What's going on?

Breakfast magnate Kellogg�s announced weaker-than-expected earnings on Thursday, but at least PepsiCo�s update wasn�t such a soggy mess.

What does this mean?

Kellogg�s quarterly revenue and profit both fell short of investors� predictions, but the breakfast-focused company hadn�t necessarily done much wrong. Investors might just have seen how fast competing consumer staples companies had been growing and set their expectations too high.

That wasn�t the case for Pepsi, whose North American food brands � which include Lay�s chips and Quaker Oats porridge � actually make up over half its profit. And seeing as there�s been plenty of comfort eating going on throughout the pandemic, last quarter�s earnings came in ahead of investors� expectations � while its growth came in ahead of arch-nemesis Coca-Cola.

Why should I care?

Zooming in: Don�t write off a fixer-upper.

Kellogg�s might�ve missed the mark, but this kind of stumble in a year when demand for at-home food�s so high isn�t the be-all and end-all. Case in point: Kraft Heinz has been quick to adapt after publicly admitting that two of its major brands � Kraft and Oscar Mayer � weren�t worth as much as it thought. That might be why it announced stronger-than-expected annual results on Thursday, along with plans to sell its underperforming nuts business for $3 billion � pushing its stock up 5%.

The bigger picture: Consumer staples have their off-days too.
Investors make a big deal about how reliable the consumer staples sector is, given that shoppers buy its products no matter how the economy�s doing. And they�re not wrong: hygiene and personal care brands were, unsurprisingly, at the top of people�s shopping lists last year, while packaged food � especially healthy and plant-based products � benefited from pandemic-driven stockpiling. But the reliability of the sector isn�t a given: drinks firms, for example, struggled with collapsing restaurant and bar sales, which might be why their shares have done relatively poorly.