Economic and Immigration Pressures Squeeze US Cooking Oil Market
The US cooking oil market is contracting and is not expected to recover soon, according to George Weston, chief executive of Associated British Foods (ABF), the owner of the Mazola brand. Weston told City analysts that sales have suffered because the primary consumer base—the Hispanic population—is under significant financial strain and facing pressure from Immigration and Customs Enforcement (Ice) raids.
“Our heavy use consumer is that Hispanic population who are under financial pressure, who are under pressure from Ice and are feeling a bit miserable,” Weston said. Anti-immigration raids championed by Donald Trump have disproportionately affected Latino communities, prompting some consumers to switch to online shopping for safety and convenience.
Hispanic Consumers Reusing Cooking Oil More Frequently
Weston noted that Hispanic customers are reusing cooking oil more often to save money. “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. He added that this behavior is unlikely to change into 2027, indicating a prolonged downturn for the cooking oil market.
ABF also owns brands such as Twinings, Kingsmill, and the fashion retailer Primark. The company’s overall grocery sales rose 1% in the three months to 20 June, with lower US oils sales offset by growth in brands like Twinings.
Impact of Appetite-Suppressing Drugs on Food Service Demand
Weston also highlighted that Stratas Foods, ABF’s US joint venture supplying oils to the food service sector, is being hit by the rapid uptake of appetite-suppressing drugs known as GLP-1s. “We are undoubtedly seeing the consequences of GLP-1s on foodservice demand, particularly for fried food,” he said.
ABF’s Overall Performance and Primark Spin-Off
The group’s total sales rose 3% to £5.3bn in the quarter, with Primark sales up 3% once exchange rate effects were removed. However, this was offset by a 4% slump in sugar sales and a 14% decline in agricultural supplies, led by animal feed. ABF, which is planning to spin off Primark into a separate listed company, noted “a challenging consumer environment across most of our markets.”
Asda Job Cuts and Financial Struggles
In a separate development, the UK’s third-largest supermarket, Asda, revealed it cut almost 6,000 jobs last year. The job losses amounted to about 4% of Asda’s workforce, reducing its headcount to nearly 137,000 by December last year. The cuts included more than 4,600 roles in stores, distribution, and grocery buying, as well as over 1,000 head office positions.
Asda said most of the job losses resulted from not replacing staff after departures or after the sale of the Leon restaurant chain. Others left due to the winding down of IT contracts as Asda completed its shift away from systems provided by former majority owner Walmart. An Asda spokesperson said: “We have continued to invest in our colleagues, including pay increases, and maintained higher store hours year on year to support a strong in-store experience.”
Asda is struggling to turn around its business after a £6.8bn takeover in 2020 by private equity firm TDR Capital and the Issa brothers. Recently published figures show Asda slumped to a near £1bn loss last year after starting a supermarket price war and spending £284m more on its IT transformation project, bringing total spending on the project to about £1.2bn.
