The American cooking oil market is contracting and faces a bleak outlook, driven by immigration enforcement crackdowns and economic hardship hitting Hispanic households, the owner of the Mazola brand warned this week.
George Weston, chief executive of Associated British Foods (ABF), told financial analysts that cooking oil demand had weakened because Hispanic consumers, his core market, are struggling under economic pressure and Immigration and Customs Enforcement operations. "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.
The pressure is reshaping buying habits. Some Hispanic shoppers have shifted toward online purchases to avoid in-person transactions, while others are stretching their budgets by reusing cooking oil far more than before. Weston noted that consumers who once discarded oil after three uses are now stretching it to four, a trend he expects to persist through 2027.
ABF's cooking oil troubles extend beyond consumer retail. The company's joint venture Stratas Foods, which supplies oils to restaurants and food service businesses, is being hammered by a different force: the explosive growth of appetite-suppressing drugs like GLP-1 medications. "We are undoubtedly seeing the consequences of GLP-1s on foodservice demand, particularly for fried food," Weston said.
The pressure on cooking oil sales is one of several headwinds battering ABF's grocery division. Overall grocery sales rose just 1 percent in the three months ending June 20, with oil weakness offsetting gains from other brands like Twinings tea and Kingsmill bread. Across the broader company, total sales climbed 3 percent to 5.3 billion pounds for the quarter, but this masked deeper fractures: sugar sales dropped 4 percent and agricultural supplies, led by animal feed, plummeted 14 percent. Primark fashion sales rose 3 percent when adjusted for currency swings.
The company flagged a difficult consumer environment across most of its markets and is preparing to spin off Primark as a separate publicly traded company.
Retailer Asda is grappling with its own workforce crisis. The UK's third-largest supermarket cut nearly 6,000 jobs last year, roughly 4 percent of its workforce, leaving headcount at just under 137,000 by December. More than 4,600 cuts came from stores and its distribution and grocery buying operation, while over 1,000 were eliminated at head office. Most losses came from attrition and the sale of its Leon food business rather than formal redundancies, though Asda also wound down technology contracts as it completed a costly shift away from systems inherited from former majority owner Walmart.
Asda remains in recovery mode following a 6.8 billion pound takeover in 2020 by private equity firm TDR Capital and billionaire brothers Mohsin and Zuber Issa. The company posted a near 1 billion pound loss last year after igniting a supermarket price war and spending 284 million pounds on its technology overhaul, bringing total technology spending to around 1.2 billion pounds.
Author James Rodriguez: "When cooking oil demand is cratering because people are rationing their purchases and drugs are killing demand for fried food, you know consumer health and wallets are in serious trouble."
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