Food in Canada | February 10, 2009
Many baked and snack foods companies are reporting unfavourabletrends in product mix in their latest quarterly financial reports.Kraft Foods of Northfield, Ill notes volume gains for its biscuitslines and especially strong momentum for its Oreo cookies (up 20per cent) as operating income fell 10 per cent due to a decline insales of higher margin snack nuts and snack bars. Ralcorp Holdingsof St. Louis, Mo., notes a 12-per-cent increase in sales for itsFrozen Bakery Products segment (pre-baked breads, doughs, biscuits,cookies, muffins and pastries), but reports a 23-per-cent declinein profits. The company attributes this to higher costs andunfavourable product mix as consumers trade down at in-storebakeries to lower-margin baked goods.
Montreal-based Saputo Inc. reported a 12-per-cent decline inoperating earnings for its grocery products sector, which itattributed to highly competitive selling prices and competitionfrom private label products. Revenues remained unchanged as unitvolume declined by the same proportion and prices were increased torecoup rising costs.
Sara Lee Corp. of Downers Grove, Ill. reports its North AmericanFresh Bakery sales rose 11 per cent, driven by both higher pricesand higher unit volumes. But even though operating income increasedfive-fold, the company did note these results “were partiallyoffset by an unfavorable sales mix into lower margin, non-brandedbakery products,” as well as higher commodity and sellingexpenses.
Kellogg Company of Battle Creek, Mich., in recognition ofconsumers’ renewed focus on value, has also launched a“Two Bowls for a Buck” January-to-July promotion tomake the point that cereal breakfast offers great value and is aconvenient and nutritious option.