Food Business News - June 21, 2011 - (Page 22)

Market Insight Consumers await full impact of higher food prices A lthough the food and beverage components of the U.S. Consumer Price Index have risen sharply the past two months, more increases may be coming as not all of the recent run-up in commodity prices, some to historical highs, has yet been passed through the food chain to the consumer level. The Bureau of Labor Statistics of the Department of Labor said last week the C.P.I. for food and beverages rose 0.4% in May, the same gain as in April, and was up 3.4% on an annual basis. The overall C.P.I. rose 0.2% in May, down from a 0.4% rise in April, mainly due to lower gasoline prices, but was up 3.6% on a year-over-year basis. Second-quarter retail food prices “unofficially” increased 4% from the first quarter of 2011 and 8% from the second quarter of 2010, according to the American Farm Bureau Federation’s quarterly 16 item market basket survey, which has been conducted since 1989. The largest increases from the first quarter included 5-lb bag of Russet potatoes (up 16%), sirloin tip roast (up 13%), bacon and apples (both up 8%), deli ham (up 7%), ground chuck (up 6%), whole milk and vegetable oil (both up 5%), and toasted oat cereal (up 4%). Egg prices were up 2% in the second quarter, but prices for chicken breasts and cheese declined, the A.F.B.F. said. The year-to-year direction of the market basket survey tracks with the food at home component of the C.P.I. index, according to the A.F.B.F. The May food at home index increased 0.5%, the meats, poultry, fish and eggs index rose 1.1% for the second consecutive month, and the cereals and bakery products index was up 1% from a month earlier. “The effects of continued raw energy cost increases are reverberating throughout the food industry, and consumers are bearing the brunt of it,” said John Anderson, an economist with the A.F.B.F. “Further retail price increases are likely to be the new normal as we move through 2011, especially for meats. Strong demand for meats and dairy products continues to influence retail prices.” There was considerable “cocktail hour” discussion about what impact those increases might have on food processors and consumers at the June 5-7 Sosland Publishing Co. Purchasing Seminar in Kansas City. Since then, nearby corn futures prices set an alltime high of $7.99¾ a bu during the June 10 trading session. Then last week corn and wheat futures saw sharp Consumers are spending 7% less on monthly grocery purchases than a year ago. setbacks as favorable weather improved growing conditions in Europe and parts of the former Soviet Union, as well as across much of the U.S. Corn Belt, while outside markets also added considerable pressure. Crude oil futures prices tumbled about $5 a barrel, equity markets sank and concern about U.S. and global economic recovery increased. But even after last week’s declines, nearby corn futures prices still were about 75% above year-ago values while soybeans and Kansas City wheat both were up more than 40%. Gains in crude oil future prices of about 13% from a year ago appeared mild in comparison. Sosland Publishing’s proprietary white pan bread index stood at 247.6 of the 2005 base of 100, up 65% from a year ago. The apple pie index was at 249.3, up 60%, and the pasta index was at 414.7, up 189%. Consumers face just as much uncertainty about the economy and how much they will have to spend as do analysts and economists, and generally with much less supporting data, which tends to result in more cautious buying. That may have been reflected in an Acosta Sales & Marketing “The Why Behind the Buy” survey reported in Supermarket News last week that showed consumers were spending 7% less on monthly grocery purchases than a year ago, with households earning $75,000 or less annually cutting budgets by 10% or more despite higher food prices, while higher income households were spending 34% more. The report noted 43% of Americans were buying less food and 22% were going to less expensive stores. The report also said grocery shoppers make fewer trips to the store when gasoline prices hit $3.70 a gallon. Although U.S. average retail gasoline prices have come off their high, prices have been above that level since the end of March, according to the Department of Energy. It remains to be seen if last week’s grain and energy price declines “stick,” helping to mitigate further price increases for food processors and consumers, but what is certain is plenty of volatility during yet another weather market. FBN RON STERK 22 FOODBUSINESS NEWS ® June 21, 2011

Table of Contents for the Digital Edition of Food Business News - June 21, 2011

Food Business News - June 21, 2011
C.D.C. report fi nds increase in salmonella infections
General Mills sees ‘robust’ growth opportunities in global yogurt category
Following Jimmy
Web Contents
Editorial - German E.coli outbreak underscores need to fund F.S.M.A.
ConAgra acquires Marie Callender’s trademarks
Kraft investing to eradicate malnutrition
Perkins & Marie Callender’s fi les for bankruptcy
Snack food sales reach $64 billion in 2010, may top $77 billion by 2015
Recession seen triggering sharp drop in food product introductions
Cargill opens Latin American innovation center
John Bilbrey to helm at Hershey
ICL Performance to acquire Cosmocel Quimica
Sugar bull
Smithfield terminates Campofrio bid
Omega-3 food, beverage market grows 11%
Roark Capital ups presence in food industry
Calavo earnings decline due to higher costs
Mountaire Farms acquiring bankrupt poultry company
Diamond Foods returns to profi tability in third quarter
Nestle water efforts recognized
C.D.C. report points to increase in salmonella infections
Consumers await full impact of higher food prices
A difficult disappearing act
Innovation honored by the I.F.T.
Mintel: Functional foods ‘on life support’
Allergen labeling guidance needed
Creating a defi nition of sustainable nutrition
German E. coli outbreak may lead to changes
Chronic inflammation: The next opportunity?
ConAgra Mills unveils food safety system for flour
Finding fiber everywhere
Spicy fl avors moving beyond heat
Dairy Business News
Commission clears Lactalis acquisition of Parmalat
New texture system replaces milk fat in dairy products
Researchers target sodium redution in cheese
General Mills sees ‘robust’ growth opportunities in global yogurt category
Saputo fiscal year earnings rise 18%
New Danisco system targets artisan ice cream
Researchers target sodium reduction in cheese
Single-serve licensing
Quiznos adds three concepts to menu
Flax USA introduces Flaxmilk
Johnsonville Sausage adds chicken varieties
General Mills adds brownies to Fiber One line
Farley’s & Sathers updates Tree Top line
Ingredient Market Trends
Senate vote to end ethanol support seen as symbolic
Ingredient Markets
New container may hold two compatible products
Solbar names president of U.S. business
Sensient launches naturally-sourced colors in dry state
Comax develops fl avors for energy drinks
Puratos launches bake-stable chocolate fi llings
DSM completes U.S. innovation center
Sea salt assists in sodium reduction
Ad Index
Food Business in the News

Food Business News - June 21, 2011