Why food producers are doing well
ConAgra and General Mills report earnings this week, and things seem to be looking up. Why? The short answer: it costs less to buy what it takes for companies to make the food. Jeremy Hobson reports.
General Mills's Dunk-A-Balls cereal (www.x-entertainment.com / Arbor Strategy Group)
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Steve Chiotakis: General Mills this hour reported a higher-than-expected quarterly profit. The maker of Chex, Haagen-Dazs and Totino's was helped by strong sales in the United States and lower commodity costs. Yesterday, ConAgra reported profits beat analyst expectations. As Marketplace's Jeremy Hobson reports, food companies are giving us a sense of how the economy's doing.
Jeremy Hobson: Why are food producers doing well in this economy? The short answer is it costs less to buy what it takes for companies to make the food.
Mark McMinimy follows agribusiness for Concept Capital's Washington Research Group.
Mark McMinimy: We are seeing commodity prices that are dramatically lower than they were a year ago in many cases.
And when they were at their highs, says Morningstar Analyst Erin Swanson. Companies raised the prices of their products for consumers. Now those prices remain high, even though commodities have come down.
But Swanson says there's something else playing into the earnings at General Mills and ConAgra. Price conscious consumers want brand name products.
Erin Swanson: They want to be getting a good value for their money. A lot of times, they turn to brands that they can trust.
And with more Americans cooking their own food these days, well-known brands from Conagra's Healthy Choice to General Mills' Wheaties stand to benefit.
In New York, I'm Jeremy Hobson for Marketplace.
Comments
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From OR, 09/24/2009
Having worked as a Lab Technician running tests for a frozen vegetable processing plant which serves Con-Agra among other large food corporations, I'm pretty sure you can go ahead and trust those frozen peas.
09/23/2009
What would be an interesting follow-up story to this topic is from what countries and what plants are Conagra and General Mills obtaining their ingredients? Please read/refer to pages 6-24 of Pat Choate's 2008 book "Dangerous Business" in which he traces the origins of tainted dog food. He then asks the question: Are Americas food and medicine sources safe?
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