Milling & Baking News - January 27, 2009 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS JANUARY 27, 2009 / NEWS C.P.I. gain last year for baked foods, cereals largest since 1980 Salmonella outbreak in peanut butter ensnares snack crackers, cookies Story on Page 12 LATE NEWS J&J Snack sales, earnings climb PENNSAUKEN, N.J. - Net income of J&J Snack Foods Corp. in the first quarter ended Dec. 27 totaled $4,319,000, equal to 23c per share on the common stock, up 128% from $1,897,000, or 10c per share, in the same period a year ago. Sales in the quarter were $141,142,000, up 8% from $130,898,000 a year ago. Sales to food service customers increased $8,126,000, or 9%, in the first quarter, to $97,535,000. During the quarter, soft pretzel sales to the food service segment increased 2% to $24,235,000. Bakery product sales, excluding Hom/ Ade and Daddy Ray's, increased Continued on Page 8 WASHINGTON - The Consumer Price Index for baked foods and cereal products posted its thirteenth consecutive year of higher prices in 2008, advancing 9.3%, its sharpest yearover-year advance since jumping 10.7% in 1980. The 2008 increase followed a 4.2% gain in 2007 and a 1.8% advance in 2006, according to the Bureau of Labor Statistics of the U.S. Department of Labor. For the second year in a row, the C.P.I. for every category of grain-based foods increased in the 12-month period that ended in December. In most cases, the gain exceeded 6%, and in many instances was more than 10%. The 2008 increase of 6% for all food was the largest on record since 1990, when the gain was 6.1%. Within the Cereal and Bakery Products category, the largest index increases in 2008 were in the rice, pasta and cornmeal sub-category, up 17.1%, and in flour and prepared mixes, up 15.2%. The two categories also were the biggest movers in 2007. The price index for Bakery Products increased 9.3% in 2008, which compared with a gain of 4.3% in 2007. Two segments within this category - bread and fresh biscuits, rolls and muffins - were introduced in 1998 with a base of December 1997. All other products are based on a 1982-84 average. In the bread segment, white bread increased 12.3%, compared with advances of 7.7% in 2007, 2.5% in 2006, 3.8% in 2005, 2.1% in 2004, 2.7% in 2003, 2.5% in 2002, 4.4% in 2001 and 3.3% in 2000. Bread other than white gained Continued on Page 31 High hurdle seen for successful '09 investing in grain-based foods KANSAS CITY - Heightened selectivity will be required for investors seeking success in owning grain-based foods shares in 2009. While a number of industry companies have promising outlooks this year, Wall Street analysts interviewed by Milling & Baking News seemed warier than usual of the sector. In what is as difficult an economic environment as experienced by anyone working today, food companies face a number of specific challenges that have changed the relative fortunes of many businesses in the industry, the analysts said. From an investment perspective, many questions hover over the grainbased foods industry and the food industry generally, and two of these questions were reviewed by the analysts in the first part of this annual assessment, published in the Jan. 20 issue of Food Business News (see story on Page 1 of that issue). The first challenge relates to Continued on Page 18

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Milling & Baking News - January 27, 2009