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We're taking a look at a sweet deal what that was struck today with Mars maker of Snickers and M&M's acquiring Kello Nova, whose brands include Pringles, poptarts, and Eggo for $36 billion. With just a few minutes left to the closing bell on Wall Street, we're looking at how to navigate the sack the snack sector with the Yahoo Finance playbook. Joining us now is Peter Galbo, BFA Securities senior food beverage analyst. Peter, I want to just open broadly here and sort of get what you make of the deal and essentially what that means for perhaps the broader snack industry. Having Mars and Kellen over combine, what does that mean for some of the other players, sir?

Hey, thanks Josh and Julie for having me on. Look, I I I think, you know, from a strategic standpoint, this deal makes a ton of sense. Um, it's it's a large white space opportunity for Mars, you know, historically very much in the confectionary and and candy part of the store, adding a salty snack portfolio really to kind of cover the waterfront in terms of snacking, and it makes them a more, you know, formidable global competitor against some of the big guys like Mondelezs, uh like Hershey, like Nestle. And so, you know, look, I I think as Mars has looked to expand their footprint, again, this is a really nice complement to some of their existing businesses.

Peter, explain that to folks who like break that down a little bit for us. How it makes them a more formidable competitor. Is it a matter of negotiating with stores to get more of their other products on the shelves so they have more negotiating power? Um, is it a matter of efficiencies in the plants where maybe they can make more than one thing? How are the different ways that they're going to make this work for them?

Yeah, thank thanks Julie. It's so it's it's pretty limited in terms of uh the portfolio overlap um between, you know, a lot of the categories. I I think the real benefit here uh is going to be in a lot of the small format stores. So what it'll do is give Mars um, you know, more more scale. Uh again, candy's kind of managed more at the front of the store. It'll help them pushing snacks, things like, you know, brands like Pringles, brands like Poptarts and cheese it in the more middle parts of the store. And again, we think kind of the biggest advantage is going to be in those convenience stores, gas stations, which tend to be kind of higher profit margins um for a lot of these guys.

Peter, I'm curious bringing in kind of the macro here right now. We've been talking a lot on the show over the last couple days about just the consumer slowing down, right? Perhaps spending less and some of the products we've been talking about, you might not necessarily need when it comes to candy or some of those other snacks. I mean, how does that impact this sector when you're looking at the space?

Yeah, I mean, Josh, it's been a pretty challenging 2Q calendar 2Q for a lot of the the snack companies and and really um Kello Nova was probably the one that stood out, you know, in a positive light. Uh they were the only company, at least in our coverage on the food side, that had positive volume growth, and that's really the key metric that investors are looking at at this point in the second quarter in North America where things have been particularly sluggish. Now, Mars is a private company, obviously we we you know, we don't see the the financials there. Um but candy, you know, and chocolate has still remained relatively resilient um as an overall category relative to kind of the the salty snack guys.

Do you think overall though that the the industry is going to remain pressured in terms of pricing, in terms of demand and market demand? What do you expect?

Yeah, you know, I think from a price standpoint, Julie, I mean, you've started to see that um in terms of some of the companies giving back a bit more pricing. Now that's coming in the forms of, you know, deals and promotions and more merchandising probably versus, you know, outright price cuts. Um but again, the the organic growth that a lot of these companies are putting up continues to be, I think weaker than most expected. And so, you know, today's announcement really probably serves as a as a starting point for, are we going to start to see more companies uh embarking on inorganic opportunities, self-help initiatives, uh you know, to help them grow one way or another.

Peter, are there any then stocks in your coverage that you think are going to hold up better that actually people should be looking at to buy right now?

Yeah, I mean, the one name in in food, Julie, that we've really been pushing is McCormick. Um I think, you know, what what they did that's a little bit different from the peers is they actually kind of recognized the the pressure on volumes earlier uh than some of the peers. They actually started kind of managing the price gaps, particularly against private label very early in the year. So in January, kind of ripped the band-aid off much sooner and they're seeing the dividends of that now from a volume perspective, whereas a lot of the other packaged food players, and again, they they compete against or across a number of different categories, um you know, are really starting to do that pricing now. So there's there's probably a six-month catch-up period before, you know, that volume really starts to take off uh for a lot of the other names.

Peter, I made a joke about maybe being able to sub out a candy bar or some of those other snacks, but I'm never going to not season my steaks. So that one certainly makes sense to me. Appreciate you joining us today.

Peter