liu at evie.liu@barrons.com

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