Hidden Valley Ranch dressing may be a victim of this summer's salad scare

By Bill Peters

As the cyclospora outbreak has made consumers more cautious about salad purchases, one analyst points to sales declines for Clorox's Hidden Valley brand

Third-party data indicates a decline in Hidden Valley Ranch sales during the past four weeks, according to an analyst.

Consumers have cut back on salad purchases, as the cyclospora outbreak keeps them wary of lettuce. And now makers of salad dressing may be feeling the pain.

TD Cowen analyst Robert Moskow said in a research note on Tuesday that one possible victim might be Clorox (CLX), which is best known for cleaning products. But the company also generates about 11% of its U.S. retail sales from dressings, according to Moskow.

He said that in the past four weeks, sales of Clorox's Hidden Valley Ranch dressing were down 5%, based on third-party data from Nielsen. Over that time, sales of Kraft Heinz's (KHC) dressing brands slid 20%, Nielsen found. Salad dressing makes up 2% of Kraft Heinz's U.S. retail sales, according to the note.

"We expect consumers' trust in the industry to gradually improve and sales to recover," he said. "That said, the negative impact to Kraft Heinz and Clorox's salad-dressing brands may prove meaningful in the current quarter."

Representatives from Clorox and Kraft Heinz didn't immediately return MarketWatch's requests for comment.

Moskow noted that the pressure on Hidden Valley Ranch sales comes after the brand had benefited from heightened consumer interest during the World Cup earlier this summer, when international fans became enamored with ranch flavoring.

The cyclospora outbreak has become the nation's largest of its kind, sickening thousands of people. Health officials have keyed in on iceberg lettuce as a potential source. Officials in Michigan, one state with a disproportionately large number of illnesses, said earlier this month that it had become safer to eat lettuce and salad greens as case counts started to fall.

Still, sales of iceberg lettuce have fallen 20% over the past four weeks, Moskow said. Iceberg lettuce represents around 37% of the $2.6 billion lettuce category, he said.

Salad chain Sweetgreen (SG) this month said it didn't use iceberg lettuce in any of its items. But it said it expects same-store sales to decrease between 7% and 8% this year, worse than a prior forecast. Chipotle Mexican Grill (CMG) last month raised its sales outlook for the year but noted a slowdown in restaurant traffic in July as worries grew about the outbreak. Yum Brands (YUM) said sales at Taco Bell, an early focus of the investigation, were coming back.

Shares of Clorox were around 0.4% higher on Tuesday. Kraft Heinz's stock was up 0.8%.

Shares of Clorox are up 5.3% so far this year, and were trading at around $106. But they're off highs of more than $230 reached in 2020, when the pandemic drove demand for hand sanitizer and other cleaning products.

-Bill Peters

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08-18-26 1646ET