Why food producers are doing well

General Mills introduced Dunk-A-Balls cereal in 1994 under the Wheaties name. The cereal, with basketball-shaped puffs that encouraged kids to play with their food, wasn't the slam dunk General Mills hoped for.

TEXT OF STORY

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.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...