Land O’Lakes Profit Surges 22% In Q3 As Consumers Cooking-At-Home Spur Butter Boon
While we have watched a lot of the obvious beneficiaries of the pandemic see their company’s respective stocks soar (not the least of which was Zoom, who passed Exxon in market cap last week), there’s still one place people haven’t necessarily shed a light on yet: butter.
Butter sales at dairy companies like Land O’Lakes have been off the charts as a result of consumers cooking at home more often, according to Bloomberg. Land O’Lakes, for example, says butter sales will rise 20% to between 275 million and 300 million pounds in 2020.
The growth is even more astonishing when one considers the decline from the food service industry, which had all but shut down completely early this year, and now operates at just a fraction of how it once did. While many dairy farmers were “forced to dump milk” as demand from school and food services waned, butter was “flying off the shelves”.
Chief Executive Officer Beth Ford said: “Often times, even for the retail business, what you do is you make a lot of butter because it’s peak milk production time, and you store it for the key season. But the buying was so strong that we didn’t do that, because we were selling right off the line.”
As a result, Land O’Lakes has shifted its focus to making 36 pound cases of its butter, instead of its normal 18 pound cases.
Additionally, the company’s Purina division, which makes animal feed for animals like horses and rabbits, also saw sales increase thanks to an 80% rise in backyard flocks.
Land O’Lakes saw its profit rise by more than 5x in the third quarter to $66 million. That number marks a 22% gain from the year prior. Ford predicts that demand is going to continue to last through fall and winter, which are especially great seasons to stay at home and cook/bake.
This year will be a curious one, as some families may forgo holiday gatherings (and the baked goods that come with them) as a result of the pandemic.
Additionally, aid programs have helped farm profitability, Bloomberg notes, and there is some speculation the market could see turmoil if government support runs out. Ford said: “There will be disruption, we don’t all understand what the path to reopening will look like, but what I have is confidence in my team.”