Milling & Baking News Corporate Profiles - October 2012 - (Page 8)

Editorial Contrasting stories in key ﬁgures N umbers may never tell the entire story, but a look at a range of figures related to the consumer packaged foods industry does much to illustrate both what has transpired over the past year and what may lie ahead. Among the more encouraging developments of recent years has been the solid share price performance of food companies over the past 12 months. The Diversiﬁed Food Products index, calculated by Food Business News, was 12,740.12 as of Oct. 5, up 2,200 points, or 21%, from a year earlier. Companies that are (or were) part of the index include Campbell Soup Co.; ConAgra Foods, Inc.; H.J. Heinz Co.; Kraft Foods Inc.; PepsiCo, Inc.; and four others companies. The index, and other indices tracked by Food Business News, are based on a March 2005 base of 10,000. Share prices of most subsegments of the food industry performed solidly in the same period, including the Grain-Based Foods index, up 20%; the Food Ingredients index, up 18%; Confectionery, up 20%; Produce, up 16%; and Beverages (non-alcoholic), up 9%. Only the Meat and Poultry index failed to show a gain over the past year, down 5%. Many of the industry’s largest companies enjoyed dramatic share price advances during the past year, including Kraft Foods Inc., up 39% in the year ahead of its breakup into two separate companies — Mondelez International, Inc. and Kraft Foods Group, Inc. Other large companies that saw strong share performance included PepsiCo, Inc., up 17%; and H.J. Heinz Co., up 18%. Specialty companies with impressive gains included Hain Celestial Group, Inc., up 112%; Panera Bread Co., up 62%; and Ingredion, Inc., up 39%. If it’s difﬁcult to reconcile such heady stock market performance with what seems like a difﬁcult environment for the food and related industries, keep in mind that none of the indices cited above kept pace with the Standard & Poor’s 500 over the same period. The S.&P. jumped an impressive 26%. Indeed, examining unit volume trends for the packaged foods industry offers instantaneous cause for concern. Not only did most categories, as tracked by Nielsen, show a unit volume decline in the year ended Sept. 1, but volumes fell at a faster pace than occurred in the year ended Sept. 3, 2011, itself a watershed year of poor sales trend for the food industry. According to Nielsen, among 31 categories with annual sales topping $1.5 billion in all outlets, only four experienced unit volume growth in the year ended Sept. 3 — fresh produce, snacks, bottled water and tea. A ﬁfth, cheese, had ﬂat unit sales. Even worse, for only 2 of the 31 categories was the decline smaller (or increase greater) between 2010-11 and 2011-12 (See table below). It is plain from these numbers that not only are unit volume trends poor, they are worsening. Worrying as these trends may be, they do not negate the stock market performance of the past year. Further, there is real cause for hope. Yes, food companies underperformed the overall market, but that virtually always happens in a bull stock market when investors shift away from the relative safety of food industry shares. The stock market is an imperfect barometer of the health of the economy, its industries and companies, but it is a leading indicator versus scanner data, which are lagging indicators. Many companies, including Kraft, have taken steps to better position themselves in the difﬁcult current environment. Clearly, investors are optimistic about the prospective success of such steps in the months and years ahead. CP Unit volume data, by category Category/Subcategory Unit sales, 52 weeks ended Sept. 1, 2012 Change, Change, 52 weeks 52 weeks Difference ended ended (percentage Sept. 3, 2011 Sept. 1, 2012 points) 0.9% -0.2% 2.9% 4.5% 4.1% 0.1% -0.7% 4.0% 0.5% 0.7% 2.4% -1.8% 0.0% 0.4% 1.0% 4.8% -1.2% -5.5% -1.4% 3.0% 1.3% -2.1% -1.8% -0.4% -3.3% -5.2% 0.0% -0.6% -2.1% -3.1% -1.5% -2.6% 4.4% -3.2% -6.4 -1.2 0.2 -3.3 -6.2 -2.0 0.3 -7.2 -5.7 -0.7 -3.0 -0.3 -3.1 -1.9 -3.6 -0.4 -2.0 Carbonated beverages 10,044,367,246 Bread and baked goods 8,807,185,587 Fresh produce 8,589,563,423 Snacks 8,520,707,201 Candy 8,436,914,924 Milk 5,861,322,431 Packaged meat 5,341,938,502 Shelf stable fruit drinks 5,256,659,612 Canned vegetables 5,039,637,891 Cheese 4,969,179,493 Pet food 4,862,423,131 Yogurt 4,839,908,115 Soup 4,675,837,317 Condiments/Soups/Gravies 4,483,792,396 Frozen prepared foods 4,362,492,971 Bottled water 4,286,437,458 Cereal 3,477,559,709 Source: Nielsen 8 \ October 2012 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - October 2012

Milling & Baking News Corporate Profiles - October 2012